Interpid Travel Pty. Ltd.- India Branch Office, Delhi V. ADIT, New Delhi

ITA 5582/DEL/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8859 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 24-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 05-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR SINGH
• Assessee Lawyers: MEGHA AGARWAL
• Keywords: Transfer pricing; International transaction; Arm length price
• Section: 133(6); 10B

Judgement Text

1 ITA 5582/DEL/2012 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SHRI H.S. SIDHU: JUDICIAL MEMBER ITA NO. 5582/DEL/2012 A.Y. 2008-09 INTREPID TRAVEL PTY. LTD., VS. ASSTT. DIRECTOR O F INCOME-TAX, INDIA BRANCH OFFICE, CIRCLE 1(2), NEW DELHI. NEW DELHI. PAN: AACFI 1289 F ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI HIMANSHU S. SINHA; SH. MANONEET DALAL & MS. MEGHA AGARWAL AR RESPONDENT BY : SHRI AJIT KUMAR SINGH CIT(DR ) DATE OF HEARING : 24-02-2015 DATE OF ORDER : 27-02-2015. O R D E R PER S.V. MEHROTRA, A.M:- THIS APPEAL, PREFERRED BY THE ASSESSEE, IS DIRECTE D AGAINST THE ASSESSMENT ORDER DATED 19-09-2012, FRAMED BY THE A O PURSUANT TO DRP DIRECTIONS U/S 144C, PERTAINING TO ASSESSMENT YEAR 2007-08. 2. BRIEF FACTS ARE THAT THE ASSESSEE FOR THE RELEV ANT ASSESSMENT YEAR FILED IT RETURN OF INCOME DECLARING INCOME OF RS. 1986319 /-. THE ASSESSEE HAD ENTERED INTO FOLLOWING INTERNATIONAL TRANSACTIONS: 2 ITA 5582/DEL/2012 NO. DESCRIPTION OF TRANSACTION METHOD PLI VALUE (I N RS.) 1. PROVISION OF COORDINATION AND SUPPORT SERVICES TNMM OP/TC 8,89,01,984 2. REIMBURSEMENTS MADE TO AES NA NA 10,53,691 3. REIMBURSEMENTS RECEIVED FROM AES NA NA 2,84,623 2.1. THE AO MADE A REFERENCE TO TPO TO DETERMINE TH E ALP U/S 92C(3) IN RESPECT OF AFOREMENTIONED TRANSACTIONS. THE ASSESSE ES OPERATING MARGINS TO COST WAS 4.25%. IN ORDER TO JUSTIFY ITS ALP, THE ASSESSE E HAD TAKEN 12 COMPARABLES, WHICH ARE REFERRED IN PARA 4.3 OF TPOS ORDER. THE TPO ONLY ACCEPTED TWO COMPARABLES OUT OF 12, SELECTED BY ASSESSEE AND REJ ECTED THE REST OF THE TEN. HE RESORTED TO SEARCH SUITABLE COMPARABLES AND SELECTE D TEN MORE COMPARABLES AND THUS DETERMINED THE PLI AT 21.48%. THE ASSESSEE FIL ED OBJECTION BEFORE DRP AND THE DRP EXCLUDED 3 COMPARABLES AFTER WHICH THE AO FINALLY DETERMINED THE OPERATING PROFIT AT 15.23%. BEING AGGRIEVED, THE AS SESSEE IS IN APPEAL BEFORE US AND HAS, INTER ALIA, TAKEN FOLLOWING GROUNDS OF APPEAL: 1.THAT THE LEARNED AO HAS AGREED ON THE FACTS AND I N LAW IN REJECTING THE TP DOCUMENTATION MAINTAINED BY THE AP PELLANT AND MAKING AN ADDITION OF RS. 92,82,443 ON ACCOUNT OF DIFFERENCE OF ARM LENGTH PRICE AS DETERMINED BY THE LEARNED TPO AND TRANSFER PRICING OF THE APPELLANT . THE ADDITION OF RS . 