M/s. Philip Morris Services India S.A., New Delhi V. DDIT, New Delhi

ITA 827/DEL/2014

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5912 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I1
• Next Hearing Date: 30-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 13-02-2014

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: I-1, NEW DELHI BEFORE SHRI RS SYAL, VICE PRESIDENT AND SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA NO. 827/DEL/2014 A.Y. 2009-10 M/S PHILIP MORRIS SERVICES INDIA S.A. 8 TH FLOOR, DLF CENTRE PARLIAMENT STREET NEW DELHI PAN: AACCP2770K VS . DY.DIT CIRCLE 2(1) NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY SH. NEERAJ KR. JAIN, SH. SHAILY GUPTA, CA SH. SAHIL SHARMA, CA SH. AKSHAY UPPAL, CA DEPARTMENT BY SH. SANJAY I BARA, CIT, D.R. DATE OF HEARING 20/06/2018 DATE OF PRONOUNCEMENT 21/06/2018 ORDER PER K.NARASIMHA CHARY, JM THIS IS AN APPEAL PREFERRED BY THE ASSESSEE CHALLEN GING THE ORDER DATED 04/01/2014 PASSED BY THE LD. ASSESSING OFFICER (LD. AO) PURSUANT TO THE DIRECTIONS GIVEN BY THE DISPUTE RESOLUTION PANEL I I, NEW DELHI VIDE DIRECTIONS DATED 30/12/2013. 2. BRIEF FACTS OF THE CASE ARE THAT THEY PHILIP MOR RIS SERVICES INDIA SA (PMSI) IS THE ASSESSEE. THIS COMPANY WAS INCORPORATED IN S WITZERLAND AND OPERATES IN INDIA THROUGH ITS BRANCH OFFICE. IT IS ENGAGED IN THE BUSINESS OF IMPORT AND 2 PAGE 2 OF 20 DISTRIBUTION OF THE MARLBORO BRAND OF CIGARETTES, E XPORT OF TOBACCO LEAVES TO ITS ASSOCIATED ENTERPRISES AND PROVISION OF MARKET SUPP ORT SERVICES. THE MARKET SUPPORT SERVICES SEGMENT OF INDIAN BRANCH OFFICE PR OVIDES THE SERVICES LIKE REPRESENTATION SERVICES TO ASSOCIATED ENTERPRISES, CARRYING OUT MARKET RESEARCH WORK AND SHARING MARKET RELATED INFORMATION WITH AE S AND LOGISTIC SUPPORT TO AES FOR SUPPLY OF GOODS TO OTHER COUNTRIES, APART F ROM RENDERING SERVICES IN RESPECT OF THE OPERATIONS IN NEPAL AND BANGLADESH. SINCE THE SERVICES RENDERED IN RESPECT OF THE INDIAN OPERATIONS ARE CLOSELY LIN KED WITH THE TRADING OPERATIONS OF THE ASSESSEE, THE SAME HAS BEEN AGGRE GATED VIDE TRADING SEGMENT FOR THE PURPOSE OF BENCHMARKING ANALYSIS. I N CONSIDERATION OF THE PROVISION OF THESE SERVICES, THE PMSI INDIA WAS REM UNERATED ON A COST PLUS BASIS, WHEREBY THE ENTIRE COST INCURRED BY PMSI IND IA IN RELATION WITH PROVISION OF SERVICES IS REIMBURSED ALONG WITH A MARKUP OF 5% . 3. FOR THE ASSESSMENT YEAR 2009-10 THE ASSESSEE FIL ED THEIR RETURN OF INCOME ON 30/09/2009 DECLARING AN INCOME OF RS. 3,6 8,11,639/-AND REVISED THE SAME ON 26/03/2010 DECLARING AN INCOME OF RS. 3,69, 92,315/-OFFERING INTEREST EXPENSE OF RS. 1,80,676/-. SINCE THE ASSESSEE WAS C ARRYING OUT INTERNATIONAL TRANSACTIONS WITH ITS ASSOCIATE ENTERPRISES, THE MA TTER WAS REFERRED TO TRANSFER PRICING OFFICER (TPO) FOR EXAMINING THE SAME AT ARM S LENGTH PRICE. 4. THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANS ACTIONS REPRESENTING MARKET SUPPORT/BUSINESS SERVICES PROVIDED TO THE AS SOCIATED ENTERPRISES IS DETERMINED BY APPLYING TRANSACTIONAL LET MARGIN MET HOD (TNMM), OPERATING PROFIT TO TOTAL COST (OP/TC) RATIO IS TAKEN AS THE PROFIT LEVEL INDICATOR (PLI) IN THE TNMM ANALYSIS. THE PLI OF THE COMPANY IS ARRIVE D AT 10.06% ON COST WHEREAS THE AVERAGE PLI OF THE COMPARABLES IS ARRIV ED AT 6.06% AS PER THE ANALYSIS IN TP STUDY REPORT. FURTHER THE PLI OF THE COMPARABLE COMPANIES WAS 3 PAGE 3 OF 20 WORKED OUT BY ADOPTING WEIGHTED AVERAGE PER THE CUR RENT YEAR AND THE IMMEDIATELY PRECEDING 2 YEARS. 5. THE ASSESSEE SELECTED THE FOLLOWING 10 COMPARABL ES: NUMBER NAME OF THE COMPANY OP/OC FOR 1 . CONCEPT COMMUNICATION LTD 2.88% 2 . CYBER MEDIA RESEARCH LTD 10.93% 3 . EDCIL (INDIA) LTD 0.47% 4 . HINDUSTAN HOUSING COMPANY LIMITED 7.69% 5 . KESTONE INTEGRATED MKTD. SERVICES PRIVATE LIMITED - 4.86% 6 . QUADRANT COMMUNICATIONS LTD 5.96% 7 . HANSA VISION PRIVATE LIMITED 4.49% 8 . EMPIRE INDUSTRIES LTD (TRADING AND INDENTING) 9.44% 9 . PRIYA INTERNATIONAL LTD (INDENTING) 21.69% 10 . ENTERTAINMENT NETWORK (INDIA) LTD (EVEN SEGMENT) 1.05% ARITHMETICAL MEAN 5.97% 6. HOWEVER, LD. TPO, AFTER ANALYSING THE DATA BASES , ANNUAL REPORTS AND OTHER RELEVANT MATERIAL AND AFTER DUE CONSIDERATION OF THE ASSESSEES OBJECTIONS SELECTED THE FOLLOWING SEVEN COMPANIES A S COMPARABLES: NUMBER NAME OF THE COMPANY OP/OC 1. APITCO LTD 37.7 2. CAMEO CORP