Case Law Details
Voith Siemens Hydro Private Limited Vs ACIT (ITAT Delhi)
The case of Voith Siemens Hydro Private Limited vs. ACIT involves transfer pricing proceedings. The focus of the proceedings is on the expenses incurred for engineering services and administrative support services. This article analyzes the details presented during the case, including the examination of invoices, the nature of the services, and the arguments put forth by the parties involved. The ultimate outcome and implications of the case are also discussed.
Analysis: During the transfer pricing proceedings, Voith Siemens Hydro Private Limited submitted details of expenses incurred for engineering services and administrative support services provided by its associated enterprise (AE). The invoices contained information such as invoice numbers, dates, gross amounts in Euros, and their equivalent amounts in INR. The expenses totaled Rs. 1,89,53,444, with Rs. 1,46,21,403 relating to engineering services and Rs. 43,32,041 related to administrative support services.
The Transfer Pricing Officer (TPO) examined the invoices and found that the AE charged the assessee for services rendered during the OTO (order to offer) stage of projects, which included OTO-support and application work. The TPO acknowledged that the engineering services were essential for the assessee, a start-up company with limited experience in the hydro power industry. The services provided by the AE included sales support, product engineering, feasibility studies, and technical assistance using Computational Fluid Dynamics (CFD) software.
The case involved a discussion on the characterization of the assessee as an EPC (Engineering, Procurement, and Construction) contractor and the comparison with companies providing engineering services. The assessee argued that its activities in subsequent assessment years were similar to the AY 2007-08, which had been characterized as an EPC contractor. The assessee presented a detailed search process that resulted in identifying comparable companies engaged as EPC contractors, supporting the arm’s length standard for the international transactions.
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