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| The Tax Publishers2019 TaxPub(DT) 3661 (P&H-HC) INCOME TAX ACT, 1961
Section 92C
Where assessee performed routine maintenance for software whereas comparable entity operated at full fledged risk and performed services of application design, software engineering and technology lapse, that entity was not to be treated as comparable for assessing Arm's length price of international transactions in case of assessee.
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Transfer pricing -- - Determination of ALP - Selection of comparables - Functional dissimilarity
A reference was made by AO to TPO to determine Arm's Length Price TPO, under section 92CA(3), proposed Transfer Pricing Adjustment. AO completed assessment under section 143(3) by including addition on account of Transfer Pricing Adjustments and interest on service tax and TDS. Held: Tribunal had recorded that assessee was providing services of commissioning of software embedded in equipment supplied by OEM. Services provided by assessee also included localization and customization and was engaged in providing low end software services. Thus, neither it was engaged in end to end development of a product nor it owned any products. It also performed routine maintenance for software whereas comparable Indian company operated at fullfledged risk and performed services of application design, software engineering and technology lapse. Accordingly, other company was not to be treated as comparable for assessing ALP and, thus, it directed TPO to exclude that company from comparability analysis of software support systems segment of assessee while determining Arm's length price of international transactions. Order of Tribunal was accordingly approved.
Followed:CIT v. Agnity India Technologies Pvt. Ltd. (2013) 36 Taxmann.com 289 (Del) : 2013 TaxPub(DT) 2693 (Del-HC), Distinguished:CIT v. Agnity India Technologies Pvt. Ltd. 2013 SCC Online Del 2521 : (2013) 36 Taxmann.com 289 (Del) : 2013 TaxPub(DT) 2693 (Del-HC),
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A.Y. :
IN THE PUNJAB & HARYANA HIGH COURT
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