SERVICES 14.95 3. CYBER MEDIA RESEARCH LTD 10.44 4. GLOBAL PROCUREMENT CONSULTANTS LTD 35.89 4 PAGE 4 OF 20 5. KILLIK AGENCIES MARKETING LTD 29.48 6. TSR DARASHAW 26.98 7. QUADRANT COMMUNICATIONS LTD 5.96 AVERAGE 23.06 7. BASING ON THE ABOVE AVERAGE PLI OF COMPARABLES, LD. TPO COMPUTED THE ARMS LENGTH PRICE OF THE MARKET SUPPORT SERVICES RE NDERED BY THE ASSESSEE AT RS. 40,68,66,472/-AND SUGGESTED THE ADJUSTMENT OF R S. 4,54,50,662/-. FURTHER, LD. AO ALSO DISALLOWED A SUM OF RS. 5,48,27,751/-UN DER SECTION 40(I)(A) OF THE ACT. 8. MAIN PLANK OF OBJECTION TAKEN BY THE ASSESSEE IS AGAINST THE INCLUSION OF FILE COMPARABLES, NAMELY APITCO LTD., CAMEO CORPORA TE SERVICES, GLOBAL PROCUREMENT CONSULTANTS LTD, KILLIK AGENCIES AND MA RKETING LTD AND TSR DARASHAW LTD, ON THE GROUNDS OF DIFFERENCE IN BUSIN ESS STRUCTURES AND FUNCTIONALLY NOT COMPARABLE. HOWEVER, WHEN THE ASSE SSEE RAISED ALL THESE OBJECTIONS BEFORE THE LD. DRP, LD. DRP BY WAY OF IM PUGNED ORDER TURNED DOWN THE OBJECTIONS OF THE ASSESSEE AND HELD THAT THESE FIVE COMPANIES ARE GOOD COMPARABLES WITH THE ASSESSEE. HENCE THE ASSESSEE I S BEFORE US IN THIS APPEAL MAINLY CHALLENGING THE INCLUSION OF THESE FIVE CO MPANIES AND ALSO THE DISALLOWANCE UNDER SECTION 40(A)(I) OF THE ACT. NOW WE SHALL PROCEED TO DEAL THE QUESTION OF COMPARABLE TEA OF THESE COMPANIES W ITH ASSESSEE WITH REFERENCE TO THE SUBMISSIONS ON EITHER SIDE AND THE MATERIAL PLACED ON RECORD. APITCO LTD., 9. ASSESSEE OBJECTED THE INCLUDED OF THIS COMPANY O N THE GROUND THAT THIS COMPANY PROVIDES HIGH-END SERVICES, DIVERSIFIED ACT IVITIES WHICH INCLUDES ASSET RECONSTRUCTION AND MANAGEMENT SERVICES, PROJECTS RE LATED SERVICES, LIKE A 5 PAGE 5 OF 20 ENTERPRISES DEVELOPMENT, INFRASTRUCTURE PLANNING AN D ALLOTMENT, RESEARCH STUDIES AND TOURISM, SKILLED ALLOTMENT, AND ADORNME NT MANAGEMENT, AND ENTREPRENEUR DEVELOPMENT AND TRAINING, CLUSTERE ALL OTMENT, ENERGY-RELATED SERVICES, EMERGING AREAS ETC. ATTENTION OF THE LD. TPO WAS BROUGHT TO THE REVENUE BREAKUP OF VARIOUS SERVICES WITH REFERENCE TO THE ANNUAL REPORT OF THE COMPANY. 10. LD. TPO, HOWEVER, HELD THAT THE REVENUE BREAKUP OF SERVICES GIVEN CONSTITUTE MUCH LOWER PERCENTAGE OF TOTAL SERVICES AND MOST OF THE SERVICES RENDERED BY APITCO LTD., OR IN THE NATURE OF BUSINE SS SERVICES AND PREDOMINANTLY APITCO LTD., IS A COMPANY PROVIDING V ARIOUS SUPPORT SERVICES FOR ALLOTMENT OF TOURISM AND INDUSTRY, AS SUCH THE OBJE CTION OF THE ASSESSEE WAS NOT ACCEPTABLE. LD. TPO FURTHER HELD THAT THE ASSES SEE HAS EXPERIENCED EMPLOYEES IN THE FIELD OF ENGINEERING, MARKETING, M ANAGEMENT AND THEREFORE THE EMPLOYEE PROFILE OF ASSESSEE WITH THE APITCO LT D., IS COMPARABLE. 11. IT IS THE ARGUMENT OF THE LD. AR THAT THE PROFI LE OF THE COMPANY AS NARRATED BY THE LD. TPO ITSELF SUGGESTS THE NON-COM PATIBILITY OF APITCO LTD., WITH THE ASSESSEE INASMUCH AS THE ASSESSEE IS PROVI DING ONLY SIMPLE SUPPORT SERVICES WHEREAS THE SERVICES PROVIDED BY THE APITC O LTD., ARE VERY DIVERSE AND HIGH-END ONES RENDERING APITCO LTD., NON-COMPARABLE WITH THE ASSESSEE. 12. IT IS SUBMITTED BY LD. DR THAT AS RIGHTLY RECOR DED BY THE LD. TPO, MOST OF THE SERVICES RENDERED BY THE APITCO LTD., ARE IN TH E NATURE OF BUSINESS SERVICES AND PREDOMINANTLY APITCO LTD., IS A COMPANY PROVIDI NG VARIOUS SUPPORT SERVICES FOR ALLOTMENT OF TOURISM AND INDUSTRY. FURTHER, IT COULD BE SEEN THAT THE MARGINS OF APITCO LTD., ARE QUITE CONSISTENT AND IN THE RANGE OF 37% TO 49% FROM FY 2005-06/02/2009-10 IN THIS ERA OF VOLATILE BUSINESS CONDITIONS, FOREX 6 PAGE 6 OF 20 FLUCTUATIONS ETC. BASING ON THESE OBSERVATIONS MADE BY LD. TPO, LD. DR JUSTIFIES THE INCLUSION OF THIS COMPANY IN THE SET OF COMPARA BLES. 13. AS COULD BE SEEN FROM THE ANNUAL REPORT OF THIS COMPANY, IS COMPANY IS ONE OF THE 18 TCOS WAS FORMED BY THE KEY NATIONAL L EVEL FINANCIAL INSTITUTIONS IN ASSOCIATION WITH STATE-LEVEL INSTITUTIONS AND BA NKS, AND ACCORDINGLY BEING A GOVERNMENT ENTERPRISE APITCO LTD., WAS ESTABLISHED TO PROVIDE TECHNICAL SERVICES TO OTHER GOVERNMENT COMPANIES AND BODY COR PORATE. FURTHER THIS COMPANY IS ENGAGED IN PROVIDING SERVICES SUCH AS AS SET RECONSTRUCTION AND MANAGEMENT, CLUSTERED ALLOTMENT FOR MEGA FOOTMARKS, AND ENVIRONMENT SERVICES, ENERGY-RELATED SERVICES, INFRASTRUCTURE P LANNING AND DEVELOPMENT, ENERGY AUDIT ETC. AND UNDOUBTEDLY THIS COMPANY IS A