TaxTMI 
TaxTMI 
2023 (10) TMI 1415
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.... also provides software development and related IT services to the group companies apart from rendering shared support services to them. Assessee has got three segments, namely, software distribution, software development (including IT services) and shared services. 3. For the assessment year 2018-19, they have filed the return of income on 29/11/2018 declaring a total income of Rs. 49,36,15,990/- under normal provisions of the Act and Rs. 46,37,02,427/- under 115JB of the Act. In view of the international transactions entered into by the assessee with Associate Enterprises (AEs), the determination of the Arms Length Price ("ALP") of the international transactions was referred to the learned Transfer Pricing Officer (learned TPO). Learned TPO by order dated 31/07/2021 suggested upward adjustment in respect of the provision of software development services, allocation of management fee, provision of ITeS, interest on receivables, related IT services and purchase of assets and liabilities taken over and goodwill. Learned Assessing Officer, pursuant thereto passed draft assessment order on 02/09/2021 under section 143(3) of the Act determining the income of assessee at Rs. 1,03,55,94....
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....indra business Services Ltd., and E-Clerks Services Ltd., is Rs. 3,061 crores, Rs. 703 crores and Rs. 1,144 crores respectively. He submits that in the earlier assessment years in assessee's own case, the hugeness of the turnover and also the value of the big brand of these companies was considered by the Co-ordinate Benches of the Tribunal and were excluded from the list of comparables with the assessee. 9. Basing on the decision of the Hon'ble Bombay High Court in the case of CIT vs. M/s. Pentair Water India Pvt. Ltd. (2016) 69 taxmann.com 180 followed in the case of Obopay Mobile Technology India Private Limited [TS-20-ITAT-2016 (Bang)-TP] for the assessment year 2010-11, PCIT vs. M/s. Obopay Mobile Technology India Private Ltd., in ITA No. 586/2016, dated 23/07/2018 and PCIT vs. New River Software Services (P) Ltd., (2017) 85 taxmann.com 302 (Delhi), learned AR submitted that the turnover is obviously a relevant factor to consider the comparability. So also, on the basis of the decision of the Hon'ble Delhi High Court in the case of PCIT vs. Oracle (OFSS) BPO Services (P) Ltd., (2018) 90 taxmann.com 388 (Delhi), view of the Co-ordinate Benches of the Tribunal in the cases of T....
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....e turnover, ipso facto does not lead to its exclusion; whereas in the case of Pentair Water India Pvt. Ltd. (supra), the Hon'ble Bombay High Court held that turnover is a relevant criteria for choosing companies as comparables in determining the ALP in Transfer Pricing cases. Hon'ble Karnataka High Court, however, in the case of Obopay Mobile Technology (supra), having noticed the view taken by the Hon'ble Delhi High Court in the case Chryscapital Investment Advisors (India) (P.) Ltd. (supra), and also the decision of the Hon'ble Bombay High Court in the case of M/s. Pentair Water India Pvt. Ltd. (supra), upheld the Tribunal order excluding certain entities from the list of comparables on the ground of huge turnover, while following the principle that where two views are possible on an issue, the view favourable to the assessee has to be adopted. 13. In these circumstances, following the foot prints of the Hon'ble Karnataka High Court in the case of Obopay Mobile Technology India Private Ltd., (supra), we hold that the turnover is a relevant criteria for choosing companies as comparables in determining the ALP in Transfer Pricing cases. 14. Now turning to the next question as to ....
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....nds No.14th and 15th seeking to allow management and consultancy fee involving ALP adjustments of Rs. 3,95,25,970/- and Rs. 1,00,01,279/-; respectively. Learned counsel vehement contended before us that the lower authorities have erred in law and on facts in making both the impugned adjustments thereby taking "NIL" price as their market rate(s) in issue. And also that they have wrongly applied benefit test as well which is not sustainable in light of CIT Vs. Cushman & Wakefield (India) Pvt. Ltd., [269 CTR 16] (Del) and CIT Vs. EKL Appliances Ltd. (2012) [345 ITR 241] (Del) that it is not within the TPO's domain to ascertain or apply the "benefit" test since the same has to be ascertained from the point of view of an assessee than questioning its wisdom by departmental authorities. His next argument is that it is the assessee's AE had in fact made the impugned payments to M/s.KPMG on "cost to cost basis" only without involving any profit element therein. Learned counsel has quoted a catena of case law that such cost to cost arrangement itself forms a valid market comparable which could not be dis-regarded whilst adding the entire price as ALP adjustment. The Revenue in t....