WESTERN UNION SERVICES INDIA P.LTD, MUMBAI V. DCIT CIR 10(1), MUMBAI

ITA 7619/MUM/2012

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8325 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: K
• Next Hearing Date: 06-07-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 26-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UDAL RAJ SINGH
• Assessee Lawyers: ABHISHEK TILAK ARS
• Keywords: Transfer pricing; International transaction; Question of law
• Section: 143(3); 64; 43; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH J, MUMBAI BEFORE SHRI R.C. SHARMA (A.M.) & SHRI PAWAN SINGH ( JM) ITA NO. 7619/MUM/2012 (ASSESSMENT YEAR : 2008-09) WESTERN UNION SERVICES INDIA PRIVATE LTD, FORTUNE 2000 BUILDING, GROUND FLOOR, UNIT NO. G- 101, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI 400 051 PAN : AAACW5943M VS DY.CIT, CIR.10(1), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY SHRI ARIJIT CHAKRAVARTY & SHRI ABHISHEK TILAK ARS RESPONDENT BY SHRI UDAL RAJ SINGH CIT-DR DATE OF HEARING 09-01-2020 DATE OF PRONOUNCEMENT 15-01-2020 O R D E R PER PAWAN SINGH, JM : 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ASS ESSMENT ORDER PASSED UNDER SECTION (U/S) 143(3) READ WITH SECTION (R.W.S.) 144C(3) OF THE INCOME-TAX ACT, 1961 DATED 15-10-201 2, PASSED IN PURSUANCE OF DIRECTION OF DISPUTE RESOLUTION PANEL (DRP) MUMBAI, FOR ASSESSMENT YEAR 2008-09. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A COMP ANY ENGAGED IN THE BUSINESS OF CONSULTANCY AND ANCILLARY SERVICES, FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 28-09 -2008 DECLARING INCOME AT RS.4.31 CRORES. THE ASSESSEE, WHILE FILING RETURN OF INCOME, HAS REPORTED INTERNATIONAL TRANSA CTIONS WITH ITS 2 ITA 7619/MUM/2012 WESTERN UNION SERVICES INDIA P LTD ASSOCIATE ENTERPRISE (AE) ABOUT RENDERING OF CONSUL TANCY AND ANCILLARY SUPPORT SERVICES OF RS.27.08 CRORES. CON SEQUENT UPON REPORTING OF INTERNATIONAL TRANSACTIONS, A REFERENC E U/S 92CA WAS MADE TO TRANSFER PRICING OFFICER (TPO) FOR COMPUTAT ION OF ARMS LENGTH PRICE (ALP) WITH REGARD TO THE SAID INTERNAT IONAL TRANSACTION. THE ASSESSEE ADOPTED TRANSACTION NET MARGIN METHOD (TNMM) AS MOST APPROPRIATED METHOD AND SELECTED ASSESSEE AS T ESTED PARTY. THE ASSESSEE SELECTED FIVE COMPARABLES COMPANIES FO R BENCH MARKING ON THE BASIS OF WHICH, THE ASSESSEE CLAIMED ITS TRANSACTION AT ARMS LENGTH PRICE. THE ASSESSEE HAS SHOWN ITS PROFIT LEVEL INDICATOR (PLI) AT 16.33%. THE MARGIN OF FIVE COMP ARABLES AS PER TRANSFER PRICING STUDY REPORT (TPSR) WAS 16.52% AND ACCORDINGLY, THE ASSESSEE CLAIMED ITS INTERNATIONAL TRANSACTION WITH ITS AE AT ARMS LENGTH PRICE (APL). THE TPO, WHILE MAKING TR ANSFER