92,82 , 443 MADE TO THE INCOME OF THE APPELLANT IS ILLEGAL, ERRONEOUS AND CONTROVERSY TO LAW AND FACT. 2.THE HONORABLE DRP AND THE LEARNED AO HAS ERRED IN FACTS AND IN LAW BY CONSIDERING THE APPELLANT'S GROUND LE VEL COORDINATION & SUPPORT SERVICES AS PRIMARILY CONSULTANCY SERVICES. 3.THE LEARNED AO HAS ERRED IN FACTS AND IN LAW BY R EJECTING THE COMPARABLE COMPANIES SELECTED BY THE APPELLANT AND BY HAND PICKING THE COMPANIES BY PLACING ARBITRARY FILTERS . SOME OF SUCH FILTERS WRONGLY USED BY THE LEARNED AO ARE: - REJECTING COMPANIES WITH TURNOVER LESS THAN INR 1 CRORES: 3 ITA 5582/DEL/2012 - REJECTING COMPANIES HAVING DIFFERENT ACCOUNTING YEA RS; - ACCEPTING COMPANIES EARNING SUPER NORMAL PROFITS 4. THAT ON FACTS AND IN LAW, THE HON'BLE DRP AND LE ARNED AO HAVE ERRED IN REJECTING THE APPELLANT'S CLAIM TO US E OF MULTIPLE YEAR DATA FOR COMPUTING THE ARM'S LENGTH PRICE AND, INSTEAD , HAS ADHERED TO THE USE OF SINGLE YEAR UPDATED DATA TO CONCLUDE THE ARM'S LENGTH PRICE OF THE INTERNATIONA L TRANSACTION . 5 . THAT ON FACTS AND IN LAW , THE LEARNED AO HAS ENTERED IN DETERMINING THE ALP BY CONSIDERING DATA RELATING TO FY 2007- 08 ONLY AND USING POWERS U/S 133(6) TO OBTAIN INFORMATION FROM THIRD PARTIES, WHICH WERE NOT AVAI LABLE IN THE PUBLIC DOMAIN AT THE TIME OF COMPLIANCE WITH TP DOC UMENTATION REQUIREMENT. 6.THE HONORABLE DRP AND THE LEARNED AO HAS ERRED IN LAW AND FACTS BY NOT PROVIDING SUITABLE ADJUSTMENTS ON ACCOUNT OF RISK PROFILE OF THE ASSESSEE WITH COMPARAB L E COMPANIES . / 7.THE HONORABLE DRP & LEARNED AO HAS ERRED IN LA W BY NOT CONSIDERING THAT THE ADJUSTMENTS TO THE ALP, SHOULD BE LIMED TO THE LOWER END OF 5 PERCENT RANGE AS THE ASSESSEE HA S THE RIGHT TO EXERCISE THIS OPTION UNDER THE PROVISO TO SECTION 9 2C OF THE ACT. 8. THAT THE LEARNED AO HAS ERRED, IN LAW, AND ON FA CTS IN INITIATING PENALTY PROCEEDINGS UNDER SECTION 271(1) (C) OF THE ACT AGAINST T HE APPELLANT. 9. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEAR NED AO HAS ERRED IN LEVYING INTEREST UNDER SECTION 234A/B/ C OF THE ACT WHILE COMPLETELY DISREGARDING THE PROVISIONS OF THE ACT AND THE JUDICIAL PRECEDENTS. 3. GROUND NOS. 4 & 5 HAVE NOT BEEN PRESSED, HENCE T HE SAME STAND REJECTED BEING NOT PRESSED. 