-1- IN HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 18 OF 2015 Commissioner of Income Tax Aaykar Bhavan , Patto, Panaji, Goa. Appellant Versus M/s. Pentair Water India Pvt. Ltd., L-55, Verna Industrial Estate, Verna, Salcete, Goa 403722. PAN: AABCS8856L Respondent Ms. Asha Desai, Advocate for Appellant. Mr. Jitendra Jain, Advocate with Ms. Sumedha Joshi, Advocate for Respondent. Coram :- F. M. REIS, K. L. WADANE, JJ. Date of Reserving Order : 7th July, 2015. Date of Pronouncement of Order : 16th September 2015. ORAL ORDER (Per F. M. Reis, J.) Heard Ms. Asha Desai, learned Counsel appearing for Appellant and Mr. Jitendra Jain, learned Counsel appearing for Respondent. 2. Briefly, it is contention of Appellant that Assessee- Respondent is engaged in business of manufacture of fibre glass pressure vessel used for water treatment, swimming pool equipments and that Respondent-Company is making three kinds of vessels namely (I) Code Line, (ii) Composite pressure vessels and (iii) FRP pressure vessels and set up in-house TXA-18-15 -2- facility for catering to its needs on area of engineering, designing & product development. It is further their case that Company has rendered such services in relevant assessment year 2007-2008 to some of its group companies abroad and that Respondent is subsidiary to Pentair INC, USA and is involved in same business. said Respondent-Company has unit at Verna Industrial Estate where said manufacturing activity is taking place. It is further their case that Respondent-Assess has filed returns of Income on 30.10.2007 disclosing total income of Rs.5,28,09,795/- on which total tax was Rs.1,81,13,280/-. Order under Section 92CA was passed on 27.10.2010 by TPO and AO on 21.12.2010 added amount of Rs.1,68,60,877/- in Order passed under Section 143 (3) of said Act. It is further contention of Appellant that being aggrieved by said Order, Respondent-Assessee preferred Appeal before Commissioner Income Tax Appeal and by its Order dated 16.11.2012, directed AO to compute TP adjustment by taking operating margin at comparable rate of 22.92%. Being aggrieved by said Order, both Respondent as well as Appellant filed Appeals before Income Tax Appellate Tribunal which came to be disposed of by Order dated 23.05.2014. Being aggrieved by said Order, Appellant has preferred present Appeal. 3. Ms. Asha Desai, learned Counsel appearing for Appellant, has pressed for only two substantial questions of law framed at para 5A and 5B of Appeal Memo. Learned Counsel has further pointed out that Income Tax Appellate Tribunal has erred in holding that profits on costs of five comparable companies as abnormal without giving reasons how functions discharged, assets deployed and risks assumed of such companies were different from TXA-18-15 -3- Respondent-Company. Learned Counsel further pointed out that Tribunal has also erred in holding that size and turnover of company are deciding factors for treating company as comparable and accordingly erred in excluding M/s. HCL Comnet Systems & Services Ltd., M/s Infosys BPO Limited and M/s. Wipro Ltd., as comparables. 4. On other hand, Shri Jain, learned Counsel appearing for Respondent, has pointed out that both Authorities have concurrently come to conclusion that said Companies are not comparable to Respondent- Assessee Company and, as such, this Court cannot re-appreciate evidence on record to come to any concurrent finding. Learned Counsel further submits that these concurrent findings of facts based on material on record cannot be re- appreciated by this Court in present Appeal as there is no substantial question of law which arise therein. Learned Counsel further pointed out that to answer said two substantial questions of law, this Court would have to re-appreciate material on record which is not at all permissible. Learned Counsel further submits that bifurcation intended to be affected by learned Counsel appearing for Appellant was not even raised before Tribunal and, consequently, above Appeal deserves to be rejected. 