PRICING ADJUSTMENT, OUT OF FIVE COMPARABLE COMPANIE S, EXCLUDED EMPIRE INDUSTRIES LTD AND TIMES INNOVATIVE MEDIA LT D ON FUNCTIONAL DISSIMILARITIES. AND ON THE BASIS OF TH E REMAINING THREE/ FINAL SET OF COMPARABLES, SUGGESTED UPWARD ADJUSTME NT OF RS.1.5 CRORES IN THE FOLLOWING MANNER:- SR.NO. NAME OF THE COMPANY AVERAGE UPDATED MARGIN FY 2007-08 1 AGRIMA CONSULTANTS INTERNATIONAL LTD - 2.69% 35.08% 3 ITA 7619/MUM/2012 WESTERN UNION SERVICES INDIA P LTD 2 IDC(INDIA) LTD 15.09% 14.71% 3 PRIYA INTERNATIONAL LTD (INDENTING SEGMENT) 19.03% 19.17% ARITHMETIC MEAN 22.98% ASSESSEES MARGIN 16.33% PARTICULARS YEAR ENDED 31 - MAR - 08 AMOUNTS IN RS. TOTAL OPERATING COST 23,28,30,131 ARM S LENGTH PLI (OP/OC) AS PER 3 FINAL COMPARABLES @22.98% 5,35,04,364 95% OF AL REVENUE (95% OF (A) 27,20,17,770 TRANSACTION PRICE (ACTUAL REVENUE RECEIVED)(B 27,08 ,39,759 AMOUNT OF ADJUSTMENT TO TOTAL INCOME (A-B) 1,54,94, 736 3. ON THE RECEIPT OF REPORT OF TPO, THE AO PASSED DRAF T ASSESSMENT ORDER UNDER SECTION 143(3) RWS 144C(3), COPY OF WHI CH WAS SERVED ON THE ASSESSEE. THE ASSESSEE, ON RECEIPT OF DRAFT ASSESSMENT ORDER, FILED OBJECTION BEFORE DISPUTE RESOLUTION PENAL (DR P). THE DRP, REJECTED THE OBJECTIONS FILED BY THE ASSESSEE AND U PHELD THE UPWARD ADJUSTMENT SUGGESTED BY TPO VIDE ITS DIRECTION DATE D 29-09-2012. ON RECEIPT OF DRP DIRECTION DATED 29-09-2012, THE A O PASSED THE FINAL ASSESSMENT ORDER DATED 15-10-2012 U/S 143(3) R.W.S. 144C(13) OF THE ACT. THUS, AGGRIEVED BY THE UPWAR D ADJUSTMENT IN THE ASSESSMENT ORDER, THE ASSESSEE HAS FILED PRE SENT APPEAL BEFORE US. THE ASSESSEE HAS RAISED THE FOLLOWING G ROUNDS OF APPEAL:- GROUND 1 - TRANSFER PRICING ADJUSTMENT RELATING TO INTERNATIONAL TRANSACTION OF PROVISION OF SUPPORT SERVICES OF RS. 15,494,736 4 ITA 7619/MUM/2012 WESTERN UNION SERVICES INDIA P LTD 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED TRANSFER PRICING OFFICER ('TPO') AND THE LEARNED AS SESSING OFFICER ('AO') UNDER THE DIRECTIONS OF THE HON'BLE DISPUTE RESOLUTION PANEL ('DRP') ERRED ON FACTS AND IN LAW IN MAKING AN ADDI TION OF RS. 15,494,736 TO THE PROVISION OF SUPPORT SERVICES TRA NSACTION OF THE APPELLANT BASED ON THE PROVISIONS OF CHAPTER X OF T HE INCOME-TAX ACT, 1961 ('THE ACT'). 2. THE LEARNED AO/TPO UNDER THE DIRECTIONS OF THE HON'BLE DRP ERRED ON FACTS AND IN LAW BY ARBITRARILY REJECTING TWO OF THE LOWER MARGIN COMPANIES FROM THE SET OF COMPARABLES ARRIVED AT BY THE APPELLANT, THEREBY RESORTING TO CHERRY PICKING THOSE COMPANIES WITH HIGHER MARGINS AND ARBITRARILY DELETING TWO LOWER MARGIN C OMPARABLES WITHOUT APPRECIATING THE BROADER COMPARABILITY REQUIRED UND ER THE TRANSACTIONAL NET MARGIN METHOD. 