Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (6) TMI 132 - AT - Income TaxTransfer pricing adjustment - Transactional Net Margin Method - selection of comparable - Held that:- Infosys Technologies Ltd., cannot be treated as comparable with the assessee company considering the giantness of Infosys Ltd., in terms of risk profile, nature of services, number of employees, ownership of branded products and brand related profits, etc. See CIT vs. Agnity India Technologies (P) Ltd. 2013 (7) TMI 696 - DELHI HIGH COURT KALS Information Systems Ltd. (seg.) company is into the business of software products and also software development and has merged the revenue from both the streams under the overall segment of ‘Application software’, which has been taken by the TPO for inclusion in the final set of comparables, this company loses the tag of comparability vis-a-vis the assessee company which is exclusively engaged in providing software development services on a contract basis to its AEs as a captive unit. It is manifest that under the circumstances prevailing in the case of this company, the impact of the profit from the sale/licence of software products on the overall profitability of the ‘Application software’ segment cannot be segregated. To what extent the overall profits of this company have been influenced by the revenues from software products, cannot be precisely ascertained. In view of the aforegoing distinguishing facts, this company ceases to be comparable. Persistent Systems Ltd. has been held to be functionally different from a software development service provider company. See FCG Software Services (India) (P) Ltd. Vs. ITO [2014 (12) TMI 681 - ITAT BANGALORE] Tata Elxsi (Seg.) company offers integrated hardware and packaged software solutions, the same cannot be considered as comparable with the assessee company, which is simply providing software related services. Wipro Ltd. (Seg.)A company which does not own any IPRS and carries on the activity of rendering software development services at its own cannot be compared with a company which provides software development services by using its own IPRS in the form of patents of software. Under such circumstances, we hold that this company cannot be considered as comparable at segment level. The same is ex consequenti directed to expelled from the set of comparables.
|