Appeal details
Counselvise Citation
[2016] 131 COUNSELVISE.COM (IT) 5939 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
9 month(s) 12 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
21-12-2016
Appeal Filed By
Assessee
Order Result
Partly Allowed
Bench Allotted
B
Assessment Year
2011-2012
Appeal Filed On
09-03-2016
Judgement Text
ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 1 OF 18 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.273/HYD/2016 & SA NO.26/HYD/2016 (ASSESSMENT YEAR: 2011-12) M/S. WORLEY PARSONS INDIA PVT. LTD, THANE PAN: AAKCS 1815 L VS DY. COMMISSIONER OF INCOME TAX, CIRCLE 17(2) HYDERABAD FOR ASSESSEE : MR.KANCHAN KAUSHAL, MR. ALI ASGAR RAMPURWALA & MR. ABHIROOP BHARGAV FOR REVENUE : SHRI K.P.C. RAO, CIT (DR) O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2011-12. IN TH IS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 144C(13) OF THE I.T. ACT, DATED 1 1.12.2015. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, ENGAGED IN THE BUSINESS OF ENGINEERING DESIGN AND C ONSULTANCY, FIELD ITS RETURN OF INCOME FOR THE A.Y 2011-12 ON 30 .11.2011 DECLARING TOTAL INCOME OF RS.3,71,39,669 UNDER THE NORMAL PROVISIONS AND BOOK PROFIT OF RS.2,90,50,762 FOR TH E PURPOSE OF MAT CALCULATION U/S 115JB OF THE ACT. DURING THE AS SESSMENT PROCEEDINGS U/S 143(3) OF THE ACT, THE AO NOTICED T HAT THE ASSESSEE HAD ENTERED INTO AN INTERNATIONAL TRANSACT ION WITH ITS AE DATE OF HEARING : 01.12.2016 DATE OF PRONOUNCEMENT : 21.12.2016 ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 2 OF 18 WITHIN THE MEANING OF SECTION 92B AND 92A OF THE AC T. THEREFORE, HE REFERRED THE COMPUTATION OF ARMS LENGTH PRICE ( ALP) TO THE TPO. THE TPO PASSED ORDER U/S 92CA OF THE ACT PROPO SING THE ADJUSTMENT OF RS.2,86,85,168. ON RECEIPT OF THE TRA NSFER PRICING ORDER, THE AO PASSED THE DRAFT ASSESSMENT ORDER IN WHICH, IN ADDITION TO MAKING THE TRANSFER PRICING ADJUSTMENT, THE AO HAS ALSO SOUGHT TO REJECT THE CLAIM OF DEDUCTION U/S 10 A ON THE GROUND THAT THE ASSESSEE HAS FAILED FURNISH FORM NO .56F ALONG WITH THE RETURN OF INCOME. AGGRIEVED BY THE DRAFT A SSESSMENT ORDER, THE ASSESSEE PREFERRED ITS OBJECTIONS BEFORE THE DRP. THE DRP PARTLY ALLOWED THE OBJECTIONS OF THE ASSESSEE A ND IN CONSONANCE WITH THE DRPS ORDER, THE FINAL ASSESSME NT ORDER WAS PASSED. THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ASSESSMENT ORDER DATED 11.12.2015. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: THE GROUNDS MENTIONED HEREIN ARE WITHOUT PREJUDICE TO ONE ANOTHER. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE DISPUTE RESOLUTION PANEL ('DRP') / LEARNED ASSESSING OFFICER ('LEARNED AO')/ LEARNED TRANSFER PRICING OFFICER ('LEARNED TPO') ERRED IN MAKING A TRANSFER PRICING ADJUSTMENT OF RS. 2,98,95,369 TO THE INTERNATIONAL TRANSACTION OF THE APPELLANT OF RENDERING FOR ENGINEERING SERVICES TO ITS ASSOCIATED ENTERPRISES. THE APPELLANT PRAYS THAT THE AFORESAID ADJUSTMENT OF RS. 2,98,95,369 OUGHT TO BE DELETED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE HON'BLE D RP ERRED IN CONFIRMING THE ACTION OF THE LEARNED AO/TPO IN NOT CONSIDERING BABCOCK BORSIG SOFT TECH PVT. LTD. AS A COMPARABLE COMPANY IN RELATION TO THE RENDERING OF ENGINEERING SERVICE S PROVIDED BY THE APPELLANT. ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 3 OF 18 THE APPELLANT PRAYS THAT THE LEARNED AO BE DIRECTED TO INCLUDE BABCOCK BORSIG SOFT TECH PVT. LTD. IN THE FINAL SET OF COMPARABLES SINCE IT IS FUNCTIONALLY COMPARABLE TO THE APPELLANT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE HON'BLE DRP ERRED IN NOT INCLUDING ACROPET AL TECHNOLOGIES LTD. AND ACCUSPEED ENGINEERING LTD. IN THE SET OF COMPARABLE COMPANIES, DESPITE CONSIDERING THEM AS FUNCTIONALLY COMPARABLE TO THE APPELLANT'S BUSINESS OF RENDERING ENGINEERING SERVICES. THE APPELLANT PRAYS THAT THE AFORESAID COMPARABLE COMPANIES OUGHT TO BE INCLUDED IN THE SET OF COMPARABLE COMPANIES SINCE THEY ARE FUNCTIONALLY COMPARABLE TO THE APPELLANT. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE HON'BLE DRP ERRED IN CONFIRMING THE ACTION OF THE LEARNED AO/TPO IN CONSIDERING LOSS ON ACCOUNT OF FOREIGN EXCHANGE DIFFERENCES AS OPERATING IN NATURE WHILE COMPUTING THE OPERATING MARGINS OF THE APPELLANT. HOWEVER, THE LEARNED AO/TPO HAVE CONSIDERED FOREIGN EXCHANGE DIFFERENCE AS A NON- OPERATING IN NATURE WHILE COMPUTING THE MARGINS OF THE COMPARABLE COMPANIES. THE APPELLANT PRAYS THAT THE LOSS ON ACCOUNT OF FOREIGN EXCHANGE DIFFERENCES OUGHT TO BE CONSIDERED AS NON-OPERATING IN NATURE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE HON'BLE DRP ERRED IN CONFIRMING THE ACTION OF THE LEARNED AO/TPO IN DISALLOWING THE CLAIM OF THE APPELLANT UNDER SECTION 10A OF THE ACT AMOUNTING TO RS. 1,58,84,238. THE APPELLANT PRAYS THAT THE CLAIM OF RS. 1,58,84,238 OUGHT TO BE ALLOWED U/S 10A OF THE ACT. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE HON'BLE DRP ERRED IN CONFIRMING THE ACTION OF THE LEARNED AO/TPO IN DISREGARDING THE UNABSORBED DEPRECIATION CLAIMED BY THE APPELLANT IN THE ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 4 OF 18 COMPUTATION OF TOTAL INCOME AS PER PROVISIONS OF SECTION 32(2) OF THE ACT. THE APPELLANT PRAYS THAT THE CLAIM OF UNABSORBED DEPRECIATION OUGHT TO BE ALLOWED U/S. 32(2) OF THE ACT. 7. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED AO/DRP ERRED IN CHARGING INTEREST U/S 234B OF THE ACT. THE APPELLANT PRAYS THAT THE INTEREST U/S 234B OF T HE ACT OUGHT TO BE DELETED. 3. FURTHER, VIDE LETTER DATED 31.03.2011, THE ASSESS EE HAS ALSO RAISED THE FOLLOWING ADDITIONAL GROUNDS OF APP EAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/DRP ERRED IN UPHOLDING THE ACTION OF THE LEARNED AO/TPO OF APPLYING A BROAD SET OF ITES COMPARABLES FOR BENCHMARKING THE APPELLANTS INTERNATIONAL TRANSACTION, WITHOUT APPRECIATING THE FACTS THAT THE APPELLANT IS PROVID ING DESIGN AND ENGINEERING SERVICES. IT IS PRAYED THAT COMPANIES WHICH ARE FUNCTIONALLY SIMILAR TO THE APPELLANT I.E. ENGAGED IN DESIGN AND ENGINEERING SERVICES BE CONSIDERED BY THE TPO FOR COMPARABILITY ANALYSIS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED AO/DRP ERRED IN CONSIDERING PROJECTS & DEVELOPMENT INDIA LTD, A GOVT. OWNED COMPANY AS A COMPARABLE COMPANY IN ITS COMPARABILITY ANALYSIS WHICH HAS A DIVERSIFIED SET OF ACTIVITIES AND IS THEREFORE, FUNCTIONALLY DISSIMILAR TO THE APPELLANT. IT IS PRAYED THAT THE SAID COMPANY BE EXCLUDED FROM THE SET OF THE COMPARABLE COMPANIES CONSIDERED BY THE TPO FOR COMPARABILITY ANALYSIS. ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 5 OF 18 4. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS NOT INTERES TED TO PURSUE THE GROUND OF APPEAL NO.4 IN THE ORIGINAL GROUNDS O F APPEAL AND ALSO THE ADDITIONAL GROUND OF APPEAL NO.1. THESE GR OUNDS ARE THEREFORE, REJECTED AS NOT PRESSED. 5. GROUND NO.1 IS GENERAL IN NATURE AND NEEDS NO ADJUDICATION. 6. AS REGARDS GROUND NO.3, BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD ENTERED INTO TWO INTERNATIONA L TRANSACTIONS WITH ITS AE, I.E. FOR (I) FOR PROVISION OF ITES AND ; (II) PAYMENT FOR TECHNICAL SUPPORT SERVICES. THE ASSESSEE, IN ITS TP STUDY, ADOPTED THE TNMM AS THE MOST APPROPRIATE METHOD AND THE PRO FIT LEVEL INDICATOR I.E. PLI AS OPERATING PROFIT/OPERATING CO ST AND ARRIVED AT THE MARGIN OF 10.11% AS AGAINST THE MARGIN OF COMPAR ABLES TAKEN BY THE ASSESSEE AT 5.74%. THE TPO OBSERVED THAT THE TAXPAYER HAS USED THE CAPITALINE DATA BASE FOR SEARCH OF COMPARA BLE COMPANIES FOR THE I.T. ENABLED SERVICES. AFTER APPLYING CERTA IN FILTERS, THE ASSESSEE HAS SHORTLISTED 8 COMPANIES AS COMPARABLES , AND THE ARITHMETIC MEAN/PLI OF THE COMPARABLES WAS COMPUTED AT 5.74% AS AGAINST ITS OWN PLI OF 10.11% AND THAT THE ASSESS EE HAS TREATED ITS TRANSACTION TO BE AT ALP. THE TPO OBSER VED THAT AS PER THE AUDITED STATEMENT OF ACCOUNTS, THE FINANCIALS O F THE TAXPAYER ARE AS UNDER: DESCRIPTION AMOUNT (IN RS.) OPERATING REVENUE 31,81,69,320 OPERATING COST 28,97,99,105 OPERATING COST 2,83,70,215 OP/OR (%) 8.92 OP/OC(%) 9.79 ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 6 OF 18 HE OBSERVED THAT THE ASSESSEE HAS AGGREGATED BOTH T HE TRANSACTIONS I.E. OF ITES AS WELL AS TECHNICAL SUPP ORT SERVICES AND TREATED THE COMBINED ACTIVITY AS ITES. ON GOING THR OUGH THE TP DOCUMENT, THE TPO OBSERVED THAT THE METHOD OF SEARC H PROCESS ADOPTED BY THE ASSESSEE SUFFERED FROM DEFECTS WHICH RESULTED IN SELECTION OF INAPPROPRIATE COMPARABLES AND REJECTIO N OF APPROPRIATE COMPARABLES. HE, THEREFORE, REJECTED TH E TP DOCUMENT OF THE ASSESSEE AND MADE AN INDEPENDENT ANALYSIS BY AGGREGATION OF TRANSACTIONS UNDER THE TNMM. ACCORDINGLY, A