3. THE LEARNED AO/TPO UNDER THE DIRECTIONS OF THE HON'BLE DRP ERRED ON FACTS AND IN LAW IN NOT ALLOWING APPROPRIATE ADJ USTMENTS NAMELY; RISK ADJUSTMENT TO THE COMPARABLES AS IS REQUIRED TO BE DONE IN ACCORDANCE WITH THE PROVISIONS OF RULE 10B(L)(E)(III) OF THE I NCOME-TAX RULES, 1962 TO ACCOUNT FOR DIFFERENCE BETWEEN THE RISK PROFILE OF THE APPELLANT AND THE ALLEGED COMPARABLES SELECTED BY THE LEARNED AO/ TPO. 4. THE LEARNED AO/TPO UNDER THE DIRECTIONS OF THE HON'BLE DRP ERRED ON FACTS AND IN LAW IN UPHOLDING / CONFIRMING THE A CTION OF THE TPO OF ARBITRARILY REJECTING THE WITHOUT PREJUDICE CONTENT ION OF THE APPELLANT TO PROVIDE THE BENEFIT / REDUCTION OF 5 PERCENT FROM T HE ARITHMETIC MEAN AS PROVIDED IN PROVISO TO SECTION 92C(2) OF THE ACT, W HILE DETERMINING THE ARM'S LENGTH PRICE FOR THE INTERNATIONAL TRANSACTIO N. 4. WE HAVE HEARD THE LEARNED AUTHORISED REPRESENTATIVE (LD. AR) OF THE ASSESSEE AND LEARNED DEPARTMENTAL REPRESENTATIV E (LD. DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON R ECORD. THE LD.AR OF THE ASSESSEE SUBMITS THAT GROUND NO. 1 OF THE APPEAL IS 5 ITA 7619/MUM/2012 WESTERN UNION SERVICES INDIA P LTD GENERAL AND NEEDS NO SPECIFIC ADJUDICATION. CONSID ERING THE STATEMENT OF THE LD.AR OF THE ASSESSEE THE GROUND N O.1 OF THE APPEAL IS DISMISSED, AS BEING GENERAL IN NATURE. 5. GROUND 2 RELATES TO SELECTION / EXCLUSION / INCLUSI ON OF COMPARABLES. THE LD. AR OF THE ASSESSEE SUBMITS TH AT HE PRESSES ONLY FOR THE EXCLUSION OF AGRIMA CONSULTANTS LTD. F ROM FINAL SET OF COMPARABLES. THE LD.AR FURTHER SUBMITS THAT IN CAS E OF AGRIMA CONSULTANTS LTD IS EXCLUDED FROM FINAL SET OF COMPA RABLES, THE MARGIN OF ASSESSEE WOULD BE WITHIN THE TOLERANCE RA NGE AND HE WOULD NOT PRESS FOR INCLUSION OR EXCLUSION OF OTHER COMPARABLE AND ANY OTHER GROUNDS OF APPEAL. THE LD.AR FOR THE ASSE SSEE FURTHER SUBMITS THAT THIS COMPARABLE CHOSEN BY ASSESSEE WHI LE MAKING TRANSFER PRICING STUDY REPORT (TPSR). HOWEVER, LAT ER ON, THE ASSESSEE REALISED THAT IN FACT, THIS COMPARABLE IS ACTUALLY NOT COMPARABLE WITH THE ASSESSEE. THE FUNCTION PERFORM ED BY THIS COMPARABLE IS ENTIRELY DIFFERENT. AGRIMA CONSULTAN TS LTD IS ENGAGED IN THE AREA SUCH AS SUGAR, CEMENT, CHEMICAL ENGINEERING, POWER TRANSMISSION AND IS IN THE FIELD OF MARKET RE SEARCH AND INTELLIGENCE GOVERNING; HENCE DIFFERENT FROM THE AC TIVITIES OF 6 ITA 7619/MUM/2012 WESTERN UNION SERVICES INDIA P LTD MARKETING SUPPORT SERVICES OF THE ASSESSEE. THERE IS DIFFERENCE IN THE SALARY COST IN THE BUSINESS MODULE. 