IN HIGH COURT OF DELHI AT NEW DELHI ITA 97/2017 BECHTEL INDIA PRIVATE LIMITED ..... Appellant Through: Mr. Himanshu Sinha & Mr. Manan Jain, Advocates. versus DEPUTY COMMISSIONER OF INCOME TAX ... Respondent Through: Ms. Lakshmi Gurung, Advocate. CORAM: JUSTICE S.MURALIDHAR JUSTICE PRATHIBA M. SINGH ORDER 25.07.2017 1. This is appeal by Assessee under Section 260A of Income Tax Act, 1961 ( Act ) against order dated 14th July, 2016 of Income Tax Appellate Tribunal ( ITAT ) in ITA No.6779/Del/2015 for Assessment Year ( AY ) 2011-12. 2. Admit. following question of law is framed for consideration: Whether ITAT erred in ordering de novo determination of Arms Length Price by Transfer Pricing Officer upon fresh benchmarking? 3. Appellant/Assessee is wholly owned subsidiary of Bechtel Corporation, USA. Its services include construction and construction management; development and financing of projects and customers ITA 97/2017 Page 1 of 7 internationally; engineering and technology; procurement; project management; safety; and sustainability development. 4. During AY under consideration, Assessee, as captive service provider, was engaged in business of providing Engineering Design Support Services ( EDS ) in nature of export of customised electronic data in form of designs, drawings, calculations and other relevant datasheet relating to Project Engineering and Commercial Solutions (PCS) for power plants, refineries, petrochemical plants etc. In addition, Assessee also provided Informational Technology Infrastructure Support Services ( IT Infra ) and Financial Accounting Support Services ( FAS ) and to its Associated Enterprises ( AEs ) to support overseas offices turnkey project execution. Therefore, business segments of Assessee are- EDS, FAS and IT Infra. 5. Assessee filed its return of income, for AY in question, on 23rd November, 2011 after adjusting book profit under Section 115JB of Act. revised return was filed on 21st March, 2013 declaring income of Rs.21,99,19,228. 6. Assessee submitted Transfer Pricing ( TP ) study as well as Form 3CEB listing out nature of international transactions undertaken by it, value thereof, most appropriate method, profit level indicator and Arms Length Pricing ( ALP ) results. 7. Transfer Pricing Officer ( TPO ) by order dated 29th January, 2015 discarded approach followed in TP study and proposed ITA 97/2017 Page 2 of 7 adjustment of amount of Rs. 25,22,91,427 attributable to difference in ALP of international transactions entered by Assessee with its AEs. Thereafter, by order dated 5th February, 2015 TPO suo moto rectified adjustment made in EDS segment and enhanced it to Rs. 29,64,46, 099. upward revision of ALP in EDS, FAS and IT Infra segments, as well as interest on outstanding receivables, was made by TPO. 8. Deputy Commissioner of Income Tax/Assessing Officer ( AO ) passed draft assessment order on 3rd February, 2015 proposing to add aforementioned amounts as recommended by TPO to total income of Assessee. Assessee then filed objections before Dispute Review Panel ( DRP ). DRP by order dated 28th October, 2015 issued following directions: EDS segment: DRP re-characterized functional profile of Appellant as being engaged in providing Engineering Procurement Construction ("EPC") and directed to exclude four companies from comparable set (Ashok Leyland Project Services Ltd, Bengal SREI Infrastructure Development Ltd., NTPC Electric Supply Company Ltd. and Pallavan Transport Consultancy Services Ltd.) and include Arvind Accel Limited. FAS and IT Infra: DRP re-characterized functional profile of Appellant as high end Knowledge Process Outsourcing ("KPO") and upheld approach and comparable set considered by TPO. Further, DRP directed TPO to be consistent in allocation of overhead costs across segments and to follow revenue based allocation as done for EDS segment. Adjustments: DRP directed TPO/AO to provide working capital adjustment. However, DRP rejected risk ITA 97/2017 Page 3 of 7 adjustment claimed by Appellant. Interest on Receivables: DRP granted partial relief and directed TPO/AO to use 6 month LIBOR plus 300 basis points as interest rate while computing interest on intercompany receivables. 