DETA ILED SHOW CAUSE NOTICE WAS GIVEN TO THE ASSESSEE AND THE ASSE SSEE FILED ITS REPLY THERETO. THE COMPARABLES SELECTED BY THE ASSE SSEE ARE AS UNDER: I) APEX KNOWLEDGE II) GODREJ INFOTECH III) BABCOCK BOR SOFT IV) KND ENGINEERING TECHNOLOGIES V) POWERMECH INFRA VI) PROJECTS AND DEVELOPMENT VII) I-DESIGN ENGINEERING VIII) STEWARTS & LLOYD 7. THE COMPARABLES SELECTED BY THE TPO ARE AS UNDER : 1. ACROPETAL TECHNOLOGIES LTD 2 PROJECTS & DEVELOPMENT INDIA LTD 3 ACCUSPEED ENGINEERING LTD 4 JEEVAN SCIENTIFIC TECHNOLOGY LTD 5 ACCENTIA TECHNOLOGIES LTD 6 TECHNO ELECTRIC & ENGINEERING CO. LTD 7 I-DESIGN ENGINEERING SOLUTIONS LTD 8 ECLERX SERVICES LTD 8. THUS, IT CAN BE SEEN THAT THE TPO HAS ACCEPTED O NLY TWO COMPANIES SELECTED BY THE ASSESSEE COMPANIES AS COMPARABLE TO THE ASSESSEE I.E. (I) PROJECTS & DEVELOPMENT IND IA LTD AND (II) I- DESIGN ENGINEERING SOLUTIONS LTD. THE TPO HAS BROUG HT IN, SIX ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 7 OF 18 NEW COMPANIES AS COMPARABLES TO THE ASSESSEE. OUT O F THESE COMPANIES, THE ASSESSEE HAS ACCEPTED ONLY ACROPETAL TECHNOLOGIES LTD AND ACCUSPEED ENGINEERING LTD AS C OMPARABLE TO THE ASSESSEE AND OBJECTED TO THE INCLUSION OF TH E OTHER FOUR COMPANIES AS COMPARABLES IN THE FINAL LIST OF COMPA RABLES BEFORE THE DRP. THE DRP ACCEPTED THAT THESE 4 COMPANIES AR E NOT COMPARABLE TO THE ASSESSEE IN VIEW OF THE FUNCTIONA L DIFFERENCES. THEREAFTER, THE DRP PROCEEDED TO HOLD THAT EVEN ONE COMPARABLE IS SUFFICIENT FOR COMPARABILITY ANALYSIS AND SINCE TWO OF THE COMPANIES SELECTED BY THE ASSESSEE ARE FOUND APPROP RIATE COMPARABLES BY THE TPO, THE TPO, INSTEAD OF CARRYIN G OUT A FRESH SEARCH, SHOULD HAVE DETERMINED THE ALP BASED ON THE SE TWO COMPARABLES. THUS, OBSERVING, THE DRP DIRECTED THE AO TO DETERMINE THE ALP BASED ON THE MARGIN OF THE ABOVE TWO COMPARABLES, I.E. 31.88% AND 13.32% RESPECTIVELY, THE MEAN OF WHICH WORKS OUT TO 22.6%. AGAINST THIS FINDING OF TH E DRP, THE ASSESSEE IS IN APPEAL BEFORE US BY RAISING THE GROU ND OF APPEAL NO.3. 9. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT BOTH THE ASSESSEE AS WELL AS THE TPO HAVE ADOPTED T NMM AS THE MOST APPROPRIATE METHOD WHICH IS AN INDIRECT METHOD OF ARRIVING THE ALP. HE SUBMITTED THAT WHILE COMPUTING THE ALP UNDER TNMM, A REASONABLE NUMBER OF COMPARABLES ARE TO BE CONSIDERED TO ENSURE THAT THE RESULTS ARE TRULY REPRESENTATIVE OF THE SEGMENT TO WHICH TESTED PARTY BELONGS. IN SUPPORT OF THIS C ONTENTION, HE PLACED RELIANCE UPON THE FOLLOWING TWO DECISIONS: I) FORTUNE INFOTECH LTD VS. ACIT (ITA NO.274/AHD/201 3, DATED 3.2.2016) II) M/S.GE HEALTHCARE BIO-SCIENCES LTD VS. DDIT (IT A NO.677/MDS/2015, DATED 3.3.2016). ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 8 OF 18 THEREFORE, ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE DRP OUGHT NOT TO HAVE DIRECTED THE AO TO CONSIDER O NLY TWO COMPANIES WHICH HAVE BEEN SELECTED BY THE ASSESSEE AND ACCEPTED THE TPO TO BE COMPARABLE TO THE ASSESSEE. HE SUBMITTED THAT THE TPO HAD MADE FURTHER SEARCH AND SINCE THE TPO HAS TAKEN ACROPETAL TECHNOLOGIES LTD AND ACCUSPEED ENGI NEERING LTD., WHOSE MARGINS WERE 11.12% AND 9.18% RESPECTIVEL Y AS COMPARABLES AND THE ASSESSEE ALSO HAS ACCEPTED THEM TO BE COMPARABLE TO THE ASSESSEE, THE DRP OUGHT NOT TO HA VE DIRECTED THAT ONLY TWO COMPANIES BE ADOPTED FOR THE COMPUTAT ION OF THE ALP. 10. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED TH AT THE ASSESSEE ITSELF HAS CONSIDERED THE TWO COMPANIES AC CEPTED BY THE TPO AS COMPARABLE TO THE ASSESSEE AND THEREFORE, TH E DRP HAS RIGHTLY DIRECTED THE AO TO CONSIDER THE MEAN MARGIN OF THESE TWO COMPANIES FOR THE PURPOSE OF ARRIVING AT THE ALP AN D THE ASSESSEE SHOULD NOT HAVE ANY GRIEVANCE AGAINST SUCH DIRECTIO N. 11. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT IN THE CASE OF FORTUNE INFOT ECH LTD (CITED SUPRA), THE COORDINATE BENCH OF THIS TRIBUNAL AT AH MEDABAD HAS ANALYZED THE ISSUE OF THE MOST APPROPRIATE METHOD A ND THE RELEVANT FACTORS AND THE NECESSARY INPUTS FOR VARIO US ALTERNATIVE OPTIONS FOR ADOPTION OF A PARTICULAR METHOD AND AT PARAS 10 & 11 OF ITS ORDER HELD AS UNDER: 10. WE HAVE NOTED THAT DURING THE COURSE OF THE HEA RING BEFORE US, LEARNED COUNSEL VEHEMENTLY CONTENDED THAT, ON THE F ACTS OF THIS CASE, THE INTERNAL TRANSACTIONAL NET MARGIN METHOD WAS WR ONGLY REJECTED BY THE AUTHORITIES BELOW. HIS CONTENTION WAS THAT U NDOUBTEDLY FIDELITY US WAS AN ASSOCIATED ENTERPRISE IN AN EARL IER ACCOUNTING PERIOD BUT THAT ASPECT OF THE MATTER WAS WHOLLY IRR ELEVANT SINCE THE ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 9 OF 18 PRICES FOR WORK DONE FOR FIDELITY US WERE NEGOTIATE D AFRESH AFTER THIS CONCERN CEASED TO AN AE. LEARNED COUNSEL TOOK PAINS TO TAKE US THROUGH THE DOCUMENTS IN SUPPORT OF THE FACTS EMBED DED IN HIS ARGUMENTS, BUT, FOR THE REASONS WE WILL SET OUT IN A SHORT WHILE AND IN OUR CONSIDERED VIEW, IT IS NOT REALLY NECESSARY TO GO INTO THAT ASPECT OF THE MATTER. WHEN WE PUT IT TO THE LEARNED COUNSEL T HAT WHEN ONLY ONE COMPARABLE IS AVAILABLE SO FAR AS INTERNAL TNMM IS CONCERNED, AND THE RELIABILITY OF THIS COMPARABLE IS ALSO NOT FREE FROM DOUBT, WOULD IT REALLY BE APPROPRIATE TO SELECT THIS METHO D AS MOST APPROPRIATE METHOD FOR DETERMINING ARMS LENGTH PR ICE ON THE FACTS OF THIS CASE, HE QUICKLY RESPONDED THAT THERE IS NO STATUTORY BAR ON APPLICATION OF A PARTICULAR METHOD ONLY BECAUSE ONE COMPARABLE IS AVAILABLE FOR BENCHMARKING. HE REFERRED TO JUDICIAL PRECEDENTS IN SUPPORT OF THE PROPOSITION SO ADVANCED BY HIM. THAT IS NOT, HOWEVER, THE ISSUE; IT IS NOT A QUESTION OF STATUTORY BAR. T HE QUESTION IS AS TO WHAT IS THE MOST APPROPRIATE METHOD ON THE FACTS OF THAT CASE, AND THIS QUESTION CANNOT BE DECIDED IN VACUUM OR IN AN ABSTRACT OR THEORETICAL TERMS. IT HAS TO BE CONSIDERED IN THE L IGHT OF THE FACTS OF THAT CASE, IN THE LIGHT OF AVAILABILITY OF NECESSAR Y INPUTS FOR VARIOUS ALTERNATIVE OPTIONS AND IN THE LIGHT OF OTHER RELEV ANT FACTORS. IF IN ONE CASE THE TRIBUNAL HAS HELD THAT EVEN ONE COMPARABLE IS GOOD ENOUGH FOR DETERMINING THE ARMS LENGTH PRICE ON THE BASIS OF ONE OF THE PRESCRIBED METHODS, AND THAT METHOD IS MOST APPROPR IATE METHOD IN A GIVEN SITUATION, IT CANNOT BE INFERRED THAT IRRES PECTIVE OF THE METHOD EMPLOYED AND DE-HORS THE PECULIARITIES OF A FACT SITUATION, A SINGLE COMPARABLE IS GOOD ENOUGH FOR ALL THE METHOD S OF DETERMINING ARMS PRICE, SO AS TO BE TREATED AS MOST APPROPRIAT E METHOD FOR THAT PURPOSE. IN AN INDIRECT METHOD LIKE TNMM, A REASONA BLE NUMBER OF COMPARABLES IS AN IMPORTANT FACTOR TO ENSURE THAT T HE RESULTS ARE TRULY REPRESENTATIVE OF THE SEGMENT TO WHICH THE TE STED PARTY BELONGS. THE SITUATION WITH REGARD TO DIRECT METHOD S LIKE CUP, AS LONG AS TRANSACTIONS ARE ESTABLISHED TO BE BONAFIDE, COU LD BE SLIGHTLY DIFFERENT. THERE ARE NO YARDSTICKS OF UNIVERSAL APP LICATION. HOWEVER, THE MANDATE OF SECTION 92C(1), READ WITH RULE 10C, IS UNAMBIGUOUS. A METHOD SELECTED FOR BENCHMARKING MUST BE A PERMISSI BLE METHOD TO BE INCLUDED IN THE CONSIDERATION ZONE, BUT EVEN IT S PRESENCE IN THE CONSIDERATION ZONE IS NOT GOOD ENOUGH TO JUSTIFY IT S APPLICATION FOR BENCHMARKING THE INTERNATIONAL TRANSACTIONS ON THE FACTS OF A PARTICULAR CASE BECAUSE SUCH A METHOD HAS TO BE NOT ONLY A PERMISSIBLE METHOD BUT ALSO MOST APPROPRIATE METHOD HAVING REGARD TO ALL THE MATERIAL FACTORS, INCLUDING AVAILABILITY , COVERAGE AND RELIABILITY OF DATA NECESSARY FOR APPLICATION OF SU CH METHOD. THE METHOD SELECTED FOR BENCHMARKING MUST NOT ONLY BE A PERMISSIBLE METHOD BUT IT ALSO BE THE MOST APPROPRIATE METHOD ON THE FACTS AND CIRCUMSTANCES OF THAT CASE AND VIS--VIS THE OTHER METHODS WHICH CAN BE APPLIED ON THE FACTS OF THAT CASE. THE SELECTION OF MOST APPROPRIATE METHOD IS NOT SIMPLY DECIDING A QUESTIO N AS TO WHAT IS PERMISSIBLE AND WHAT IS NOT PERMISSIBLE, BECAUSE, A S IS ELEMENTARY, EVERYTHING PERMISSIBLE IN LAW, AS INDEED IN ALL WAL KS OF LIFE, IS NOT NECESSARILY THE MOST APPROPRIATE THING AS WELL. IT IS IMPORTANT TO BEAR ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 10 OF 18 IN MIND THE FACT THAT UNDER SECTION 92C(1), THE AR MS LENGTH PRICE IN RELATION TO AN INTERNATIONAL TRANSACTION SHALL BE D ETERMINED BY ONE OF THE ...