6. THE LD.AR FURTHER SUBMITS THAT THERE IS NO BAR IN T HE LAW TO SEEK THE EXCLUSION OF COMPARABLES, IF THE SAME IS SELECT ED BY ASSESSEE AND IN FACT IS NOT COMPARABLE WITH THE FUNCTIONS OF THE TESTED PARTY. IN SUPPORT OF HIS SUBMISSION, THE LD.AR OF THE ASSE SSEE RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS TATA POWER SOLAR SYSTEMS LTD IN ITA NO.1120 OF 2014 DATED 126- 12-2016 AND IN PCIT VS VISTEON ENGINEERING CENTRE (INDIA) PVT L TD (ITA NO.1336 OF 2017) DATED 03-09-2019. 7. ON FUNCTIONAL DISSIMILARITY, THE LD.AR SUBMITS THAT THE ASSESSEE COMPANY (TESTED PARTY) IS MAINLY ENGAGED IN MARKETI NG SUPPORT SERVICES AND THE SERVICES RENDERED BY THE ASSESSEE TO ITS ASSOCIATE ENTERPRISES ARE NOT DISPUTED BY THE AO. THE LD.AR SUBMITS THAT IN THE FOLLOWING CASES, AGRIMA CONSULTANTS LTD HELD TO BE NOT COMPARABLE WITH THE COMPANY ENGAGED IN MARKETING SU PPORT SERVICES:- HAWORTH (INDIA)(P) LTD VS DCIT (2017) 88 TAXMANN.CO M 316 (PUNE TRIB) AY 2009-10 DOVER INDIA (P) LTD VS DCIT (2017) 81 TAXMANN.COM 2 45 (PUNE TRIB) AY 2009-10 DOVER INDIA (P) LTD VS DCIT (2015) 59 TAXMANN.COM 5 3 (PUNE TRIB) AY 2009-10 7 ITA 7619/MUM/2012 WESTERN UNION SERVICES INDIA P LTD AKZO NOBEL CHEMICALS (INDIA) LTD VS ACIT (2014) 51 TAXMANN.COM 117 (PUNE TRIB) AY 2009-10. 8. IN ALTERNATIVE SUBMISSION, THE LD.AR SUBMITS THAT D UE TO HIGH FLUCTUATION OF ITS REVENUE IN EARLIER AND SUBSEQUEN T ASSESSMENT YEAR THIS COMPARABLE WAS REJECTED/ EXCLUDED. THE LD.AR SUBMITS THAT PROFIT MARGIN OF THIS COMPARABLE IN AY 2006-07 WAS -.62% IN A.Y. 2007-08; IT WAS .51% IN AY 2008-09; IT WAS 35. 08%; NO DATA FOR AY 2009-10 IS AVAILABLE; HOWEVER, IN AY 2010-11 , THE PROFIT MARGIN WAS AGAIN -79.43%. THE LD.AR SUBMITS THAT V ARIOUS BENCHES OF TRIBUNAL IN FOLLOWING CASES HELD THAT WI DE FLUCTUATION IN MARGIN EARNED BY THE SAID CONCERN OVER A PERIOD OF TIME, THEREFORE, CANNOT BE INCLUDED FOR COMPARISON. RAMPGREEN SOLUTIONS PVT LTD VS CIT (2015) 60 TAXMAN N.COM 355 (DELHI HC), EXXON MOBIL CO LTD (2011) 12 TAXMANN.COM 84 (MUMBAI TRIB) MAERSK GLOBAL CENTRES (INDIA)(P) LTD VS ACIT (2014) 43 TAXMANN.COM 100 (MUM)(SB) LUBRIZOL ADVANCED MATERIALS INDIA P. LTD VS DCIT (2 015) 64 TAXMANN.COM 135 (AHD) (LEGAL PB PG.167.PARA 17) CUMMINS TURBO TECHNOLOGIES LIMITED ITA NO.161 &269/ PN/2013 9. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF TPO / DRP. THE LD. DR FOR THE REVENUE SUBMITS T HAT AT PAGES 22 & 23 OF THE TPSR, THE ASSESSEE ITSELF HAS SHOWN IT AS A PRIMARY CONSULTANCY SERVICE PROVIDER. M/S AGRIMA CONSULTANT S LTD IS ALSO PROVIDING CONSULTANCY SERVICES. THE LD. DR FURTHER SUBMITS THAT 8 ITA 7619/MUM/2012 WESTERN UNION SERVICES INDIA P LTD ASSESSEE ITSELF SELECTED THIS COMPARABLE. THE ASSE SSEE HAS NOT OBJECTED TO THE INCLUSION EITHER BEFORE THE TPO OR BEFORE DRP. THE LD. DR FOR THE REVENUE SUBMITS THAT IN CASE THE TRIBUNAL COMES TO THE CONCLUSION THAT AGRIMA CONSULTANTS LTD IS LIABLE TO BE EXCLUDED FROM FINAL SET OF COMPARABLES, THE MATTER MAY BE RESTORED TO THE FILE OF TPO / AO FOR CONSIDERATION OF THE MA TTER AFRESH. 