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2014 (12) TMI 1195 - ITAT DELHITransfer pricing adjustment - selection of comparabels - Held that:- Infosys is not a suitable comparable to the case of the present assessee i.e. Pyramid India because there is a vast difference between functional profile of Infosys and the assessee company. We also note that the assessee is only providing contract software development services and IT staffing services and, on the other hand, Infosys being a high turnover giant company having a different functional profile, along with huge expenses on advertising and marketing and having substantial intangible assets, cannot be held to be a suitable comparable for the assessee company which is only having turnover of ₹ 7.24 crore from the contract software development services segment. KALS Information Systems is not a suitable comparable as this company was developing software products and was not merely, purely or mainly a software provider company. Avani Cincom Technologies earns revenue from sale of software products and software services and in absence of segmental details and data, AvaniCincom Technologies cannot be considered as comparable to the assessee company who was providing contract software development services only. Persistent Systems Ltd. in absence of segmental details/information about segregated income from both the segments, the company cannot be taken into account for comparability analysis and, therefore, Persistent Systems Ltd. ought to have been omitted from the final set of comparable. Quintegra Solutions Ltd. ought to have been omitted from the final set of comparables for the year under consideration as undisputedly, present assessee company is primarily engaged in provision of contract software development services (CSD segment) and IT staffing services Tata Elxsi (Seg) not fit for comparability analysis for determining the ALP of the assessee having turnover of more than ₹ 200 crore and more than 50 times of the assessee’s turnover, also owns several intellectual property rights and intangible assets worth 11.86 crores which are 12% of its total net fixed assets. Lucid Software is not a suitable comparable for the purpose of determination of ALP of the impugned transaction of the present assessee and this entity deserves to be deleted from the final set of comparables as Lucid Software has developed a software product named “Muulam” and for this purpose, the company has employed heavy capital in development of a specific product, then profitability in the sale of product would be certainly high in comparison to the company which is only involved in the service sector.
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