(PRESCRIBED)... METHODS, BEING THE MOST APPR OPRIATE METHOD, HAVING REGARD TO THE NATURE OF TRANSACTION OR CLASS OF TRANSACTION OR CLASS OF ASSOCIATED PERSONS OR FUNCTIONS PERFORMED BY SUCH PERSONS OR SUCH OTHER RELEVANT FACTORS AS THE BOARD MAY PRESCR IBE. RULE 10C, WHICH PRESCRIBES THE RELEVANT FACTORS FOR DETERMINI NG THE MOST APPROPRIATE METHOD, AS IT STOOD AT THE RELEVANT POI NT OF TIME, STATES AS FOLLOWS: RULE 10 C- MOST APPROPRIATE METHOD. (1) FOR THE PUR POSES OF SUB- SECTION (1) OF SECTION 92C, THE MOST APPROPRIATE ME THOD SHALL BE THE METHOD WHICH IS BEST SUITED TO THE FACTS AND CIRCUM STANCES OF EACH PARTICULAR INTERNATIONAL TRANSACTION AND WHICH PROV IDES THE MOST RELIABLE MEASURE OF AN ARM'S LENGTH PRICE IN RELATI ON TO THE INTERNATIONAL TRANSACTION . (2) IN SELECTING THE MOST APPROPRIATE METHOD AS SPE CIFIED IN SUB-RULE (1), THE FOLLOWING FACTORS SHALL BE TAKEN INTO ACCO UNT, NAMELY: (A) THE NATURE AND CLASS OF THE INTERNATIONAL TRANS ACTION; (B) THE CLASS OR CLASSES OF ASSOCIATED ENTERPRISES ENTERING INTO THE TRANSACTION AND THE FUNCTIONS PERFORMED BY THEM TAK ING INTO ACCOUNT ASSETS EMPLOYED OR TO BE EMPLOYED AND RISKS ASSUMED BY SUCH ENTERPRISES; (C) THE AVAILABILITY, COVERAGE AND RELIABILITY OF D ATA NECESSARY FOR APPLICATION OF THE METHOD; (D) THE DEGREE OF COMPARABILITY EXISTING BETWEEN TH E INTERNATIONAL TRANSACTION AND THE UNCONTROLLED TRANSACTION AND BE TWEEN THE ENTERPRISES ENTERING INTO SUCH TRANSACTIONS; (E) THE EXTENT TO WHICH RELIABLE AND ACCURATE ADJUS TMENTS CAN BE MADE TO ACCOUNT FOR DIFFERENCES, IF ANY, BETWEEN THE INT ERNATIONAL TRANSACTION AND THE COMPARABLE UNCONTROLLED TRANSAC TION OR BETWEEN THE ENTERPRISES ENTERING INTO SUCH TRANSACTIONS; (F) THE NATURE, EXTENT AND RELIABILITY OF ASSUMPTIO NS REQUIRED TO BE MADE IN APPLICATION OF A METHOD. [EMPHASIS, BY UNDERLINING, SUPPLIED BY US] 11. THE SCHEME OF THE TRANSFER PRICING LEGISLATION IN INDIA IS THUS UNAMBIGUOUS. THERE IS NO DISPUTE THAT THE SELECTION OF MOST APPROPRIATE METHOD IS NOT IN THE UNFETTERED DISCRE TION OF THE ASSESSEE AND IT IS SOMETHING WHICH CAN ALWAYS BE SU BJECT MATTER OF ADJUDICATION AT THE ASSESSMENT AS WELL AS APPELLATE STAGE. THE TPO HAS A RIGHT, AS INDEED DUTY, TO EXAMINE WHETHER A P ARTICULAR METHOD ADOPTED BY THE ASSESSEE IS INDEED MOST APPROPRIATE METHOD OF DETERMINING ARMS LENGTH PRICE ON THE FACTS OF A PA RTICULAR CASE. ONE OF THE IMPORTANT FACTORS GOVERNING THE DECISION ON AS TO WHAT WILL CONSTITUTE THE MOST APPROPRIATE METHOD, AS SET OUT IN RULE 10C(1)(C) ABOVE, IS THE AVAILABILITY, COVERAGE AND RELIABILI TY OF DATA NECESSARY FOR APPLICATION OF THE METHOD. THE AVAILABILITY OF DATA, WITH RESPECT TO A PARTICULAR METHOD VIS -A-VIS OTHER METHODS OF DETERMINING THE ALP, IS THUS ONE OF THE CRUCIAL FACTORS IN DECIDING WHETHER THAT PARTICULAR METHOD OF DETERMINING THE ALP IS MOST A PPROPRIATE METHOD OF DETERMINING ALP ON THE FACTS OF THAT CAS E, OR NOT. WHEN ONLY ONE COMPARABLE IS AVAILABLE FOR APPLICATION OF A PARTICULAR ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 11 OF 18 METHOD, THIS SERIOUS LIMITATION ON THE AVAILABILITY OF DATA, IN OUR CONSIDERED VIEW, CERTAINLY RELEGATES ITS APPROPRIAT ENESS VIS-A-VIS OTHER ALTERNATE METHODS AVAILABLE, SUCH AS EXTERNAL TNMM, IN RESPECT OF WHICH SUFFICIENT, AND ESSENTIALLY RELIAB LE, DATA IS AVAILABLE. FOR THIS SHORT REASON ALONE, THE INTERNAL TNMM IS C ERTAINLY NOT THE MOST APPROPRIATE METHOD ON THE FACTS OF THIS CASE. THAT IS ONE ASPECT OF THE MATTER. THE OTHER ASPECT OF THE MATTER IS IT S RELIABILITY. THE FACT THAT THE INDEPENDENT ENTERPRISE WAS AN ASSOCIATED E NTERPRISE IN NOT SO DISTANT A PAST, THE FACT THAT DESPITE ITS BECOMI NG, IN LEGAL TERMS AND AS AN OFFSHOOT OF GROUP RESTRUCTURING, AN INDEP ENDENT ENTERPRISE, THE ASSESSEE CONTINUES TO WORK FOR THIS ENTERPRISE EVEN AFTER MAKING HUGE LOSSES, AS HIGH AS 21.75% ON COST, AND THE FAC T THAT IT IS A SINGLE COMPARABLE, DOES RAISE SERIOUS APPREHENSIONS ABOUT ITS RELIABILITY. THIS FACT SITUATION, COUPLED WITH THE ADMITTED POSI TION THAT SUFFICIENT NUMBER OF EXTERNAL COMPARABLES FOR TNMM ARE AVAILAB LE, DOES LEAVE THE INTERNAL TNMM MUCH LOWER IN THE HIERARCHY OF ME THODS, PARTICULARLY VIS--VIS EXTERNAL TNMM, APPROPRIATE F OR DETERMINING THE ALP ON THE FACTS OF THIS CASE. WE ARE OF THE CONSID ERED VIEW THAT THE INTERNAL TNMM, ON THE BASIS OF WHICH THE ASSESSEE H AD DONE ITS BENCHMARKING, WAS INDEED NOT THE MOST APPROPRIATE M ETHOD ON THE FACTS OF THIS CASE. FOR THIS SHORT REASON ALONE, AN D WITHOUT ADDRESSING OURSELVES TO THE MERITS OF THE LINE OF REASONING AD OPTED BY THE AUTHORITIES BELOW, WE APPROVE THE CONCLUSIONS ARRIV ED AT BY THE TPO AND THE DRP AND DECLINE TO INTERFERE IN THE MATTER. A LOT OF ARGUMENTS HAVE BEEN ADDRESSED ON WHETHER THE SERVICES RENDERE D TO THE NON AE CAN BE COMPARED WITH THE SERVICES RENDERED TO THE A E, BUT, GIVEN OUR ABOVE CONCLUSIONS, THAT ASPECT OF THE MATTER IS WHO LLY ACADEMIC. 