10. IN THE REJOINDER SUBMISSION, THE LD.AR OF THE ASSES SEE SUBMITS THAT AT PAGE 27 OF TPSR IN FUNCTIONAL ANALYSIS, THE ASSE SSEE HAS CLEARLY MENTIONED THAT THE ASSESSEE HAS ENTERED INTO SUPPOR T SERVICES AGREEMENT WITH ITS AE FOR RENDERING CONSULTANCY AND ANCILLARY SUPPORT SERVICES. THE FUNCTION PERFORMED BY ASSES SEE IS CARRYING OUT MARKET RESEARCH, STATISTICAL ANALYSIS, IDENTIFY ING NEW LOCATION, SUB CONTRACT AND EXECUTION OF SUB REPRESENTATIVE AG REEMENT IN COMPLIANCE WITH STANDARD AGREEMENT. THE LD.TPO IN HIS REPORT HAS CLEARLY ACCEPTED THAT THE FUNCTION OF ASSESSEE PRIMARILY COMPRISE ASSISTING IN APPOINTMENT OF SUB REPRESENTA TIVE AGREEMENT, MAINTAINING EXISTING REPRESENTATIVE RELATIONSHIP, M ARKETING AND PROMOTION, TRAINING AND SUPPORT AND BUSINESS SUPPOR T TO AE AS RECORDED AT PARA 3 OF REPORT / ORDER OF TPO. 9 ITA 7619/MUM/2012 WESTERN UNION SERVICES INDIA P LTD 11. THE LD.AR FURTHER SUBMITS THAT IN CASE THE SUBMISSI ON OF ASSESSEE ABOUT EXCLUSION OF AGRIMA CONSULTANTS LTD IS ACCEPT ED, THE OTHER GROUNDS OF APPEAL RAISED BY ASSESSEE WOULD BECOME A CADEMIC. 12. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND HAVE GONE THROUGH THE ORDERS OF LOWER AUTHORITIES. WE H AVE ALSO DELIBERATED ON VARIOUS CASE LAWS RELIED UPON BY REP RESENTATIVES OF THE PARTIES. WE HAVE NOTED THAT THE FUNCTION PERFO RMED / UNDERTAKEN BY ASSESSEE IS DULY IDENTIFIED BY LD. TP O AT PARA 3 OF HIS ORDER, WHICH CONSISTS OF ASSISTING IN APPOINTME NT OF SUB- REPRESENTATIVE AGREEMENT, MAINTAINING EXISTING REPR ESENTATIVE RELATIONSHIP, MARKETING AND PROMOTION, TRAINING AND SUPPORT AND BUSINESS SUPPORT TO AE. THE INTERNATIONAL TRANSACT ION REPORTED BY ASSESSEE IS ALSO RELATED WITH CONSULTANCY AND ANCIL LARY SUPPORT SERVICES, THUS, THE ASSESSEE IN THE YEAR UNDER CONS IDERATION IS IN PRIMARILY IN SUPPORTED SERVICES. IN OUR VIEW, THE ONLY SHORT DISPUTE IN PRESENT APPEAL IS, IF THE COMPARABLE COMPANY, AG RIMA CONSULTANTS LTD IS LIABLE TO BE RETAINED IN FINAL S ET OF COMPARABLES OR TO BE EXCLUDED, ON THE BASIS OF FUNCTIONAL DISSI MILARITY AND FLUCTUATING MARGIN AND / OR DIFFERENT BUSINESS MODU LE. 10 ITA 7619/MUM/2012 WESTERN UNION SERVICES INDIA P LTD 13. THERE IS NO DISPUTE THAT THIS COMPARABLE WAS INITIA LLY SELECTED / INCLUDED BY ASSESSEE ITSELF WHILE PREPARING TPSR. BEFORE US, THE LD. AR OF THE ASSESSEE VEHEMENTLY SUBMITTED THAT TH IS COMPARABLE COMPANY IS NOT AT ALL COMPARABLE WITH THE ASSESSEE AS THE SAME IS ENGAGED IN DIFFERENT BUSINESS, SO