4. GROUND NOS. 1, 2 AND 3 DEAL WITH COMPARABLES. TH E MAIN DISPUTE IN THE PRESENT APPEAL IS WITH REGARD TO SELECTION OF 3 COM PARABLES BY TPO VIZ. (I) CHOKSHI LABORATORIES LTD. (II) INDUS TECHNICAL & FINANCIAL CONSULTANTS LTD. (III) WAPCOS LTD. (SEG.) 4 ITA 5582/DEL/2012 4.1. THE ASSESSEE IS A BRANCH OFFICE OF INTREPID TR AVEL PTY. LIMITED, HAVING HEAD OFFICE AT AUSTRALIA AND IS ENGAGED IN THE BUSINESS OF ORGANIZING PACKAGE TOURS AND TRIPS FOR TOURISTS IN VARIOUS PARTS OF THE WORLD IN CLUDING INDIA. THE ASSESSEE PROVIDES GROUND SUPPORT TRAVEL RELATED SERVICES, WH ICH INCLUDE ATTENDING TO THE ADMINISTRATION AND CO-ORDINATION OF THE TOURS, ARRA NGING HOTEL ACCOMMODATION, TRAVEL, TRANSPORT, TOUR GUIDES AND OTHER SUCH TRAVE L RELATED SERVICES TO INTREPID AUSTRALIA. INTREPID GROUP WAS STARTED IN 1989 IN AU STRALIA AS A TOUR AND TRAVEL AGENCY PROVIDING SPECIALIZED TOURS TO VARIOUS LOCAT IONS IN ASIA. INTREPID GROUP FOCUSES ON TRAVELLING IN WHICH TRAVELERS EXPERIENCE THE LOCAL PUBLIC, TRANSPORT FOR COMMUTING, SMALL SCALE LOCALLY OWNED ESTABLISHMENTS FOR LODGING AND EATING, TRAVELLING IN SMALL GROUPS WHILE STILL MAINTAINING HIGH TRAVELLING STANDARDS. THUS, PARTLY THE SERVICES RENDERED BY ASESSEE INCLUDED TH E FOLLOWING: - TO PROVIDE ON-GROUND CO-ORDINATION AND LOGISTICAL S UPPORT TO ENABLE THE SUCCESSFUL OPERATION OF THE INTREPID ITINERARIES. T HIS LOGISTICAL SUPPORT INCLUDES THE PROVISION OF GROUP LEADERS AND THE ORG ANIZATION OF LOCAL SUPPLIERS. - TO OPERATE THE TRIPS IN ACCORDANCE WITH INTREPIDS SAFETY AND RESPONSIBLE TRAVEL POLICIES; - TO OPERATE THESE TRIPS IN ACCORDANCE WITH INTREPID TRAVELS BRANDING GUIDELINES; - TO COMMUNICATE ANY NECESSARY ITINERARY ALTERATIONS TO INTREPID TRAVEL AT THE EARLIEST OPPORTUNITY; - TO ASSIST IN HANDLING OF ANY PASSENGER COMPLAINTS I N A PROMPT AND PROFESSIONAL MANNER. - TO NEGOTIATE COMPETITIVE FEES WITH LOCAL OPERATORS, FOR ITINERARIES AND PRODUCT AS REQUESTED BY INTREPID TRAVEL WITHIN AGRE ED TIMEFRAMES. 5 ITA 5582/DEL/2012 4.2. IN RESPECT OF TRANSACTIONS OF PROJECT SUPPORT SERVICES, THE ASSESSEE HAD BENCHMARKED THE SAME BY USING TNMM AS THE MOST APPR OPRIATE METHOD. THE PLI USED WAS OP/OC. THE CALCULATION OF OPERATING PROFIT BY THE ASSESSEE HAD BEEN CARRIED OUT AT AN ENTITY LEVEL. THERE IS NO DISPUTE ON THESE ISSUES. 