The Tax Publishers2021 TaxPub(DT) 4916 (Bang-Trib)

INCOME TAX ACT, 1961

Section 92C

Transactions entered by assessee with its US based AE were similar to the transactions entered into with non-US based AEs and no distinction was made by assessee between two in its TP study and while preparing its audited financial statements. Further, no distinction was made by TPO also in the comparability analysis carried out by him. Therefore, TPO was directed to adopt the net margin rate of 16.99% for non-USA based transaction also and compute transfer pricing adjustment for SWD segment [IT Services segment] accordingly.

Transfer pricing - Determination of ALP - USA and non-USA transactions - Settlement of USA based transactions under Mutual Agreement Procedure (MAP) resolution process

Assessee engaged in software development services entered into transactions with US and non-US based AEs. Consequent to the settlement of USA based transactions under Mutual Agreement Procedure (MAP) resolution process. Margin had been fixed at 16.99%, while margin shown by assessee for entire international transactions relating to SWD segment was 15.05%. In order to put quietus to this matter, i.e., the assessee was agreable for adopting margin at 16.99% in respect of non-USA based transactions also. It submitted that non-USA based transactions constituted major portion of the transactions, still MAP settled rate of 16.99% could be adopted to those transactions also, as neither assessee nor TPO treated USA and non-USA transactions separately. Held: Transactions entered by assessee with its US based AE were similar to the transactions entered into with non-US based AEs and no distinction was made by assessee between two in its TP study and while preparing its audited financial statements. Further, no distinction was made by TPO also in the comparability analysis carried out by him. Therefore, TPO was directed to adopt the net margin rate of 16.99% for non-USA based transaction also and compute transfer pricing adjustment for SWD segment [IT Services segment] accordingly.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12


INCOME TAX ACT, 1961

Section 92C

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