FAR AS THE EXCLUS ION OF ASSESSEES OWN COMPARABLE IS CONCERNED. THE HONBLE JURISDICTI ONAL HIGH COURT IN CIT VS TATA POWER SOLAR SYSTEMS LTD (SUPRA ) WHILE CONSIDERING THE QUESTION OF LAW IF THE A COMPARABLE SELECTED BY THE ASSESSEE, IN THE LIST OF COMPARABLES FOR THE PURPOS E OF ARRIVING AT THE ALP IN RESPECT OF ITS INTERNATIONAL TRANSACTION S WITH ITS AE AND LATER ON SOUGHT TO WITHDRAW THE COMPARABLE FROM THE LIST OF COMPARABLES ON THE GROUND OF FUNCTIONAL DIFFERENCE, THE HONBLE COURT HELD THAT THERE IS NO BAR IN LAW FROM WITHD RAWING FROM THE LIST OF COMPARABLES, AND IF THE SAME IS FOUND TO BE INCLUDED ON ACCOUNT OF MISTAKE, AS OF FACTS IS NOT COMPARABLE. HONBLE HIGH COURT HELD THAT COMPARISON HAS TO BE MADE BETWEEN L IKE COMPANIES AND REQUIRE CARRYING OUT OF FUNCTION UNDERTAKEN, AS SET EMPLOYED AND RISK ASSUMED (FAR) ANALYSIS TO FIND OUT TO FIND THE SAME AND IN CASE OF FAR ANALYSIS FOUND WITH COMPARABLE ARE N OT COMPARABLE 11 ITA 7619/MUM/2012 WESTERN UNION SERVICES INDIA P LTD AND THEY ARE IN DIFFERENT AREA, THEN SUCH QUESTION WOULD NOT GIVE RISE TO ANY SUBSTANTIAL QUESTION OF LAW. 14. FURTHER, THE HONBLE JURISDICTIONAL HIGH COURT IN V ISTEON ENGINEERING CENTRE (INDIA) PVT LTD (SUPRA), WHILE C ONSIDERING SIMILAR QUESTION OF LAW HELD THAT WITHDRAWING OF A COMPARABLE COMPANY SELECTED BY ASSESSEE AS A COMPARABLE, IS NO LONGER RES INTEGRA IN VIEW OF ITS EARLIER DECISION ON CIT VS T ATA POWER SOLAR SYSTEMS LTD (SUPRA). THUS, CONSIDERING THE AFORESA ID FACTUAL AND LEGAL POSITION, WE ARE OF THE VIEW THAT UNDER LAW, THERE IS NO BAR TO SEEK THE EXCLUSION OF COMPARABLE, IF IT IS FOUND NO T FUNCTIONALLY COMPARABLE WITH THE ASSESSEE COMPANY. 15. NOW ADVERTING TO THE FUNCTIONAL COMPARABILITY OF AG RIMA CONSULTANTS LTD, THE LD.AR OF THE ASSESSEE WHILE MA KING HIS SUBMISSION HAS DRAWN OUR ATTENTION ON THE BUSINESS PROFILE OF AGRIMA CONSULTANTS LTD AS EXTRACTED FROM WEBSITE OF THIS COMPARABLE, WHEREIN THIS COMPARABLE IS SHOWN TO HAV E ENGAGED IN CEMENT AND BUILDING MATERIAL, RIGID PACKAGING, SUGA R, HORTICULTURE AND FLORICULTURE, ENGINEERING, CONSULTANCY IN AGRO CHEMICAL FINANCIAL SERVICES INTERNATIONAL TRADE, SUPPORT ENT ERTAINMENT AND FOOD SERVICES. THE P&L ACCOUNT OF THIS COMPARABLE IS ALSO PLACED 12 ITA 7619/MUM/2012 WESTERN UNION SERVICES INDIA P LTD ON RECORD ON PAGES 50 & 51 OF THE PAPER BOOK. THE CO-ORDINATE BENCH OF PUNE TRIBUNAL IN DOVER (INDIA) P LTD (SUPR A) WHILE CONSIDERING THE COMPARABILITY OF AGRIMA CONSULTANTS LTD HELD THAT A COMPANY ENGAGED IN SOFTWARE SERVICES FUNCTION MAR KETING SUPPORT SERVICES, DISTRIBUTION AND MANUFACTURING FU NCTIONS HELD THAT AGRIMA CONSULTANTS LTD IS PROVIDING CONSULTANC Y SERVICES OF