HIGH-END CONSULTANCY SERVICE PROVIDER. THE ANNUAL REPORT FURTHER REVEALS THAT THIS COMPANY IS ENGAGED IN PROVIDING HIGH-END TECHNICAL SERVICES AL SO. 14. LD. AR BROUGHT TO OUR NOTICE THAT THEY APITCO L TD., WAS REJECTED BY A CATENA OF DECISIONS RENDERED BY DIFFERENT BENCHES O F THIS TRIBUNAL INCLUDING A COORDINATE BENCH OF THIS TRIBUNAL IN CIENA INDIA (P ) LTD VS. DCIT IN ITA NO. 2948 AND 3224/DEL/2013 FOLLOWING WHICH IN AVAYA INDIA PR IVATE LIMITED VERSUS DCIT IN ITA NO. 146/DEL/2013. HE ALSO PLACED RELIANCE ON THE NATION REPORTED IN KOBELCO CRANES INDIA PRIVATE LIMITED VS. ITO IN ITA NO. 802/DEL/2016. IN INTERNATIONAL SOS SERVICES INDIA PRIVATE LIMITED VE RSUS DCIT ITA NO. 1631/DEL/2014 THIS COMPANY WAS EXCLUDED ON ACCOUNT OF BEING HUNDRED PERCENT GOVERNMENT ORGANISATION AND THE APPEAL AGAI NST THIS DECISION OF THE TRIBUNAL WAS DISMISSED BY THE HONBLE JURISDICTIONA L HIGH COURT.. FURTHER IT COULD BE SEEN IN VESTEGAARD ASIA PRIVATE LIMITED VE RSES DCIT IN ITA NO. 6670/DEL/2015 AND H & M MOURITZ INDIA PRIVATE LIMIT ED VERSES DCIT IN ITA 282/BANKG/2015 IT IS HELD THAT THE APITCO LTD., IS NOT A GOOD COMPARABLE WITH ANY COMPANY RENDERING BUSINESS SUPPORT SERVICES ON THE GROUND THAT THIS 7 PAGE 7 OF 20 COMPANY IS A PUBLIC SECTOR UNDERTAKING AND ITS OPER ATIONS ARE MAINLY BASED THE ON THE POLICY REQUIREMENTS OF THE GOVERNMENT. 15. FURTHER RELIANCE IS PLACED BY THE COUNSEL ON TH E DECISION OF THE MUMBAI BENCH OF THIS TRIBUNAL IN TYSOKKRUPP INDUSTRIES IND IA PRIVATE LIMITED VERSES ACIT IN ITA NO. 6460/MUM/2012 WHEREIN IT WAS HELD THAT T HIS COMPANY BEING A GOVERNMENT ENTERPRISES IS NOT COMPARABLE WITH A PRI VATE BUSINESS SERVICE PROVIDER BECAUSE IN CASE OF GOVERNMENT ENTERPRISES PROFIT MOTIVE IS NOT IRRELEVANT CONSIDERATION, AND GOVERNMENT COMPANIES WORK FOR OTHER PUBLIC SECTOR UNDERTAKINGS AND IN THAT SENSE THE RELATED P ARTY TRANSACTIONS ARE MUCH MORE THAN THE FILTER OF 25%. THIS DECISION OF THE T RIBUNAL WAS UPHELD BY THE HONBLE BOMBAY HIGH COURT IN ITA NUMBER 20/02/2018 OF 2013. 16. THE REASONS RECORDED BY THE TRIBUNAL IN ALL THE DECISIONS REFERRED TO ABOVE HOLD GOOD FOR THE ASSESSEE ALSO INASMUCH AS T HE ASSESSEE IS A PRIVATE COMPANY IN THE FIELD OF PROVIDING BUSINESS SUPPORT SERVICES. WE, THEREFORE, WHILE RESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE ABOVE DECISIONS HOLD THAT APITCO LTD., IS NOT A GOOD COMPARABLE WITH THE ASSESSEE AND IS ACCORDINGLY LIABLE TO BE EXCLUDED. WE, THEREFORE, DIRECTLY LD. TPO TO EXCLUDE THIS COMPANY FROM THE FINALIST OF COMPARABLES TO BENCHMARK THE I NTERNATIONAL TRANSACTION RELATING TO THE MARKET SUPPORT SERVICES PROVIDED BY THE ASSESSEE TO ITS AES. CAMEO CORPORATE SERVICES. 17. ASSESSEE DISPUTED THE INCLUSION OF THIS COMPANY BEFORE THE LD. TPO ON THE GROUND THAT CAMEO CORPORATE SERVICES IS PROVIDI NG BUSINESS SERVICE REGISTRY, TRANSFER, ARCHIVAL AND RETRIEVAL AND AS P ER THE WEBSITE, CAMEO CORPORATE SERVICES IS AN ESTABLISHED BUSINESS PROCE SS OUTSOURCING (BPO) SERVICE, HEADQUARTERED IN CHENNAI, INDIA PROVIDING DIVERSIFIED SERVICES OF 8 PAGE 8 OF 20 DOCUMENT MANAGEMENT, MEDICAL TRANSCRIPTION, REGISTR Y AND SHARE TRANSFER AND OTHER BPO SERVICES. 18. LD. TPO EXTRACTED THE DETAILS OF THE SERVICES R ENDERED BY CAMEO CORPORATE SERVICES WHICH INCLUDES THE REGISTRY AND TRANSFER AGENCY DIVISION, ARCHIVAL AND RETRIEVAL SERVICES AND MEDICAL TRANSCR IPTION DIVISION. 19. IT IS THE SUBMISSION OF THE LD. AR THAT GOING B Y THE DESCRIPTION OF THE SERVICES, THE DETAILS OF WHICH ARE EXTRACTED BY THE LD. TPO IT IS EVIDENT THAT THIS COMPANY IS FUNCTIONALLY NOT COMPARABLE BEING ENGAGE D IN SHARE REGISTRY AND SERVICE OF TRANSFER AND REGISTRY SERVICES RELATING TO OPEN OFFERS, BONUS, STOCK SPLITS, BUYBACKS ETC. PER CONTRA, IT IS THE SUBMISS ION OF THE LD. DR THAT A STUDY OF THE HIGHLIGHTED PORTIONS IN THE PROFILE OF THE C OMPANY EXTRACTED IN THE ORDER OF THE LD. TPO REVEALS THAT THE ACTIVITIES OF THE C OMPANY OR IN THE NATURE OF BUSINESS SERVICES WHICH ARE OUTSOURCING WILL COMPAN IES IN INDIA, AS SUCH THIS COMPANY IS A GOOD COMPARABLE TO THE ASSESSEE, INASM UCH AS AES OF THE ASSESSEE ALSO OUTSOURCE SOME OF THEIR SERVICES TO T HE ASSESSEE. BY PLACING RELIANCE ON THE ORDER OF THE LD. TPO, HE FURTHER SU BMITTED THAT AS RIGHTLY POINTED OUT BY THE LD. TPO THE COMPARISON HAS TO BE WITH A COMPANY WHICH IS PROVIDING SERVICES BY DEALING