Comparable companies for transfer pricing benchmarking must share objective functional similarity; government-owned enterprises with distinct risk profiles and entities lacking distinct segmental data for diversified activities are fundamentally unsuitable for benchmarking against an assessee engaged in specialized technical and payroll services.

O R D E R

PER ANUBHAV SHARMA, JM:

This appeal is preferred by the assessee against the order dated 14.03.2023 of the Ld. CIT(A)-42, Delhi (hereinafter referred as Ld. First Appellate Authority or in short Ld. ‘FAA’) in DIN& Order No: ITBA/APL/S/250/2022-23/1050714487(1) arising out of the order dated 26.11.2021 u/s 143(3) r.w.s 254 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by the NFAC, Delhi for AY: 2012-13.

2. Heard and perused the records. Assessee / appellant, Fieldcore India (earlier known as Granite Services International India Ltd.) was incorporated in India on February 15, 2005 as a wholly owned subsidiary of Fieldcore Service Solutions International LLC, USA. During the year, the Appellant was primarily engaged in providing technical support and payroll administrative services to its associated enterprises ('AEs).The Ld. TPO computed arm's length price under section 92CA(3) of the Act and made transfer pricing adjustment amounting to INR 3,97,61,547. The Ld. AO, following the Ld. TPO order dated January 28, 2016 under section 92CA(3) of the Act, issued the draft assessment order dated March 22, 2016 by incorporating the aforesaid adjustment.Aggrieved by the draft assessment order, Appellant filed the objections before the Hon'ble Dispute Resolution Panel ("DRP") dated April 25, 2016.During the DRP proceedings, the Appellant submitted its detailed contentions on the additions made by the Ld. AO in draft assessment order.DRP passed the directions dated November 18, 2016 and upheld Ld. TPO's approach and granted working capital adjustment on comparable companies.

2.1 Then the Appellant filed an appeal before this Tribunal on February 9, 2017, for the exclusion/inclusion of the functionally dissimilar/similar comparable companies and the co-ordinate bench passed the order dated June 19, 2018 in respect of the certain specific comparable companies and referred the matter to the file of TPO for necessary adjudication. (The copy of this order is available at Page No. 69-93 of the Appeal set)

2.2 Pursuant to the order dated 19/06/2018, the Ld. TPO passed impugned order dated January 12, 2021, disregarding the contentions on few of the comparable companies thereby reducing the transfer pricing adjustment to INR 1,78,51,646. The Ld. AO, following the Ld. TO order passed final assessment order dated November 26, 2021. Assessee preferred before Learned Commissioner of Income Tax Appeals ("Ld. CIT(A)") for the exclusion of the functionally dissimilar comparable companies i.e. HSC India Limited and Mitcon Consultancy and Engineering Services Limited. However, ld. CIT(A) dismissing the contentions of the Appellant concluded that the Ld. TPO was justified in including HSC India Limited and Mitcon Consultancy and Engineering Services Limited as suitable comparables. Accordingly assesse is in appeal raising following grounds;

3. We have considered rival contentions and find that Ground no. 1 is a general ground. No specific averments have been made in respect of this ground. Similarly ground no. 3 and 4 are consequential.

4. Ground no. 2 with sub-grounds; The issue is if Ld. CIT(A) has erred in including HSC India Limited ("HSCC") and Mitcon Consultancy and Engineering Services Limited ("Mitcon") as suitable comparables. The contentions of ld. Counsel of Appellant on exclusion of HSCC is primarily thatHSCC India Ltd. is a Government company and works in completely different environment with no risk and assured assurance.

5. We find that earlier in first round the coordinate ben