4.3. THE ASESSEE HAS ALSO NOT PRESSED THE GROUND RE LATING TO SELECTION/ USE OF MULTIPLE YEAR DATA VIS A VIS CURRENT YEARS DATA FOR COMPUTING THE ALP. 4.4. THE ASSESSEES MAIN OBJECTION BEFORE DRP WAS T HAT IT WAS IN SUPPORTING/ COOPERATION SERVICES UNDER BROAD CATEGORY OF BUSI NESS SUPPORT WHEREAS THE COMPARABLES SELECTED BY TPO AND CONFIRMED BY LD. DR P WERE IN SOPHISTICATED ENGINEERING AND TECHNICAL CONSULTANCY HAVING DIFFER ENT FAR. LD. COUNSEL POINTED OUT THAT LD. DRP, AFTER CONSIDERING THE ASSESSEES OBJECTIONS, HAD EXCLUDED APITCO LIMITED, RITES LTD. AND VAPI WASTE & EFFLUENT MANAG EMENT. AS REGARDS THE THREE COMPARABLES IN DISPUTE VIZ. CHOKSHI LABORATOR IES LTD., INDUS TECHNICAL & FINANCIAL CONSULTANTS LTD.; AND WAPCOS LTD. (SEG.), LD. DRP DID NOT AGREE WITH THE ASSESSEES CONTENTION THAT IT WAS AN ENGINEERIN G COMPANY SINCE IT HAD CONSULTANCY SEGMENT ALSO. THE LD. DRP FURTHER OBSER VED THAT SINCE NEITHER THE DEPARTMENT NOR THE ASSESSEE HAD FOUND ANY CONSULTAN CY COMPARABLES IN THE TOURISM SECTOR, THEREFORE, THIS COMPARABLE COULD NO T BE REJECTED. 5. LD. COUNSEL POINTED OUT THAT CHOKSHI LABORATORIE S LTD WAS ENGAGED IN PROVIDING CALIBRATION AND LAB TESTING SERVICES, CON SULTANCY SERVICES AND POLLUTION CONTROL SERVICES OF VARIOUS PRODUCTS. THEREFORE, FUNCTIONALLY IT COULD NOT BE COMPARED WITH THE ASSESSEE. 5.1. AS REGARDS INDUS TECHNICAL & FINANCIAL CONSULT ANTS LTD., LD. COUNSEL POINTED OUT THAT THIS COMPANY WAS ENGAGED IN THE MANUFACTUR ING ACTIVITY, WHICH IS NOT 6 ITA 5582/DEL/2012 COMPARABLE ACTIVITY WITH THAT PERFORMED BY THE ASSE SSEE. FURTHER, ON THE WEB SITE OF THIS COMPANY, IT WAS NOTED AS UNDER: WE ARE ALSO A RENOWNED MANUFACTURER OF TMT BARS. W E AREA DYNAMIC AND FAST GROWING COMPANY WITH DIVERSE EXPOS URE IN MANY FIELDS. OUR FIRM HAS BEEN SERVING THE INDUSTRY FOR OVER TWO DECADES WITH A RANGE OF UNBEATABLE SERVICES. WI TH THE TWIN ADVANTAGES OF STRONG EXPERIENCE AND EXCELLENT EXPER TISE, WE ENJOY THE STRONG SUPPORT OF INNUMERABLE CLIENTS IN INDIA. 5.2. HE, THEREFORE, SUBMITTED THAT THIS COMPANY ALS O WAS NOT FUNCTIONALLY COMPARABLE WITH THE ASSESSEE BEING PERFORMING HIGH LY TECHNICAL NATURE. 5.3. AS REGARDS WAPCOS, LD. COUNSEL SUBMITTED THAT IT WAS ENGAGED IN PROVIDING SOPHISTICATED ENGINEERING CONSULTANCY SERVICES IN T HE FIELD OF INFRASTRUCTURE IN AREAS LIKE PORTS AND HARBOURS, ENVIRONMENTAL IMPACT ASSES SMENT, WATER AND SANITATION, MICRO CANALIZATION, RURAL ELECTRIFICATION BOTH IN I NDIA AS WELL AS OUTSIDE INDIA. IT WAS PROVIDING ENGINEERING AND TECHNICAL CONSULTANCY SERVICES WHICH ENTAIL COMPLETELY DIFFERENT FUNCTION, ASSET AND RISK PROFI LE AS COMPARED TO ASSESSEES ROUTINE COORDINATION AND SUPPORT SERVICES. 5.4. LD. COUNSEL SUBMITTED THAT IN VIEW OF RULE 10B (2)(B), THESE THREE COMPARABLES HAVE TO BE EXCLUDED. 