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01. This is the bunch of six cross appeals in case of M/s Gea Processing Engineering India Private Limited (the appellant/assessee) for three years i.e. assessment year 2005 - 06, 2009 - 10 and 2010 - 11 involving similar Page | 3 ITA No. 6494 & 6495/MUM/2016, 1213/MUM/2017 CO No.216, 127, 128/MUM/2017 M/s Gea Process Engineering (I) Pvt. Ltd.;A.Y. 2005-06, 2009-10, 2010-11 issues. Both the parties argued them together. Therefore, these appeals are disposed of by this common order.

05. Brief facts of the case shows that i. Assessee is a company engaged in the business of engineering, procurement and construction of food, dairy, chemical and Pharma plants.

Page | 5 ITA No. 6494 & 6495/MUM/2016, 1213/MUM/2017 CO No.216, 127, 128/MUM/2017 M/s Gea Process Engineering (I) Pvt. Ltd.;A.Y. 2005-06, 2009-10, 2010-11 ii. Assessee filed its return of income on 26/10/2005 at the total income of ₹ 58,775,840/-.

xiv. Accordingly the assessment order under section 143 (3) of the act was passed by the learned AO on 28/11/2008 wherein the only adjustment was the transfer pricing adjustment of ₹ 23,793,786/- determining the total income of the assessee at ₹ 82,569,626/- against the returned income of ₹ 58,775,840/-.

06. The assessee aggrieved with assessment order preferred an appeal before the learned CIT - A. The learned CIT appeal deleted i. 25% adjustment to the arm's-length price of the import of spares and components and payment of design and engineering services international transaction holding that the Page | 9 ITA No. 6494 & 6495/MUM/2016, 1213/MUM/2017 CO No.216, 127, 128/MUM/2017 M/s Gea Process Engineering (I) Pvt. Ltd.;A.Y. 2005-06, 2009-10, 2010-11 transaction for import of spares and components and payment of design and services are forming part of the overall contract. He further held that it can be seen from the invoices submitted by the appellant company that one to one correlation made to third-party customers in India of such procurement is possible. He further referred to the FAR in assessee submitted by the assessee company holding that FAR of each of the international transactions are completely different from each other. He further noted that in assessment year 2009 - 10 in assessment year 2010 - 11 for which the assessee was also in appeal before him, vide order dated 29/7/2016 the benchmarking methodology adopted by the assessee with respect to procurement of goods and payment for design and engineering services was found to be appropriate. Therefore he held that the benchmarking carried out by the assessee in its transfer pricing study report was appropriate. Accordingly he deleted the adjustment.

016. On careful study of TPSR, At paragraph number 5.1 the international transaction of imported components from its associated enterprises are referred to. The assessee was selected as a tested party for this international transaction. The most appropriate method is discussed in paragraph number 5.5.6 of the PSR. It was submitted that since the components and spares are sold without any significant processing, resale price method as MAM may be used to determine the arm's-length character of the international transaction. It was stated that the components and spares are imported to specific requirements of each project such spares and components either are charged separately or are covered as a part of overall project revenue. Accordingly, the determination of gross margin is not feasible for every component. Therefore, arm's-length price has been determined for all the purchase transactions from the AE taken together. For Page | 14 ITA No. 6494 & 6495/MUM/2016, 1213/MUM/2017 CO No.216, 127, 128/MUM/2017 M/s Gea Process Engineering (I) Pvt. Ltd.;A.Y. 2005-06, 2009-10, 2010-11 the purpose of determining the ALP, normal gross margin earned by comparable companies was determined. Companies engaged in engineering procurement and commissioning business or dealing in similar products were selected as a population for arriving at the normal gross margin by using prowess database. Assessee selected 11 comparables as per appendix 7B and gross margin was computed of this comparable deriving the AM mean of 18.13%. The assessee applied this margin to the purchases from associated enterprises. The assessee derived that the arm's-length purchase price of this material is Rs. 9,78,39,303 whereas the international transaction is only of ₹ 8,33,24,837 and accordingly this international transaction is at arm's-length. By looking at the appendix 8 assessee has imputed the sales value of each of the purchase transaction. However the assessee itself in paragraph number 5.7 has stated that determination of gross margin is not feasible for every component because the components are imported to the specific requirement of each project and the spare and components are either charged separately or are recovered as part of overall project revenue. Therefore, it is not known that how the assessee has arrived at sales value with respect to each of the invoices of associated enterprises. Because in EPC contract there is no separate value of sales of each component as stated in TPSR. This is also contrary to the last paragraph of the order of the learned CIT - A at page number six of 13 wherein it is stated that in most cases the customer is charged Page | 15 ITA No. 6494 & 6495/MUM/2016, 1213/MUM/2017 CO No.216, 127, 128/MUM/2017 M/s Gea Process Engineering (I) Pvt. Ltd.;A.Y. 2005-06, 2009-10, 2010-11 individually for the said component and spares. We also failed to understand that in this situation [ EPC Contracts] how the learned CIT - A has given a finding that one-to- one identification for purchase and sales is possible and therefore the resale price method adopted by the assessee is most appropriate method is correct. The method mentioned by ld AO in TP order is Cost plus method, there is no finding of dl CIT (A) that how now the most appropriate method is RPM.