A LEADING FINANCIAL INSTITUTION IN OUTSIDE INDIA AND THAT ASSESSEE WAS PROVIDING MARKET SUPPORT SERVICES TO ITS GROUP COMP ANIES, IS NOT COMPARABLE WITH THE ACTIVITY OF AGRIMA CONSULTANTS LTD. THE RELEVANT PART OF DECISION OF CO-ORDINATE BENCH IS E XTRACTED BELOW:- 10. HOWEVER, DURING THE COURSE OF HEARING, THE LEA RNED AUTHORIZED REPRESENTATIVE FOR THE LESSEE RESTRICTED HIS OBJECT IONS TO THE INCLUSION OF AGRIMA CONSULTANTS INTERNATIONAL LIMITED 'THE PLEA OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE U S WAS THAT THE ASSESSEE WAS A BPO TYPE OF COMPANY, WHEREAS AGRIMA CONSULTANTS INTERNATIONAL LIMITED WAS A KNOWLEDGE BASED COMPANY . OUR ATTENTION WAS DRAWN TO THE WEBSITE EXTRACT OF M/S. AGRIMA CON SULTANTS INTERNATIONAL LIMITED, WHICH IS PLACED AT PAGE 52 O F THE PAPER BOOK, IN WHICH IT IS PROVIDED THAT AGRIMA CONSULTANTS INTERN ATIONAL LIMITED WAS AN APPROVED CONSULTANCY CONCERN TO LEADING FINANCIA L INSTITUTIONS AND WAS OFFERING ITS SERVICES IN FIELDS SUCH AS SUGAR, CEMENT CHEMICAL ENGINEERING, POWER, ETC. THE PLEA OF THE ASSESSEE B EFORE US IN THIS REGARD WAS THAT THE SAID COMPANY WAS FUNCTIONALLY D IFFERENT FROM THE TESTED PARTY AND HENCE, THE MARGINS OF THE SAID COM PANY COULD NOT BE APPLIED TO BENCHMARK INTERNATIONAL TRANSACTIONS OF THE ASSESSEE. 13 ITA 7619/MUM/2012 WESTERN UNION SERVICES INDIA P LTD 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE REFERRED TO THE ORDERS O AUTHORITIES BELOW AND POINTED OUT T HAT AGRIMA CONSULTANTS INTERNATIONAL LIMITED WAS BROADLY COMPA RABLE TO THE FUNCTIONS UNDERTAKEN BY THE ASSESSEE. 12. ON THE PERUSAL OF THE RECORD AND INFORMATION FURNI SHED BY THE ASSESSEE, AGRIMA CONSULTANTS NATIONAL LIMITED WAS F ORMED IN 1972 AND ENGAGED IN AREA SUCH AS SUGAR, CEMENT, CHEMICAL ENG INEERING, POWER TRANSMISSION, ETC, WHICH SERVICES ARE OFFERED TO CL IENTS IN DEVELOPING COUNTRIES. FURTHER, AGRIMA CONSULTANTS INTERNATIONA L LIMITED IS PROVIDING CONSULTANCY SERVICES TO LEADING FINANCIAL INSTITUTIONS IN AND OUTSIDE INDIA. ON THE OTHER HAND, THE ASSESSEE WAS AIDING MARKETING SUPPORT SERVICES TO VARIOUS GROUP ENTITIES AND THE SAME IS NOT COMPARABLE TO THE ACTIVITIES OF AGRIMA CONSULTANTS INTERNATIONAL LIMITED. WHILE BENCHMARKING THE INTERNATIONAL TRAN SACTIONS OF TESTED PARTY AND WHILE APPLYING TNM METHOD ENDEAVORS HAS B EEN TO SELECT SUCH COMPANIES, WHICH ARE FUNCTIONALLY SIMILAR. WHE RE THE COMPARABLES ARE FUNCTIONALLY DISSIMILAR TO THE TESTED PARTY, TH E MARGINS OF SUCH COMPANIES CANNOT BE UTILIZED FOR DETERMINING THE AR M'S LENGTH PRICE OF INTERNATIONAL TRANSACTIONS CARRIED OUT BY THE TESTE D PARTY. IN THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE FIND NO MERIT IN T HE SELECTION PROCESS CARRIED OUT BY THE TPO AND WE DIRECT THE TPO TO EXC LUDE THE MARGINS OF AGRIMA CONSULTANTS INTERNATIONAL WHILE BENCHMARKING THE ARM'S LENGTH PRICE OF INTERNATIONAL TRANSACTIONS OF THE ASSESSEE AND APPLYING THE MARGINS OF OTHER COMPARABLES AS SELECTED BY DRP, DE TERMINE THE ARM'S LENGTH PRICE OF INTERNATIONAL TRANSACTIONS OF ASSESSEE. 