5. On perusal of impugned Order passed by Tribunal dated 23.05.2014, we find that Tribunal has recorded reasons for not accepting said three companies are comparable by stating as follows : (I) HCL Comnet Systems & Services Ltd :- We find force in submission of ld. AR that this TXA-18-15 -4- company cannot be comparable as turnover of this company is 260.18 crores while in case of Assessee, turnover is around Rs.11 crores only. While making selection of comparables, turnover filter, in our opinion, has to be basis for selection. company having turnover of Rs.11 crores cannot be compared with company which is having turnover of Rs.260 crores which is more than 23 times turnover of Assessee. This company cannot be regarded to be in equal size to Asseessee. We, accordingly, direct AO to exclude this company out of comparables. (ii) Infosys BPO Ltd. :- In this case also we noted turnover in respect of this Company is Rs.649.56 crores while turnover of Asseessee company is around Rs. 11 crores which is much more than 65 times of Assessee's turnover. We, therefore, do not find any illegality or infirmity in order of CIT(A) in excluding this Company out of comparables. Accordingly, we confirm order of CIT(A). (iii) Wipro Ltd. :- After hearing rival submissions, we noted that CIT(A) applying turnover filter has excluded this company out of comparables. turnover reported in case of Wipro Ltd. Is Rs.939.78 crores while in case of Asseessee turnover is around Rs. 11 crores. Therefore, on basis of turnover filter itself this company cannot be regarded to be comparable to Asseessee company and accordingly, we do not find any infirmity in finding of CIT(A) while he excluded this company on turnover criteria TXA-18-15 -5- following decision of this tribunal in : Sony India (P) Ltd. vs. DCIT, 114 ITD 448 Delhi, E-Gain Communication, 2008 TIOL 282 ITAT (Pune) Deloittee Consulting India Pvt. Ltd. vs. DCIT, ITA No. 1082/Hyd/2010 Genisys Integrating System (India)(P.) Ltd. vs DCIT,, 53 Sot 159 (Bang) 6. said findings of Tribunal in respect of said three Companies are on basis of appreciation of evidence on record. We find no infirmity in said findings of Tribunal on that count. In fact, Tribunal has endorsed views of CIT Appeals whilst coming to such conclusions. concurrent findings of facts arrived at by Authorities below, cannot be re- appreciated by this Court in present Appeal. 7. In this connection, Apex Court in Judgment reported in 2011(1) SCC 673 in case of Vijay Kumar Talwar vs. CIT, has observed at Para 23 thus : 23. finding of fact may give rise to substantial question of law, inter alia, in event findings are based on no evidence and/or while arriving at said finding, relevant admissible evidence has not been taken into consideration or inadmissible evidence has been taken into consideration or legal principles have not been applied in appreciating evidence, or when evidence has been misread. (See Madan Lal v. Gopi, Narendra Gopal Vidyarthi v. Rajat Vidyarthi, Commr. of Customs v. Vijay Dasharath Patel, Metroark Ltd. v. CCE and W.B. Electricity Regulatory Commission v. TXA-18-15 -6- CESC Ltd) 8. In present Appeal, Appellant-Revenue has not been able to controvert or deny data relied upon by Authorities below to come to such conclusion. said Companies are no doubt large and distinct companies where area of development of subject services are different and as such profit earned therefrom cannot be bench-marked or equated with Respondent- Company. 9. Shri Jain, learned Counsel has rightly relied upon Judgment of Delhi High Court reported in (2013) 36 taxmann.com 289(Delhi) in case of Commissioner of Income-tax vs. Agnity India Technologies (P.) Ltd. Learned Counsel has also brought to our notice Order of Income Tax Appellate Tribunal whilst examining similar circumstances for assessment year 2005-06. He has taken us through findings therein to point out that conclusions arrived at are based on comparison that condition in any uncontrolled transaction between independent enterprises for purpose of such comparison, economically relevant characteristics must be sufficiently comparable if two parties are to be placed in similar situation. Learned Counsel as such submitted that it is not open for appellant to now contend different criteria to ascertain comparability. In fact Tribunal whilst passing impugned Order has considered said principles whilst coming to conclusion that said three Companies cannot be treated to be comparable to Respondent-Assessee Company. turn over is obviously relevant factor to consider comparability. TXA-18-15 -7- 10. In view of above, we find that said two substantial questions of law proposed by learned Counsel appearing for Appellant do not arise in present Appeal taking note of concurrent findings of fact arrived at by Authorities below. Appeal stands accordingly rejected. K. L. WADANE, J. F. M. REIS, J. arp/* TXA-18-15 Commissioner of Income Tax v. M/s. Pentair Water India Pvt. Ltd