5.5. LD. COUNSEL RELIED ON FOLLOWING DECISIONS: (I) DCIT VS. M/S MCI COM INDIA P. LTD. & ORS. (ITA NO. 4187/DEL/2010 & ORS DATED 30-8-2012), WHEREIN, IN THE TP STUDY, TH E ASSESSEES DESCRIPTION OF BUSINESS AND ITS COMPARABLE COMPANY WAS AS FOLLOWS: WATER AND POWER CONSULTANCY SERVICES (INDIA) LTD. (WAPCOS) WAPCOS PROVIDES CONSULTING IN THE DOMESTIC AND INTERNATIONAL WATER AND POWER SECTORS. SERVICES OFF ERED INCLUDE 7 ITA 5582/DEL/2012 MARKET INTELLIGENCE, FEASIBILITY STUDIES, PLANNING/ PROJECT FORMULATION, FIELD INVESTIGATIONS AND TE S TI N G, E N G IN EE R I NG DE S IG N , C ONTRACT MANAGE M E N T , QU A L ITY ASSUR A NCE & MA N AGE M E NT A ND HUM A N RESOURCE DE V ELOP M ENT . THE COM P A N Y H AS I D EN T I FI ED ITS BUSI N ESS ACTI V IT Y I N T O TWO BUSINESS SEG M E N T I.E. C ON S ULTANC Y & ENG I NE E RING PROJEC T S AND LUMP SUM TU RNK EY PROJ E CTS (AS P ER THE AN N UAL R E P OR T F OR F I NA N CIAL Y EAR 2003- 0 4) . WA PC O S H A S B E EN P R O V ID I NG CO N SU LT A N CY SERVI C ES IN A LL FACETS OF WATER RESO UR CES , POW E R A ND INFRASTR U CTURE SECTORS I N I N DIA A N D ABROAD . ' M A I N F I E L D S OF T HE COMPAN Y C O V ER IRRIGAT I ON , WATE R MANAGEMENT , DR A INAGE , G R OU ND WATE R E X P L ORAT I ON , DE V ELOPM E NT , FLOOD CON T R OL , RECLAMATION AN D RI V ER M A NAG E MENT , D AM AND RESER V OIR , POWER ENGINEERING ; HY D RO PO W ER GEN E RAT I ON ; AGRI C U L T UR A L DEV E LOPMENT ; WATE R WAYS ; S Y S TE MS S T UD IE S AN D IN F O R M ATION T ECHNOLOGY , HUMAN RESOURCES DEVEL OPM E N T. W APCOS HAS A L SO BEE N VE N T URIN G I NTO NEWE R FI E LDS SUCH AS SOFTWAR E D E V E LOPMENT , CIT Y D EVE LOPM E N T PLANS , FINANCIAL M AN AG EM E N T S Y S T EM TECH N ICAL ED U C A TI ON , QUAL I T Y CONTROL AND CONS T RU CT I ON SUPERVISION , ROAD S & BRI D GE S. ' 5.6. HE FURTHER POINTED OUT THAT HIGH RISK PROFILE OF EIL, RITES, WAPCOS AND TCE RENDERED THE COMPANYS FINANCIAL RESULTS NON-COMPAR ABLE TO THE MARGINS EARNED BY THE ASSESSEE FROM ITS MARKETING SUPPORT ACTIVITIES. THE TRIBUNAL, AFTER CONSIDERING THESE SUBMISSIONS, ACCEPTING THE FINDING OF FIRST A PPELLATE AUTHORITY, OBSERVING AS UNDER: WE AGREE WITH THE VIEW OF THE FIRST APPELLATE AUT HORITY THAT EIL, RITES, WAPCOS AND TCE ARE ENGINEERING COMPANIE S AND PROVIDE END-TO-END SOLUTIONS AND WHEREAS THE ASSESS SEE COMPANY PROVIDES MARKETING SUPPORT SERVICES TO THE PARENT 8 ITA 5582/DEL/2012 COMPANY, WHICH IS IN THE NATURE OF SUPPORT SERVICE AND HENCE NOT FUNCTIONALLY COMPARABLE. 