12. WE FIND THAT THIS DECISION HAS BEEN FOLLOWED BY THE COORDINATE BENCH OF THIS TRIBUNAL AT CHENNAI IN THE CASE OF M/S. GE HEALTHCARE BIO-SCIENCES LTD VS. DDIT (CITED SUPR A). THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE HOLD THAT THE DRP IS NOT CORRECT IN HOLDING THAT THE TPO CAN COMPUTE THE ALP BY CONSIDERING ONLY THE TWO COMPANIES WHICH HAVE BEEN SELECTED BY THE ASSESSEE AND ACCEPTED BY THE TPO FOR COMPUTING THE ALP. FURTHER, THE TPO U/S 92CA OF THE ACT HAS CONDUCTED H IS OWN SEARCH FOR COMPARABLE COMPANIES AND HAS ARRIVED AT ACROPETAL TECHNOLOGIES LTD AND ACCUSPEED ENGINEERING LTD AND THE ASSESSEE ALSO HAS ACCEPTED THESE COMPANIES AS COMPA RABLES BY NOT OBJECTING TO THE SAME BEFORE THE DRP. THEREFORE , IN VIEW OF THE FACT THAT THE TNMM IS THE INDIRECT METHOD, REQUIRIN G A REASONABLE ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 12 OF 18 SET OF COMPARABLES, TO ARRIVE AT THE CORRECT ALP, W E DO NOT AGREE WITH THE DIRECTIONS OF THE DRP. GROUND OF APPEAL NO .3 IS ACCORDINGLY ALLOWED. 13. GROUND NO.2 IS AGAINST THE REJECTION OF BABCOCK BORSIG SOFT TECH PVT. LTD ONE OF THE COMPANIES TAKEN AS CO MPARABLE BY THE ASSESSEE, ON THE GROUND THAT, THE FINANCIAL RES ULTS OF THE SAID COMPANY ARE NOT AVAILABLE. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AT THE TIME OF TP STUDY AND ALSO DUR ING THE PROCEEDINGS BEFORE THE DRP, THE COMPLETE ANNUAL REP ORT OF THE SAID COMPANY WAS NOT AVAILABLE, BUT NOW THE DETAILS ARE AVAILABLE IN THE PUBLIC DOMAIN AND THEREFORE, PRAYED THAT THE SAID COMPANY BE TAKEN AS COMPARABLE TO THE ASSESSEE. 14. THE LEARNED DR SUBMITTED THAT THE ISSUE MAY BE REMANDED TO THE FILE OF THE AO TO EXAMINE THE COMPA RABILITY OF THIS COMPANY AND TO INCLUDE IT IN THE FINAL LIST OF COMPARABLES IF IT IS SO COMPARABLE. 15. IN VIEW OF THE RIVAL SUBMISSIONS, WE DEEM IT FI T AND PROPER TO REMAND THIS GROUND TO THE FILE OF THE AO/ TPO FOR RE- CONSIDERATION AND RE-COMPUTATION OF ALP IN ACCORDAN CE WITH LAW. 16. AS REGARDS ADDITIONAL GROUND OF APPEAL NO.2 FOR EXCLUSION OF PROJECTS & DEVELOPMENT INDIA LTD FROM THE FINAL LIST OF COMPARABLES, THE ASSESSEE HAS FILED A PETITION FOR ADMISSION OF THE ADDITIONAL GROUND. IT IS STATED BY THE ASSESSEE THA T THE ASSESSEE HAD ITSELF TAKEN THIS COMPANY AS COMPARABLE INADVER TENTLY, THOUGH IT IS A GOVT. COMPANY AND HAS DIVERSIFIED SE T OF ACTIVITIES. IT IS SUBMITTED THAT THE ASSESSEE IS NOW SEEKING TO EXCLUDE THIS ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 13 OF 18 COMPARABLE COMPANY SINCE IT IS NOT COMPARABLE TO TH E ASSESSEE. FOR ADMISSION OF THE ADDITIONAL GROUND OF APPEAL, TH E LEARNED COUNSEL HAS PLACED RELIANCE UPON THE FOLLOWING DECI SIONS: I) CIT VS. S.NELLIAPPAN (66 ITR 722 (S.C) II) CIT VS. KANPUR COAL SYNDICATE (53 ITR 225 (S.C) III) JUTE CORPORATION OF INDIA LTD (187 ITR 688 (S. C) IV) NEW INDIA INDUSTRIES LTD (207 ITR 1010 (GUJ.) V) UNION COAL CO. LTD (70 ITR 45 (CAL.) VI) NTPC VS.CIT (229 ITR 383 (S.C) VII) ASHOK VARDHAN BIRLA VS. CWT (208 ITR 958 (BOM. ) VIII) CONTROLLER OF ESTATE DUTY VS. R. BRAHADEESWAR AM (163 ITR 680 (MAD.) IX) INAROO LTD. VS. CIT (204 ITR 312 (BOM.) X) CIT VS. GOVINDRAM BROS. P. LTD (141 ITR 626 (BO M.) 17. THE LEARNED DR, ON THE OTHER HAND, OBJECTED TO THE ADMISSION OF THE ADDITIONAL GROUNDS OF APPEAL. ACCO RDING TO HIM, THE ASSESSEE ITSELF HAS TAKEN THIS COMPANY AS COMPA RABLE AND THEREFORE, IS NOW PRECLUDED FROM OBJECTING TO ITS C OMPARABILITY BEFORE THE TRIBUNAL FOR THE FIRST TIME. 18. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT IN ALL THE DECISIONS (CITED SUPRA), RELIED UPON BY THE ASSESSEE, IT HAS BEEN HELD THAT THE TRI BUNAL HAS POWERS TO ENTERTAIN AND ADMIT AN ADDITIONAL GROUND OF APPEAL SUBJECT TO THE LIMITS, IF ANY, PRESCRIBED BY THE ST ATUTORY PROVISIONS. UNDISPUTEDLY, THE ASSESSEE HAS TAKEN TH IS COMPANY AS COMPARABLE IN ITS OWN TP STUDY AND HAS NOT OBJECTED TO EITHER BEFORE THE AO OR BEFORE THE DRP. BUT THE ASSESSEE I S NOT PRECLUDED FROM RAISING A GROUND AGAINST ITS COMPARA BILITY BEFORE THE TRIBUNAL WHICH IS THE FINAL FACT FINDING AUTHOR ITY AND IS THE FIRST APPELLATE AUTHORITY AS FAR AS THE TP MATTERS ARE CONCERNED. THEREFORE, IN OUR OPINION, THE ASSESSEE IS AT LIBER TY TO QUESTION THE ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 14 OF 18 COMPARABILITY OF PROJECTS & DEVELOPMENT INDIA LTD B EFORE THE TRIBUNAL. THEREFORE, WE ADMIT THE ADDITIONAL GROUND OF APPEAL. 