16. FURTHER, IN AKZO NOBEL CHEMICALS (INDIA) LTD VS ACIT (SUPRA), WHILE CONSIDERING THE COMPARABILITY OF AGRIMA CONSU LTANTS LTD WITH AN ASSESSEE ENGAGED IN MARKETING SALES SUPPORT SERVICES HELD THAT THIS COMPARABLE IS ENGAGED IN PROVIDING SUPPOR T SERVICES WITH RESPECT TO MARKET RESEARCH ( MARKET INTELLIGENT FUN CTION AND RELATED 14 ITA 7619/MUM/2012 WESTERN UNION SERVICES INDIA P LTD SERVICES). THE SERVICES IN THE FIELD OF MARKET RESE ARCH AND GATHERING OF INTELLIGENT GATHERING ARE QUITE DISTINCT. 17. SO FAR AS THE HIGH FLUCTUATING MARGIN IS CONCERNED , THIS COMPARABLE HAS SHOWN NEGATIVE MARGIN PROFIT MARGIN OF 8.62% IN AY 2006-07, 0.51% IN A.Y. 2007-08 AND 25.0-8% IN THE CURRENT AS SESSMENT YEAR. THE HONBLE DELHI HIGH COURT IN RAMPGREEN SO LUTIONS PVT LTD VS CIT (SUPRA) HELD THAT IT IS NECESSARY TO KEE P IN MIND THAT SUPERNORMAL PROFIT MAY IN CERTAIN CASES INDICATES A FUNCTIONAL DISSIMILARITY OR DISSIMILARITY WITH RESPECT TO A FE ATURE THAT HAS A MATERIAL BEARING ON THE PROFITABILITY. 18. FURTHER, THE MUMBAI TRIBUNAL IN EXXON MOBIL CO LTD (2011) 12 TAXMANN.COM 84 (MUMBAI) ACCEPTED THE EXCLUSION OF C OMPARABLE ON ACCOUNT OF ABNORMAL FALL IN TURNOVER. FURTHER, THE AHMEDABAD TRIBUNAL IN LUBRIZOL ADVANCED MATERIALS INDIA P. LTD VS DCIT (SUPRA) EXCLUDED THE COMPARABLE DUE TO FLUCTUATING MARGIN. IN VIEW OF THE AFORESAID FACTUAL AND LEGAL DISCUSSION, WE D IRECT THE AO / TPO TO EXCLUDE AGRIMA CONSULTANTS LTD FROM THE FINA L SET OF COMPARABLES AND RECOMPUTE THE ALP ON THE BASIS OF R EMAINING COMPARABLE COMPANIES. 15 ITA 7619/MUM/2012 WESTERN UNION SERVICES INDIA P LTD 19. CONSIDERING THE FACT THAT WE HAVE ACCEPTED THE PRIM ARY AND FOREMOST CONTENTION OF LD.AR OF THE ASSESSEE THAT I N CASE AGRIMA CONSULTANTS LTD IS EXCLUDED FROM THE FINAL SET OF C OMPARABLES, THE OTHER GROUNDS OF APPEAL RAISED BY ASSESSEE WOULD BE COME ACADEMIC. THEREFORE, CONSIDERING THE FACT THAT WE HAVE ALLOWED THE EXCLUSION OF AGRIMA CONSULTANTS LTD FROM FINAL SET OF COMPARABLES, THEREFORE, THE DISCUSSIONS ON THE OTHER COMPARABLES AND GROUNDS OF APPEAL RAISED BY THE ASSESSEE HAVE BECOME ACADEMIC. 20. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15-01-2020. SD/- SD/- (R.C. SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 15 TH JANUARY, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI