Bechtel India (P) Ltd. v. Dy. CIT

INCOME TAX ACT, 1961

--Transfer pricing--Determination of ALPSelection of comparables--100% Government owned undertaking--KITCO Ltd. was a 100% Government owned undertaking and most of the clients or projects undertaken by this company were either for State Government or government run institutions, therefore, majority revenue of this company come from governments i.e. State or Central Government run projects and the company derived benefit out of its parental relation with government in getting contract and because of this, profit margins of the company could not be said to be indicative of a free-market economy where assessee operate, hence, there could be no comparability analysis.--Assessee rendered engineering design and related services (EDS) to its AE abroad. TPO considered KITCO Ltd. as comparable to assessee's case. Held: KITCO Ltd. was a 100% Government owned undertaking and most of the clients or projects undertaken by this company were either for State Government or Central government run institutions, therefore, majority revenue of this company come from government/state or centre run pojects and the company derived benefit out of its parental relation with government in getting contract and because of this, profit margins of the company could not be said to be indicative of a free market economy where assessee operated, hence, there could be no comparability analysis.