19. ON THE MERITS OF THE SAID GROUND, THE LEARNED C OUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE ANN UAL REPORT OF THE SAID COMPANY WHICH IS PLACED AT PAGE 203 OF THE PAPER BOOK WHEREIN IT IS CLEARLY STATED THAT IT IS A GOVT. OF INDIA UNDERTAKING. IN SUPPORT OF ITS CONTENTION THAT A GOVT. UNDERTAKI NG CANNOT BE TAKEN AS A COMPARABLE TO PRIVATE COMPANIES LIKE THE ASSESSEE HEREIN WHICH OPERATE IN A TOTALLY DIFFERENT AND RIS K BEARING ENVIRONMENT, THE LEARNED COUNSEL FOR THE ASSESSEE P LACED RELIANCE UPON THE FOLLOWING DECISIONS: I) CIT VS. THYSSEN KRUPP INDUSTRIES INDIA (P) LTD ( 2016) 385 ITR 612 (BOM.) II) M/S. THYSSEN KRUPP INDUSTRIES INDIA P LTD. VS. ACIT IN ITA NO.6466/MUM/2012. III) KHF COMPONENTS P LTD VS. INCOME TAX OFFICER (20 16) 71 TAXMANN.COM 52 (BANG.TRIB) IV) INTERNATIONAL SOS SERVICES INDIA P LTD VS. DCIT (2016) 67 TAXMANN.COM 73 (DEL.TRIB.) V) ACIT VS. CHEMTEX GLOBAL ENGINEERS P LTD IN ITA NO.3590/MUM/2010. 20. THE LEARNED DR, HOWEVER, OPPOSED THE SAID CONTE NTION STATING THAT EVEN THOUGH THE PROJECTS & DEVELOPMENT INDIA LTD IS A GOVERNMENT COMPANY, IT IS NOT RESTRICTED TO EXECU TING ONLY GOVT. PROJECTS, BUT AS SEEN FROM THE ANNUAL REPORT, IT AL SO EXECUTES PRIVATE CONTRACTS. THEREFORE, ACCORDING TO HIM, IT CANNOT BE SAID THAT GOVT. COMPANIES ARE WORKING/OPERATING ONLY IN PROTECTIVE ATMOSPHERE AND SHOULD NOT BE INCLUDED IN THE FINAL LIST OF COMPARABLES. ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 15 OF 18 21. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE HON'BLE BOMBAY HIGH COU RT IN THE CASE OF CIT VS. THYSSEN KRUPP INDUSTRIES INDIA (P) LTD (CITED SUPRA) HAS CONSIDERED THIS ISSUE AT LENGTH AND HAS HELD THAT THE PUBLIC SECTOR UNDERTAKINGS WERE NOT DRIVEN BY PROFI T MOTIVE ALONE BUT SUCH OTHER CONSIDERATIONS ALSO WEIGH SUCH AS DI SCHARGE OF SOCIAL OBLIGATIONS ETC. AND HENCE THEY CANNOT BE CO NSIDERED AS COMPARABLE TO THE PRIVATE COMPANIES. RELEVANT PORTI ON OF THE ORDER IS REPRODUCED HEREUNDER: 5. RE QUESTION (B) : (A) THE GRIEVANCE OF THE RESPONDENT ASSESSEE BEFORE THE TRIBUNAL WAS THAT M/S. ENGINEERS INDIA LTD. HAS BEEN ERRONEOUSLY INTRODUCE D AS A COMPARABLE BY THE TPO FOR DETERMINING THE ALP OF THE RESPONDENT ASSES SEE'S INTERNATIONAL TRANSACTIONS. THE IMPUGNED ORDER OF THE TRIBUNAL RE CORDS THE FACT THAT THE ENGINEERING INDIA LTD. IS A GOVERNMENT COMPANY AND ITS ANNUAL REPORT INDICATES THAT A SUBSTANTIAL PART OF ITS REVENUE IN EXECUTION OF TURNKEY PROJECTS AROSE OUT OF EXECUTING PROJECTS OF PUBLIC SECTOR UNDERTAKINGS. I N THE CIRCUMSTANCES, THE IMPUGNED ORDER OF THE TRIBUNAL HOLDS THAT THE ENGIN EERS INDIA LTD. COULD NOT BE CONSIDERED TO BE COMPARABLE FOR THE REASON THAT CON TRACTS BETWEEN PUBLIC SECTOR UNDERTAKINGS ARE NOT DRIVEN BY PROFIT MOTIVE ALONE BUT OTHER CONSIDERATION ALSO WEIGH IN SUCH AS DISCHARGE OF SOCIAL OBLIGATIONS ET C. THUS, IT IS NOT COMPARABLE. MOREOVER, FROM THE ANNUAL REPORT, IT IS CLEAR THAT THE REVENUE EARNED IN EXECUTING TURNKEY PROJECT FOR OTHER PUBLIC SECTOR UNDERTAKING S WAS MUCH MORE THAN THE FILTER OF 25%, WHICH HAS BEEN APPLIED BY THE TPO IN HIS ORDER UNDER SECTION 92CA(3) OF THE ACT, WHILE TAKING TRF LTD. AS A COMP ARABLE ON THE GROUND THAT ITS RELATED PARTY TRANSACTION WAS NOT IN EXCESS OF 25% OF ITS TOTAL TURNOVER. THUS, APPLYING CONSISTENT FILTER OF 25% OR LESS OF RELATE D PARTY TRANSACTION ALONE TO BE CONSIDERED COMPARABLE, ENGINEERS INDIA LTD. COULD N OT BE CONSIDERED TO BE COMPARABLE. (B) WE FIND THAT THE VIEW TAKEN BY THE TRIBUNAL IN THE IMPUGNED ORDER IS A REASONABLE AND POSSIBLE VIEW. NOTHING HAS BEEN SHOWN WHICH WOULD J USTIFY OUR INTERFERENCE IN THE IMPUGNED ORDER OF THE TRIBUNAL EXCLUDING E NGINEERS INDIA LTD. FROM THE LIST OF COMPARABLES. (C) IN THE ABOVE VIEW, QUESTION (B) AS FRAMED ALSO DOES NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. THUS, NOT ENTERTAINED. THE OTHER CASE LAW RELIED UPON BY THE LEARNED COUNS EL FOR THE ASSESSEE IS ALSO TO THIS EFFECT ONLY. THEREFORE, WE DIRECT THE AO TO ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 16 OF 18 EXCLUDE THE COMPANY M/S. PROJECTS & DEVELOPMENT IND IA LTD FROM THE FINAL LIST OF COMPARABLES AND THE ADDITIONAL GR OUND OF APPEAL NO.2 IS ACCORDINGLY ALLOWED. 22. AS REGARDS GROUND NO.5 AGAINST THE DISALLOWANCE OF THE CLAIM OF THE ASSESSEE U/S 10A OF THE ACT, AMOUN TING TO RS.1,58,84,238 FOR NON FURNISHING OF FORM NO.56F, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THOUGH THE ASSESSEE HAS NOT FILED FORM NO.56F ALONG WITH THE RETURN OF INCOM E, IT HAS FILED THE SAME BEFORE THE DRP AND THEREFORE, THE DRP OUGH T TO HAVE CONSIDERED THE CLAIM OF DEDUCTION OR OUGHT TO HAVE DIRECTED THE AO TO CONSIDER THE CLAIM OF DEDUCTION U/S 10A OF TH E ACT. IN SUPPORT OF HIS CONTENTION THAT NON FURNISHING OF FO RM NO.56F IS ONLY AN IRREGULARITY, AND IS A CURABLE DEFECT, HE P LACED RELIANCE UPON THE FOLLOWING DECISIONS: I) CIT VS. AMERICAN DATA SOLUTIONS INDIA P LTD (201 4) 223 TAXMAN 143 (KAR.) II) CIT VS. MEDICAPS LTD (2010) 323 ITR 554 (MP) III) CIT VS. ACE MULTITAXES SYSTEMS P LTD (2009) 31 7 ITR 207 (KAR.) IV) ZENITH PROCESSING MILLS VS. CIT (1996) 134 CTR 2 88 (GUJ.) 23. THE LEARNED DR, HOWEVER, SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW AND PLACED RELIANCE UPON THE JUDG MENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. NAGPUR HOTEL OWNERS REPORTED IN (2001) 247 ITR 0201 WHEREIN IT W AS HELD THAT NON FURNISHING OF AUDIT REPORT ALONG WITH THE RETUR N OF INCOME IS FATAL TO THE CLAIM U/S 11 OF THE ACT.. 24. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE IS REQUIRED TO FILE FORM NO.56F ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 17 OF 18 ALONG WITH THE RETURN OF INCOME TO ENABLE THE AO TO EXAMINE THE ALLOWABILITY OF AND ALSO TO COMPUTE THE DEDUCTION U /S 10A OF THE ACT. THE HON'BLE SUPREME COURT IN THE CASE OF CIT V S. NAGPUR HOTEL OWNERS (CITED SUPRA) WAS CONSIDERING THE CASE OF AN ASSESSEE CLAIMING EXEMPTION U/S 11 OF THE ACT AND T HE HON'BLE SUPREME COURT HAS HELD THAT FURNISHING OF RETURN SU BSEQUENT TO THE ASSESSMENT IS NOT TO BE CONSIDERED. WE FIND THA T THE ASSESSMENT IN THE CASE OF THE ASSESSEE BEFORE US W AS STILL OPEN AS THE ASSESSEE HAS FILED ITS OBJECTIONS BEFORE THE DR P AGAINST THE DRAFT ASSESSMENT ORDER AND THE FINAL ASSESSMENT ORD ER IS PASSED ONLY PURSUANT TO THE DIRECTIONS OF THE DRP U/S 144C (13) OF THE ACT. THEREFORE, THE DECISION OF THE HON'BLE SUPREM E COURT IN THE CASE OF THE CIT VS. NAGPUR HOTEL OWNERS IS NOT STRI CTLY APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE AS IN THE ASSESSEES CASE, THE ASSESSMENT ORDER HAS NOT YET BEEN PASSED AND TH E ASSESSEE HAS FILED THE RELEVANT INFORMATION BEFORE THE DRP. THEREFORE, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE OF THE C OMPUTATION OF DEDUCTION U/S 10A OF THE ACT TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY THE CLAIM IN ACCORDANCE WITH LAW AFTER TA KING NOTE OF FORM 56F AND OTHER DOCUMENTS FILED BY THE ASSESSEE BE FORE THE DRP. GROUND NO.5 IS THEREFORE, TREATED ALLOWED FOR STATISTICAL PURPOSES. 25. AS REGARDS GROUND NO.6 THE ASSESSEE IS CLAIMING CONSEQUENTIAL RELIEF AS REGARDS UNABSORBED DEPRECIA TION CONSEQUENT TO THE ORDER OF THE CIT (A) THE EARLIER A.Y. THE RELIEF SOUGHT BY THE ASSESSEE IS CONSEQUENTIAL TO THE ORDE RS OF THE CIT (A) FOR THE EARLIER A.Y. THEREFORE, WE DO NOT SEE A NY REQUIREMENT TO GIVE ANY SPECIFIC DIRECTION DURING THE RELEVANT A.Y AS THE AO IS ITA NO 273 AND SA 26 OF 2016 WORLEY PARSONS INDIA P LTD THANE PAGE 18 OF 18 BOUND TO GIVE CONSEQUENTIAL RELIEF TO THE ASSESSEE. THUS, THIS GROUND OF APPEAL IS REJECTED. 26. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. S.A. NO.26/HYD/2016 27. IN VIEW OF THE ORDER PASSED IN ITA NO.273/HYD/2 016 BY ORDER EVEN DATED, THE STAY APPLICATION HAS BECOM E INFRUCTUOUS AND IS ACCORDINGLY REJECTED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST DECEMBER, 2016. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 21 ST DECEMBER, 2016. VINODAN/SPS COPY TO: 1 M/S. WORLEY PARSONS INDIA PVT LTD, 5 TH FLOOR, B WING, I-THINK TECHNO CAMPUS, OFF POKHRAN ROAD NO.2, THANE 400607 2 DY. COMMISSIONER OF INCOME TAX, CIRCLE 17(2) AAYA KAR BHAVAN, BASHEERBAGH, HYDERABAD 3 DISPUTE RESOLUTION PANEL (DRP) HYDERABAD 4 DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) I T TOWERS, HYDERABAD 5 THE ADDL. CIT (T.P) HYDERABAD 6 THE DR INCOME TAX APPELLATE TRIBUNAL HYDERABAD 7 GUARD FILE BY ORDER