5.7. LD. COUNSEL FURTHER SUBMITTED THAT THIS DECISI ON HAS BEEN CONFIRMED BY HONBLE DELHI HIGH COURT VIDE ITS ORDER DATED 29-5- 2013 IN THE CASE OF CIT VS. VERIZON INDI PVT. LTD. (ITA NO. 271/2013). (II) H&M HENNES & MAURITZ INDIA PVT. LTD. VS. DCIT (ITA NO. 4704/DEL/2012 DATED 12-4-2013). LD. COUNSEL POINTED OUT THAT IN THIS DECISION ALSO THE WAPCOS WAS EXCLUDED FROM COMPARABLES ON THE GROUND OF BEING TECHNICAL AND ENGINEERING COMPANIES NOT COMPARABLES TO ADMINISTRA TIVE SUPPORT SERVICES. (III) NORTEL NETWORKS INDIA P. LTD. VS. ADDL. CIT (ITA NO S. 4765/DEL/2011 & 427/DEL/2013 DATED 25-02-2014) IN THIS DECISION ALL THE EARLIER DECISIONS HAVE BEE N CONSIDERED AND IN PARAS 11 AND 11.1 OF ITS ORDER THE TRIBUNAL HAS OBSERVED AS UNDER: 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. APROPOS THE ISSUE OF COMPARABILITY AND THE EXCLUSION OF CHOKSI, RITES AND WAPCOS, DELHI TR IBUNAL IN THE CASES OF M/S MCI COM INDIA P. LTD. AND M/S VERIZON INDIA P. LTD. HAS HELD THAT COMPANIES LIKE EIL, RITES, WAPSOS AND TCE ARE ENGINEERING COMPANIES WHICH PROVIDE END TO END SOLUTIONS AND TH EREFORE THEY CANNOT BE COMPARED WITH ASSESSEES WHO PROVIDE MARKET ING SUPPORT SERVICES TO THE PARENT COMPANY. THEY WERE HELD TO B E FUNCTIONALLY NOT COMPARABLE WITH THEE ENGINEERING COMPANIES. 11.1. FOLLOWING THE ORDERS OF COORDINATE BENCHES OF ITAT IN THE CASES OF M/S MCI COM INDIA P. LTD.; M/S VERIZON IND IA P. LTD. (SUPRA); ESTEL IN ITA NO.584/BANGLORE/06AND OUR OWN DECISION IN CASE OF ACTIS ADVISERS PVT. LTD. ITA NO. 6390/DEL/2 012, WE HOLD THAT CHOKSI, RITES AND WAPCOS BEING FUNCTIONALLY DIFFEREN T CANNOT BE APPLIED AS APPROPRIATE COMPARABLE TO THE ASSESSEE. THEREFORE, THEY ARE TO BE EXCLUDED FROM TP ADJUSTMENT WHILE DETERMI NING THE ALP. 9 ITA 5582/DEL/2012 5.8. HE, THEREFORE, SUBMITTED THAT IN VIEW OF THESE DECISIONS, THESE THREE COMPARABLES BEING NOT FUNCTIONALLY COMPARABLES WITH THE ASSESSEES FAR, ARE TO BE EXCLUDED. 6. LD. CIT(DR) SUBMITTED THAT LD. DRP HAS NOT EXAMI NED CHOKSI LABORATORIES LTD. AND INDUS TECHNICAL & FINANCIAL CONSULTANTS LT D. AND HAS GIVEN FINDING ONLY WITH REGARD TO WAPCOS. THEREFORE, THE MATTER SHOULD BE RESTORED TO THE FILE OF LD. DRP. 7. IN REJOINDER, LD. COUNSEL POINTED OUT THAT ASSES SEE HAD RAISED SPECIFIC OBJECTION BEFORE LD. DRP, WHICH IS AVAILABLE AT PAG ES 12 & 13 OF THE OBJECTIONS RAISED BEFORE LD. DRP. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E PERUSED THE RECORD OF THE CASE. THERE IS NO GAIN SAYING THAT UNLESS THE COMP ARABLE IS FUNCTIONALLY SIMILAR TO THE TESTED PARTYS FUNCTION, THE SAME CANNOT BE INC LUDED IN THE LIST OF COMPARABLES FOR COMPUTING ALP AS PER THE PROVISIONS OF RULE 10B (2)(B). LD. DRP WHILE CONSIDERING THE COMPARABLE WAPCOS, INTER ALIA, OBSE RVED THAT NEITHER THE DEPARTMENT NOR THE ASSESSEE HAS FOUND ANY CONSULTAN CY COMPARABLES IN THE TOURISM SECTOR. THEREFORE, IT BECOMES IMPERATIVE THAT ONLY THOSE COMPARABLES SHOULD BE TAKEN INTO CONSIDERATION WHICH HAVE CLOSE SIMILARIT Y WITH THE FUNCTIONS CARRIED OUT BY TESTED PARTY. 8.1. AS REGARDS WAPCOS LTD., WE FIND THAT LD. DRP H AS APPROVED THE INCLUSION OF THIS COMPARABLE ON THE BASIS THAT THERE IS CONSULTA NCY SEGMENT OF WAPCOS. HOWEVER, NO SEGMENTAL DETAILS OF THIS COMPARABLE HA VE BEEN BROUGHT ON RECORD. 10 ITA 5582/DEL/2012 THEREFORE, SINCE THIS COMPARABLE WAS ADMITTEDLY AN ENGINEERING COMPANY, THE SAME COULD NOT BE INCLUDED IN THE LIST OF COMPARABL ES. THIS ASPECT IS ALSO COVERED BY VARIOUS DECISIONS NOTED IN LD. COUNSELS ARGUMEN TS. 8.2. AS REGARDS CHOKSHI LABORATORIES LTD. , IT IS N OT IN DISPUTE THAT THE SAID COMPARABLE WAS ENGAGED IN PROVIDING TESTING SERVICE S FOR VARIOUS PRODUCTS, CALIBRATION, POLLUTION CONTROL SERVICES AND THEREFO RE, WE FAILED TO APPRECIATE AS TO HOW THIS COULD AT ALL BE CONSIDERED COMPARABLE WIT H THE BUSINESS PROFILE OF ASSESSEE. THEREFORE, THIS HAS TO BE EXCLUDED FROM T HE LIST OF COMPARABLES. 8.3. AS REGARDS INDUS TECHNICAL & FINANCIAL CONSULT ANTS LTD., AS PER WEB SITE DETAILS, REPRODUCED EARLIER, THIS COMPANY WAS ENGAG ED IN THE MANUFACTURING ACTIVITY AND, THEREFORE, HAD COMPLETELY DIFFERENT F AR FROM THE TESTED PARTY. 8.4. ACCORDINGLY, IN VIEW OF ABOVE DISCUSSION, WE D IRECT THE AO TO EXCLUDE THE ABOVE THREE COMPARABLES FROM THE LIST OF COMPARABLE S SELECTED BY HIM. 9. GROUND NOS. 6 & 7: LD. COUNSEL POINTED OUT THAT AFTER EXCLUSION OF ABOVE THREE COMPARABLES FROM THE LIST OF COMPARABLES, THE PLI WOULD COME WITHIN (+)(-) 5% RANGE AND, THEREFORE, THIS GROUND HAS BECOME ACA DEMIC . 11 ITA 5582/DEL/2012 10. GROUND NO. 8 RELATING TO LEVY OF PENALTY, IS PR EMATURE AND STANDS REJECTED ACCORDINGLY. 11. GROUND NO. 9: THE CHARGING OF INTEREST U/S 234A /B/C IS CONSEQUENTIAL. THE AO SHALL RECALCULATE THE CHARGING OF INTEREST, IF A NY, WHILE GIVING EFFECT TO APPELLATE ORDER. 12. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 27-02-2015. SD/- SD/- (H.S. SIDHU ) ( S.V. MEHROTRA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27-02-2015. MP: C OPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR 12 ITA 5582/DEL/2012 DATE INITIAL 1. DRAFT DICTATED ON 24 .02.2015 PS 2. DRAFT PLACED BEFORE AUTHOR 25 .02.2015 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.