IN THE DOMESTIC MARKE T AND NOT TOWARDS HIS CLIENTS IN FORM OF CALL CENTRES AND OTHER OUTSOURCI NG SERVICES CATERING TO FOREIGN CUSTOMERS. THE BENEFICIARY IN BOTH CASES IS A FOREI GN CLIENT, BUT THE DIFFERENCE IS THAT IN ONE CASE THE SERVICES ARE BEING PROVIDED ENTIRELY IN LOCAL MARKET AND IN THE CASE OF ITES COMPANIES SERVICES ARE BEING PR OVIDED BY INTERACTING WITH FOREIGN CLIENTS ARE CUSTOMERS OF FOREIGN CLIENTS ON DAY TO DAY BASIS. ITES COMPANIES HAVE THE ADVANTAGE OF LOCATION SAVINGS WH Y THE BUSINESS SERVICE COMPANIES DO NOT HAVE THE ADVANTAGE AND SINCE IN TH IS CASE SERVICES ARE BEING PROVIDED IN INDIA FOR THE PREDOMINANT BUSINESS, CAM EO CORPORATE SERVICES IS A CORRECT COMPARABLE TO THE ASSESSEE. 9 PAGE 9 OF 20 20. WE HAVE GONE THROUGH THE FINANCIALS OF THIS COM PANY, INCLUDING THE PROFIT AND LOSS ACCOUNT INCORPORATED PAGE NO. 96 AN D SCHEDULED 8 INCORPORATED AT PAGE NUMBER 102 OF THE PAPERBOOK RE LATING TO THE FINANCIALS OF THE COMPARABLE COMPANIES AND FIND THAT THE ENTIRE I NCOME OF RS. 24,36,67,920/-WAS SHOWN WITHOUT ANY SEGMENTAL BIFUR CATIONS. 21. FURTHER THE COMPARABILITY OF THE CAMEO CORPORAT E SERVICES WITH THE COMPANIES PROVIDING MARKET SUPPORT SERVICES LIKE AS SESSEE WAS CONSIDERED BY A COORDINATE BENCH OF THIS TRIBUNAL IN VESTERGAARD ASIA PRIVATE LIMITED ITA 6670/DEL/2015 BY ORDER DATED 30/11/2017, IN THE LIG HT OF THE ANNUAL REPORTS OF THE COMPANIES AND THE DECISION IN ADIDAS TECHNICAL SERVICES PRIVATE LIMITED VS. DCIT IN ITA NO. 862/DEL/2016, DISCUSSED THE DESIRAB ILITY OF RETAINING THE CAMEO CORPORATE SERVICES AS ONE OF THE COMPARABLES, AND R EACHED A CONCLUSION THAT THE FUNCTIONAL PROFILE OF CAMEO CORPORATE SERVICES IS SIMILAR TO THE PROFILE OF TSR DARASHAW LTD. AND NOT TO THE COMPANIES LIKE ASS ESSEE IN THIS MATTER. ON THAT GROUND CAMEO CORPORATE SERVICES WAS DIRECTED T O BE EXCLUDED FROM THE LIST OF COMPARABLES. IT IS PERTINENT TO NOTE THAT I N ADIDAS TECHNICAL SERVICES PRIVATE LIMITED (SUPRA) TSR DARASHAW LTD. WAS CONSI DERED AND REJECTED. THE TRIBUNAL IN VESTERGAARD ASIA PRIVATE LIMITED (SUPRA ) FOUND THAT CAMEO CORPORATE SERVICES AND TSR DARASHAW LTD. STAND ON T HE SAME FOOTING AND ARE NOT GOOD COMPARABLES TO THE MARKET SUPPORT SERVICE PROVIDERS. 22. GOING BY THE PROFILE OF CAMEO CORPORATE SERVICE S EXTRACTED BY THE LD. TPO IN HIS ORDER AND ALSO IN VIEW OF THE NONAVAILAB ILITY OF SEGMENTAL INFORMATION IN THE FINANCIALS OF THIS COMPANY COUPL ED WITH THE FINDINGS OF A COORDINATE BENCH OF THIS TRIBUNAL VESTERGAARD (SUPR A), WE ARE OF THE CONSIDERED OPINION THAT CAMEO CORPORATE SERVICES IS NOT A GOOD COMPARABLE TO 10 PAGE 10 OF 20 THE ASSESSEE IN VIEW OF THE FUNCTIONALITY SIMILARIT Y. WE, ACCORDINGLY, DIRECT THE LD. TPO TO DELETE THIS COMPANY FROM THE FINAL SET O F COMPARABLES. GLOBAL PROCUREMENT CONSULTANTS LTD., 23. THIS COMPANY IS RESISTED TO BE INCLUDED IN THE FINAL SET OF COMPARABLES BY THE ASSESSEE ON THE GROUND THAT THEY GLOBAL PROCURE MENT CONSULTANTS LTD., IS FUNCTIONALLY DIFFERENT AS IS EVIDENT FROM THE INFOR MATION PROVIDED IN THEIR WEBSITE. FURTHER IT WAS SUBMITTED THAT THE ANNUAL R EPORT OF THE GLOBAL PROCUREMENT CONSULTANTS LTD., GIVES OVERVIEW OF ITS ACTIVITIES AND THE RELEVANT INFORMATION WAS THAT THE GLOBAL PROCUREMENT CONSULT ANTS LTD., WAS ESTABLISHED PRIMARILY TO BRIDGE THE GAP IN THE PROF ESSIONAL PROCUREMENT AND MANAGEMENT SERVICES AND TO PROVIDE COMPREHENSIVE MA NAGEMENT SERVICES REQUIRED BY THE GOVERNMENT DEPARTMENTS OR THEIR PRO JECT EXECUTION AGENCIES TO CARRY OUT PROCUREMENT IN A TIME BOUND ENERGY-EFF ICIENT MANNER WITHIN THE FRAMEWORK OF GOVERNMENT REGULATIONS AND GUIDELINES OF INTERNATIONAL INSTITUTIONS. THE WEBSITE FURTHER STATES THAT THE T RAINING AND CAPACITY BUILDING IN THE INSTITUTIONAL ASPECTS OF PROCUREMENT MANAGEM ENT FORMS AN INTEGRAL PART OF THESE ACTIVITIES, BESIDES WHICH, THE CONSORTIUM BASE OF GLOBAL PROCUREMENT CONSULTANTS LTD., ENSURES THAT ALL MAJOR SECTORS OF THE ECONOMY INCLUDING HEALTH, EDUCATION, URBAN AND RURAL DEVELOPMENT ARE COVERED. 24. LD. TPO, HOWEVER, OPINED THAT THE GLOBAL PROCUR EMENT CONSULTANTS LTD., IS INTO THE ACTIVITY OF PROVIDING PROCUREMENT MANAG EMENT SERVICES TO GOVERNMENT DEPARTMENTS AND THEIR PROJECT EXECUTION AGENCIES, AND INASMUCH AS THE PROCUREMENT SERVICES ARE IN THE NATURE OF BU SINESS SERVICES, GLOBAL PROCUREMENT CONSULTANTS LTD., IS A CORRECT COMPARAB LE. LD. DRP IN THE IMPUGNED ORDER STATED THAT GLOBAL PROCUREMENT CONSU LTANTS LTD., IS ALSO IN THE 11 PAGE 11 OF 20 SIMILAR LINE OF BUSINESS AS THAT OF THE ASSESSEE AN D THEREFORE IT SHOULD BE RETAINED IN THE LIST OF COMPARABLES. 