9. Thereafter AO passed final assessment order on 30 th November, 2015 making addition of sum of Rs.26,03,31,157 to total income of Assessee on account of ALP of international transactions and determined income of Assessee at Rs.48,02,50,390. 10. Assessee then filed appeal before ITAT which was partly allowed by impugned order dated 14th July, 2016. summary of ITAT s order reads thus: i. As far as EDS segment was concerned, ITAT remanded issue to TPO for de novo consideration by observing that there were multiple changes in comparable set from TP study to different levels of assessment casting doubt on process of selection and retention of comparable relied upon by both Assessee as well as Revenue. ii. As far as FAS segment was concerned, it was stated that as regards re-characterising of profile of Assessee as Knowledge Process Outsourcing ( KPO ) service provider, it had not offered any arguments. ITAT directed exclusion of TCS E Serve Ltd. as comparable as it was functionally different. ITA 97/2017 Page 4 of 7 iii. As regards IT Infra segment, ITAT remanded selection of Sankhya Infotech Ltd. and Sasken Communications Technologies Ltd. to file of TPO as ground against their selection was being presented for first time before ITAT. ITAT directed exclusion of Infosys Limited, E- Infochips India Pvt. Ltd. and E-Zest Solutions as comparables. iv. As regards interest on receivables, ITAT restored matter to TPO to enable Assessee to demonstrate that facts relating to AY 2010-11 were also present in AY in question. v. Even on segmental accounts, ITAT restored matter to TPO to apply directions issued by DRP across segments by allocating cost in ratio of revenue. 11. According to Assessee, ITAT failed to adjudicate claim of Assessee by denying it benefit of economic adjustment on account of difference in risk profile of assessee in arriving at ALP. 12. At hearing of present case on 14th March, 2017 Assessee was asked to file chart explaining approach of TPO, DRP and ITAT in respect of determination of ALP for each of segments. 13. Mr. Himanshu Sinha, learned counsel appearing for Assessee has placed on record detailed chart showing approach of TPO, DRP and ITAT. This chart prima facie shows that in EDS Segment ITAT had failed to give any finding with regard to exclusion of five comparables- Global Procurement Consultant Ltd.; ITA 97/2017 Page 5 of 7 Mitcom Consultancy & Engineering Ltd.; Usha Hydrodynamics Ltd.; TCE Consulting Engineers Ltd. and IBI Chematur (Engineering and Consultancy) Ltd. 14. Although, Ms. Lakshmi Gurung submitted that facts relating to these comparables were not available on record which prompted ITAT to remand matter to TPO, Mr. Sinha denied this by pointing out specific page numbers of record where said details were available. 15. chart produced by Assessee also indicates with regard to each of segments as to manner in which ITAT failed to render finding, even though, facts were available on record before it. 16. Court does not propose to examine each of these issues since it is of view that it would be more appropriate for ITAT itself to decide said issues without remanding matter to TPO. 17. Consequently, question framed by this Court is answered in affirmative by holding that ITAT ought not have remanded matter to TPO for de novo determination of ALP of international transactions in various segments. This exercise should be performed by ITAT itself. This is on basis of submission of Assessee that all details relevant for such determination are already available on record. ITA 97/2017 Page 6 of 7 18. impugned order of ITAT is accordingly set aside. Assessee s appeal ITA No. 6779/Del/2015 for concerned AY 2011- 12 is restored to file of ITAT. said appeal will be listed before it for directions on 21st August, 2017. 19. appeal is disposed of in above terms. S.MURALIDHAR, J. PRATHIBA M. SINGH, J. JULY 25, 2017 b nesh ITA 97/2017 Page 7 of 7 Bechtel India Private Limited v. Deputy Commissioner of Income-tax