25. LD. AR SUBMITTED THAT THIS COMPANY IS NOT A GOO D COMPARABLE WITH THE ASSESSEE WHO IS ONLY A MARKETING SUPPORT SERVICE PR OVIDER WHEREAS GLOBAL PROCUREMENT CONSULTANTS LTD., IS GIANT GOVERNMENT C OMPANY WITH DIVERSIFYING ACTIVITIES. LD. DR SUBMITTED THAT IT IS THE FUNCTIO N THAT IS IMPORTANT BUT NOT THE MAGNITUDE OF BUSINESS OR THE CLIENTS WHICH THE COMP ANIES SERVE. 26. WE HAVE GONE THROUGH THE MATERIAL PROVIDED IN T HE PAPER BOOK IN RESPECT OF GLOBAL PROCUREMENT CONSULTANTS LTD. AND FIND THAT GLOBAL PROCUREMENT CONSULTANTS LTD., IS PRIMARILY ENGAGED IN PREPARING AND REVIEWING TECHNICAL SPECIFICATIONS, ESTIMATION OF CASTES, SEL ECTION OF VENDORS, INSPECTION AND A EXPEDITING AND QUALITY CONTROL AND TIME MANAG EMENT. IT IS ALSO CLEAR THAT THE COMPANY RENDERS THE PROCUREMENT RELATED SERVICE S IN EXCLUSIVELY IN CIS COUNTRIES, EASTERN EUROPE AND EMERGING ECONOMIES IN THE AFRICAN CONTINENT, BY KETTERING RELATES IN THE AREAS LIKE HEALTH, EDUCATI ON, URBAN AND RURAL DEVELOPMENT, AGRICULTURE, MINING, TRANSPORTATION, C OMMUNICATION, ENERGY, WATER RESOURCES AND OTHER KEY FACTORS. WE ALSO FURT HER FIND FROM THE RECORD THAT GLOBAL PROCUREMENT CONSULTANTS LTD., CONDUCTS PROCUREMENT PUSHED REVENUE FOR WORLD BANK FINANCED PROJECTS, RENDERS F INANCIAL ADVISORY SERVICES WITH A HIGH VOLATILE MARGINS. 27. THIS PROFILE WHAT WE HAVE OBSERVED FROM THE REC ORD CERTAINLY MAKES THIS COMPANY TO STAND APART FROM THE MARKET SUPPORT SERV ICE PROVIDERS. FURTHER IT IS SUBMITTED BY THE LD. AR THAT THIS COMPANY REJECT ED BY LD. DRP, DELHI IN THE CASE OF TRAVEL SECURITY SERVICES (INDIA) PRIVATE LT D FOR ASSESSMENT YEAR 2011-12 BY HOLDING THAT THIS COMPANY IS FUNCTIONALITY SIMIL AR AND SHOULD BE DELETED FROM THE SET OF COMPARABLE COMPANIES RENDERING BUSI NESS SUPPORT SERVICES. 12 PAGE 12 OF 20 FURTHER A COORDINATE BENCH OF THIS TRIBUNAL IN KOBE LCO CRANES INDIA PRIVATE LIMITED VS. ITO IN ITA NO. 802/DEL/2016 EXCLUDED TH IS COMPANY AS COMPARABLE TO THE MARKETING SUPPORT SERVICES. SO ALSO IN ADIDA S TECHNICAL SERVICES LTD VS. DCIT IN ITA NO. 862/DEL/2016 AND ITA NO. 1233/DEL/2 015 A COORDINATE BENCH OF THIS TRIBUNAL EXCLUDED THIS GLOBAL PROCUREMENT C ONSULTANTS LTD., AS A GOOD COMPARABLE TO THE MARKETING SUPPORT SERVICE PROVIDE RS ON THE GROUND OF FUNCTIONALITY SIMILARITY. 28. THE PROFILE OF THIS GLOBAL PROCUREMENT CONSULTA NTS LTD., AS NARRATED BY THE LD. TPO HIMSELF SPEAKS IN UNEQUIVOCAL TERMS THA T THIS GLOBAL PROCUREMENT CONSULTANTS LTD., IS A COMPANY ESTABLISHED BY THE G OVERNMENT TO SERVE THE PURPOSE OF PROFESSIONAL PROCUREMENT AND MANAGEMENT SERVICES NEEDS AND ALSO TO PROVIDE COMBINES MANAGEMENT SERVICES REQUIR ED BY THE GOVERNMENT DEPARTMENTS OR THEIR PROJECT EXECUTION AGENCIES TO CARRY OUT THE PROCUREMENT IN A TIME BOUND AND EFFICIENT MANNER WITHIN THE FRA MEWORK OF GOVERNMENT REGULATIONS AND GUIDELINES OF INTERNATIONAL INSTITU TIONS, WHICH IS NOT SUCH A CHARACTERISTIC OF THE BUSINESS OF THE ASSESSEE. THE BUSINESS MODEL ITSELF IS DIFFERENT, LET ALONE THE DISPROPORTION IS OF THE FI NANCIALS. WE HAVE NO HESITATION, IN THE FACE OF THE PROFILE OF GLOBAL PR OCUREMENT CONSULTANTS LTD., THAT IT IS NOT A GOOD COMPARABLE AT ALL TO THE ASSE SSEE AND FOR THAT MATTER TO ANY PRIVATE MARKETING SUPPORT SERVICE PROVIDER, AS SUCH WE DIRECT THE LD. TPO TO EXCLUDE THIS COMPANY FROM THE LIST OF COMPARABLE S TO BENCHMARK THE INTERNATIONAL TRANSACTION OF THE ASSESSEE IN PROVID ING THE MARKET SUPPORT SERVICES TO ITS AES. KILLIK AGENCIES AND MARKETING LTD. 29. KILLIK AGENCIES AND MARKETING LTD WAS OPPOSED B EFORE THE LD. TPO BY THE ASSESSEE TO BE INCLUDED IN THE FINAL LIST OF COMPAR ABLES ON THE GROUND THAT THIS 13 PAGE 13 OF 20 COMPANY IS PROVIDING BUSINESS SERVICES AND NOT COMP ARABLE WITH THE ASSESSEE. HAVING EXTRACTED THE BUSINESS PROFILE OF KILLIK AGE NCIES AND MARKETING LTD, LD. TPO OBSERVED THAT THIS COMPANY EARNS COMMISSION AND SERVICE CHARGES FOR PROVIDING AGENCY SERVICES, ONE OF THE SERVICES IS L ISTED AS COMMISSION AGENTS SERVICES AND ON THAT SCORE THIS IS A GOOD COMPARABL E FOR THE COMPANIES PROVIDING MARKET SUPPORT SERVICES. LD. TPO FURTHER OBSERVED THAT THERE IS NO NEED OF ANY SEGMENTAL FINANCIALS. 30. IT IS THE ARGUMENT OF THE LD. AR THAT KILLIK AG ENCIES AND MARKETING LTD IS ENGAGED IN AGENCY SERVICES IN RESPECT OF DREDGERS, DREDGING EQUIPMENTS, STEERABLE RUDDAR PROPULSION IS, MARITIME AND AVIATI ON LIGHTING AND ACROSTIC COMMUNICATIONS ETC., BESIDES RENDERING ENGINEERING SERVICES IN RELATION TO INSTALLATION AND COMMUNICATION OF NEW EQUIPMENT AND MAINTENANCE AND REPAIR OF OLD EQUIPMENT. HE SUBMITTED THAT A PARTIC ULAR AGENCY IN A PARTICULARS EQUIPMENT IN A MONOPOLISTIC ENVIRONMENT CANNOT BE E QUATED TO THE MARKET SUPPORT SERVICES TO BE A GOOD COMPARABLE THE COMPAN IES LIKE ASSESSEE. 31. LD. DR SUBMITTED THAT, AS IN THE CASE OF THE EA RLIER COMPARABLES, IT IS NOT POSSIBLE TO HAVE THE COMPARABLES DOING THE VERY SAM E BUSINESS AS THAT OF THE ASSESSEE AND WE HAVE TO TAKE THE COMPANIES PERFORMI NG THE NEAREST POSSIBLE FUNCTIONAL PROFILE AND TO MAKE SUITABLE ADJUSTMENT IN ORDER TO DETERMINE THE ARMS LENGTH PRICE. ON THE PREMISE HE SUBMITTED THAT THE KILLIK AGENCIES AND MARKETING LTD WILL ALSO PERFORMING THE AGENCY FUNCT IONS AND EARNING COMMISSION AS AN AGENT IS ALSO A GOOD COMPARABLE 32. FROM THE ANNUAL REPORT OF THIS COMPANY WE FIND THAT KILLIK AGENCIES AND MARKETING LTD IS A PUBLIC LTD UNLISTED COMPANY ACTI NG AS AGENT FOR VARIOUS FOREIGN PRINCE FALLS FAR SALE OF DREDGERS, DREDGING EQUIPMENTS, STEERABLE RUDDAR PROPULSION, MARITIME AND AVIATION LIGHTING, ACOUSTIC COMMUNICATION 14 PAGE 14 OF 20 EQUIPMENTS ETC. AND THIS COMPANY ALSO OFFERS AFTER SALE SERVICES. APART FROM THIS, THE COMPANY IS INVOLVED IN EXPORT OF MICRO SW ITCHES, ENGINEERING ITEMS, ACCOUSTIC ITEMS AND HEADSETS. 33. IT IS BROUGHT TO OUR NOTICE THAT IN THE CASE OF PARAMETRIC TECHNOLOGY INDIA PRIVATE LIMITED, LD. DRP REJECTED THIS KILLIK AGENCIES AND MARKETING LTD TO BE A GOOD COMPARABLE TO THE COMPANIES ENGAGED IN MA RKET SUPPORT SERVICES AND A JURISDICTIONAL TRIBUNAL THAT IS A BENCH OF THE BANGALORE TRIBUNAL UPHELD SUCH A FINDING OF THE LD. DRP. FURTHER THE BANGALOR E TRIBUNAL IN THE CASE OF DCIT VS. ARUBA NETWORKS INDIA PRIVATE LIMITED IN ITA-TP 57/BANK/2015 FOUND THAT KILLIK AGENCIES AND MARKETING LTD IS NOT A MARKETIN G SUPPORT SERVICE AND IT CANNOT FIND A PLACE IN THE SET OF COMPARABLES FOR S UCH COMPANIES. 34. ON A PERUSAL OF THE PROFILE OF THIS KILLIK AGEN CIES AND MARKETING LTD AND ALSO THE FINDINGS OF THE TRIBUNAL ON THE COMPARABIL ITY OF THIS COMPANY WITH THE COMPANIES RENDERING MARKET SUPPORT SERVICES, WE ARE OF THE CONSIDERED OPINION THAT KILLIK AGENCIES AND MARKETING LTD CANN OT BE A GOOD COMPARABLE TO THE ASSESSEE AND IS LIABLE TO BE EXCLUDED FROM THE FINAL LIST OF COMPARABLES AND, ACCORDINGLY WE DIRECT THE LD. TPO TO EXCLUDE THIS C OMPANY FROM THE LIST OF COMPARABLES FOR BENCHMARKING THE INTERNATIONAL TRAN SACTION OF MARKET SUPPORT SERVICES. TSR DARASHAW LTD. 35. THIS COMPANY WAS OPPOSED BY THE ASSESSEE BEFORE THE LD. TPO ON THE GROUND OF FUNCTIONALITY SIMILARITY AND THE BUSINESS MODEL. IT IS ARGUED BEFORE US THAT THE TSR DARASHAW LTD. OPERATES IN THREE BUSINE SS SEGMENTS, NAMELY, REGISTRAR AND TRANSFER AGENT ACTIVITY, RECORD MANAG EMENT ACTIVITY AND PAYROLL AND TRUST FUNDING ACTIVITY, WHICH ARE QUITE DISSIMI LAR TO THE FUNCTIONS OF THE ASSESSEE. IT IS FURTHER SUBMITTED BEFORE US THE TSR DARASHAW LTD. IS A BUSINESS 15 PAGE 15 OF 20 PROCESS OUTSOURCING (BPO) ORGANISATION PRIMARILY EN GAGED IN HANDLING BPO ACTIVITIES IN WHICH IT HANDLES PROCESSING ACTIVITY SERVING OVER 5 MILLION CUSTOMERS AND USERS ON BEHALF OF THE CLIENTS MOST O F WHOM ARE LEADERS IN THEIR RESPECTIVE INDUSTRIES. 36. LD. TPO OBSERVED THAT THE ACTIVITIES OF TSR DAR ASHAW LTD. ARE IN THE NATURE OF BUSINESS SERVICES WHICH ARE OUTSOURCED BY COMPANIES IN INDIA AND THEREFORE TSR DARASHAW LTD. IS A GOOD COMPARABLE WI TH THE ASSESSEE INASMUCH AS AE OF THE ASSESSEE HAS ALSO OUTSOURCING SOME OF SERVICES TO THE ASSESSEE. ON THIS ASPECT LD. DRP HELD THAT TSR DARASHAW LTD. IS ALSO IN THE BUSINESS OF PAYROLL, RECORD MANAGEMENT AND REGISTRAR AND TRANSF ER AGENT FOR ITS CLIENT WHICH ARE COMPARABLE TO THE ACTIVITIES OF THE ASSES SEE AND ON THAT SCORE TSR DARASHAW LTD. IS A GOOD COMPARABLE TO THE ASSESSEE. 37. LD. AR SUBMITTED THAT TSR DARASHAW LTD. IS NOT FUNCTIONALLY COMPARABLE AND AS PER THE ANNUAL REPORT OF THE COMPANY IT IS P RIMARILY ENGAGED IN PROVISION OF SHARE REGISTRY AND RELATED FINANCIAL S ERVICES AND, THEREFORE, CANNOT BE COMPARED WITH THE ASSESSEE WHICH IS A CAPTIVE MA RKET SUPPORT SERVICE PROVIDER. HE FURTHER SUBMITTED THAT AS PER COMPANY S WEBSITE IT IS ENGAGED IN PROVISION OF SERVICES SUCH AS VALUATION, CONSULTANC Y, LEGAL SERVICES, PROVISION OF FIXED DEPOSIT MANAGEMENT, PAYROLL SERVICES, REAL ES TATE INITIATION SERVICES ETC. ON THIS GROUND LD. AR SUBMITTED THAT TSR DARASHAW L TD. MAY BE EXCLUDED FROM THE SET OF COMPARABLES. 38. PER CONTRA, THE LD. DR WHILE RELYING ON THE ORD ER OF THE LD. TPO, SUBMITTED THAT THE COMPARISON HAS TO BE WITH A COMP ANY WHICH IS PROVIDING SERVICES BY DEALING IN THE DOMESTIC MARKET AND NOT TOWARDS HIS CLIENTS IN FORM OF CALL CENTRES AND OTHER OUTSOURCING SERVICES CARR IED INTO FOREIGN CUSTOMERS. THE BENEFICIARY IN BOTH CASES IS A FOREIGN CLIENT, WITH THE DIFFERENCE THAT IN ONE 16 PAGE 16 OF 20 CASE THE SERVICES ARE BEING PROVIDED ENTIRELY IN LO CAL MARKET AND IN THE CASE OF ITES COMPANIES, SERVICES ARE BEING PROVIDED BY INTE RACTING WITH FOREIGN CLIENTS ARE CUSTOMERS OF FOREIGN CLIENTS ON DAY TO DAY BASI S. HE FURTHER SUBMITTED THAT ITES COMPANIES HAVE THE ADVANTAGE OF LOCATION SAVIN GS WHILE THE BUSINESS SERVICE COMPANIES DO NOT HAVE THAT ADVANTAGE AND SI NCE IN THE CASE ON HAND THE SERVICES ARE BEING PROVIDED IN INDIA FOR THE PR EDOMINANT BUSINESS, TSR DARASHAW LTD. IS A GOOD COMPARABLE WITH THE ASSESSE E. 39. ON A PERUSAL OF RECORD AND THE ANNUAL REPORT OF TSR DARASHAW LTD. WE FIND THAT TSR DARASHAW LTD. IS MAINLY INTO THE PAYR OLL PROCESS OUTSOURCING WITH A NEW GLOBAL PAYROLL ERP APPLICATION CALLED RAMCO F OR ITS PAYROLL BUSINESS. FURTHER THE ORDER OF LD. TPO ITSELF READS THAT TSR DARASHAW LTD. UNDERTAKES THE REGISTRAR AND TRANSFER AGENT ACTIVITY FUNCTIONS FOR EQUITY AND PREFERENCE SHARES, VENTURE INSTRUMENTS AND BONDS, COMMERCIAL PAPER AND PRIVATE PLACEMENTS. MOREOVER THIS COMPANY, UNDER THIS SEGMENT ALSO UNDE RTAKES TRANSFER PROCESSING CUSTOMER/QUERY HANDLING AND CORRESPONDEN CE SPLIT/CONSOLIDATION/RENEWAL OF CERTIFICATES, PROCES SING AND DISTRIBUTION OF INTEREST TO SLASH DIVIDEND WARRANTS, PAYMENTS BY PH YSICAL WARRANTS/THROUGH ECS/DIRECTOR CREDITED. IN THE SEGMENT OF RECORDS MA NAGEMENT ACTIVITY, TSR DARASHAW LTD. UNDERTAKES STORAGE, RETENTION AND TRI BAL OF PHYSICAL AND/OR ELECTRONIC RECORDS. IN THE SEGMENT OF PAYROLL AND T RUST FUND ACTIVITY, TSR DARASHAW LTD. HANDLES THE ACTIVITIES NORMALLY HANDL ED BY PAYROLL AND RETIREMENT FUNDS SECTION IN ANY ORGANISATION INCLU DING INTERFACE WITH THE REGULATORY AUTHORITIES. THESE FUNCTIONS ARE NOT AT ALL COMPARABLE WITH THE FUNCTIONS PERFORMED BY THE ASSESSEE. AT THE SAME TI ME NO SEGMENTAL INFORMATION IS AVAILABLE AS TO THE REVENUES. 17 PAGE 17 OF 20 40. FURTHER THE COORDINATE BENCHS OF THIS TRIBUNAL IN MICROSOFT CORPORATION INDIA PRIVATE LIMITED VS. DCIT IN ITA NO. 5766/DEL/ 2011, ELI LILLY AND CO (INDIA) PRIVATE LTD VS. ACIT IN ITA NO. 788/DEL/2015 AND KO BELCO CRANES INDIA PRIVATE LIMITED VS. ITO IN ITA NO. 802/DEL/2016, ADOBE SYST EMS INDIA PRIVATE LIMITED VS. JCIT IN ITA NO. 1163/DEL/2014, AND ADIDAS TECHN OLOGY SERVICES PRIVATE LIMITED VS. DCIT IN ITA NO. 862/DEL/2016 HELD THAT TSR DARASHAW LTD. IS NOT A GOOD COMPARABLE TO THE COMPANIES RENDERING MARKET S UPPORT SERVICES. 41. IN THIS FACTUAL AND LEGAL POSITION, WHERE OF TH E CONSIDERED OPINION THAT TSR DARASHAW LTD. IS NOT AT ALL A GOOD COMPARABLE T O THE ASSESSEE WHO IS RENDERING ONLY MARKET SUPPORT SERVICES IN NO WAY CO MPARABLE TO THE FUNCTIONS PERFORMED BY THE TSR DARASHAW LTD. WE, THEREFORE, D IRECT THE LD. TPO TO DELETE THIS COMPANY FROM THE FINALIST OF COMPARABLE S. 42. FOR THE REASONS RECORDED IN THE PRECEDING PARAG RAPHS, WE FIND THAT THE 5 COMPANIES, NAMELY, APITCO LTD., CAMEO CORPORATE SER VICES, GLOBAL PROCUREMENT CONSULTANTS LTD, KILLIK AGENCIES AND MA RKETING LTD AND TSR DARASHAW LTD. OPPOSED BY THE ASSESSEE BEFORE THE AU THORITIES BELOW ARE NOT GOOD COMPARABLES TO THE ASSESSEE AND THEY ARE LIABL E TO BE DELETED. WE THEREFORE DIRECT THE LD. TPO TO DELETE ALL THESE CO MPANIES CAN DEFINE A LIST OF COMPARABLES FOR BENCHMARKING THE INTERNATIONAL TRAN SACTION OF MARKET SUPPORT SERVICES RENDERED BY THE ASSESSEE TO AES., AND TO RECOMPUTE THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTION OF MARKET SUPPORT SERVICES. 43. NO TURNING TO THE ISSUE RELATING TO DISALLOWANC E OF RS. 5,24,18,207/- UNDER SECTION 40 (I)(A) OF THE ACT, LD. AO, DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THE ASSESSEE HAD INCURRED CERTAIN EXPENDITURE IN FOREIGN CURRENCY ON VARIOUS ACCOUNTS AND OUT OF THE SAME A SUM OF RS. 5,24,18,207/-WAS FOUND INADMISSIBLE AS THE ASSESSEE WAS SUPPOSED TO DEDUCT 18 PAGE 18 OF 20 TAX ON SUCH PAYMENTS BUT NO TDS WAS MADE ON SUCH PA YMENTS. ASSESSEE EXPLAINED THAT THE SERVICES WERE RENDERED IN BANGLA DESH AND THERE WAS NO BUSINESS CONNECTION OF THE PAYEE IN INDIA AND HENCE THIS SUM IS NOT BEING CHARGEABLE TO TAX IN INDIA, TDS WAS NOT DONE AND TH AT NO INCOME ACCRUING OR ARISING TO THE PAYEE IN INDIA, AS SUCH TDS WAS NOT DONE. 44. LD. AO, HOWEVER, HELD IN PARAGRAPH NO. 5.2 THAT THE ...PAYMENTS WERE MADE FOR THE ALLEGED PROFESSIONAL SERVICES IN BANGLADESH. AS PER SECTION 5 (2) READ WITH SECTION 9 (1) (VII) (C), SUCH PAYMENTS ARE MADE TO NON-RESIDENT FOR RENDERING MAN AGERIAL, CONSULTANCY OR TECHNICAL SERVICES TO SUCH NONRESIDE NTS FIND THEIR BUSINESS IN INDIA ARE TAXABLE IN INDIA. SUCH PAYMENTS ARE CO VERED UNDER ARTICLE XXIV OF THE TREATY. SUCH PAYMENTS CAN ALSO BE CHARA CTERISED AS ROYALTY FOR IMPARTING OF COMMERCIAL OR INDUSTRIAL KNOWLEDGE AND SKILL IN THE ACT AS WELL AS DTAA BETWEEN INDIA AND BANGLADESH. THE A SSESSEE HAS NOT FURNISHED THE COPY OF AGREEMENT BETWEEN THE ASSESSE E AND THE PAYEE. XXX XXX XXX XXX XXX XXX IN VIEW OF DISCUSSION IN PARA 5.2 ABOVE, THE PAYMEN TS ARE CHARGEABLE TO TAX IN INDIA AND HENCE, TEDIOUS SHOULD HAVE BEEN DO NE. IN THE EVENT OF NON-COMPLIANCE, THE PROVISIONS OF SECTION 40 (I) (A ) IS ATTRACTED AND DISALLOWANCE OF RUPEE RS. 5,24,18,207/-IS IS BEING MADE. 45. IT IS BROUGHT TO OUR NOTICE THAT IN RESPECT OF THE ASSESSMENT YEAR 2008- 09 IN ITA NO. 26/DEL/2013 BY ORDER DATED 19/04/2018 A COORDINATE BENCH OF THIS TRIBUNAL CONSIDERED THIS ASPECT OF DISALLOWANC E UNDER SECTION 40 (A)(I) AND NOTED THAT THE FACT WHETHER THE SERVICES HAVE BEEN PROVIDED ONLY IN BANGLADESH AND NOT IN INDIA IS ALSO NOT AVAILABLE O N RECORD BEFORE THE AO, AND THE ASSESSEE DID NOT SUBMIT MRS INSIGHT AND IDEAS. THUS MERE PRESUMPTION NOT BE TAKEN INTO ACCOUNT WHILE DETERMINING THE NATURE OF PAYMENT IS WHETHER FEES FOR TECHNICAL SERVICES ARE ROYALTY, AS SUCH, T HE CLAIM UNDER SECTION 40 (A)(I) IS VALID OR NOT NEEDS TO BE VERIFIED AT THE LEVEL OF AO. ON THIS GROUND THE 19 PAGE 19 OF 20 TRIBUNAL REMANDED BACK THE ISSUE TO THE FILE OF THE LD. AO FOR FRESH ADJUDICATION AFTER RELEASING THE ASSESSEE AN OPPORT UNITY OF BEING HEARD. 46. IT IS SUBMITTED BY THE LD. AR THAT IN RELATION TO THE PRESENT ASSESSMENT YEAR THE ASSESSEE FILED THE ADDITIONAL EVIDENCE BEF ORE THE LD. DRP BUT THE LD. DRP WITHOUT ADVERTING TO SUCH ADDITIONAL EVIDENCE R ECORDED THAT IS THERE IS NO EVIDENCE AVAILABLE DURING THE ASSESSMENT PROCEEDING S TO SUPPORT THE PREMISES THAT THE PAYMENTS WHICH WERE MADE TO THE ABOVE PART Y WHERE IN THE NATURE OF BUSINESS INCOME IN THE HANDS OF THE PARTIES AND WER E RELATED TO MARKETING/ADVERTISING ACTIVITIES CARRIED OUT IN BAN GLADESH. 47. THE VERY SUBMISSION OF THE LEARNED COUNSEL THAT THE ASSESSEE HAD TO FILE ADDITIONAL EVIDENCE TO FURNISH THE ALLEGED AGREEMEN T, LENDS ANY AMOUNT OF SUPPORT TO THE OBSERVATIONS OF THE LD. AO THAT SUCH AN AGREEMENT WAS NOT AVAILABLE DURING THE ASSESSMENT PROCEEDINGS SO THAT THE LD. AO COULD HAVE RETURNED A FINDING AFTER APPRECIATING THE CONTENTIO NS OF THE ASSESSEE. FURTHER THE MATTER IS PENDING BEFORE THE LD. AO FOR CONSIDE RATION OF THE VERY SAME ISSUE IN RESPECT OF THE ASSESSMENT YEAR 2008-09, AS WAS REMANDED BY THIS TRIBUNAL. IN THE CIRCUMSTANCES, WE DEEM IT JUST AND PROPER TO REMAND THIS ISSUE TO THE FILE OF THE LD. AO FOR CONSIDERATION THIS IS SUE IN THE LIGHT OF THE AGREEMENT, AFTER GIVING AN OPPORTUNITY TO THE ASSES SEE OF BEING HEARD. 48. IN RESPECT OF THE GROUND RELATING TO THE LEVY O F INTEREST UNDER SECTION 234B OF THE ACT, SUFFICE IT TO SAY THAT LEVY OF INT EREST UNDER THIS SECTION IS MANDATORY AND CONSEQUENTIAL IN NATURE. 20 PAGE 20 OF 20 48. THE APPEAL IS, THEREFORE, ALLOWED IN PART FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS THE 21 ST DAY OF JUNE, 2018. SD/- SD/- (R.S.SYAL) (K.N. CHARY) VICE PRESIDENT JUDICIAL MEMBER DT. 21 ST JUNE, 2018 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES