IN THE ITAT, BANGALORE BENCH
N.V. VASUDEVAN, V.P. & CHANDRA POOJARI, A.M.
VMWARE Software India (P) Ltd. v. Dy. CIT
IT(TP)A Nos. 322, 323, 417, 418/Bang/2018
23 December, 2020
Assessee by: T. Suryanarayan, Advocate
Revenue by: Pradeep Kumar, Commissioner (Departmental Representative) (ITAT), Bangalore
N.V. Vasudevan, V.P.
ITA No. 322/Bang/2018 & ITA No. 417/Bang/2018 are appeals by the Assessee and Revenue respectively against the order of Commissioner (Appeals)-7, Bengaluru, dated 21-11-2017, relating to assessment year 2010-11. ITA No. 323/Bang/2018 & ITA No. 418/Bang/2018 are appeals by the Assessee and Revenue respectively against the order of Commissioner (Appeals)-7, Bengaluru, dated 21-11-2017, relating to assessment year 2011-12. The issues in these appeals are common and arise out of identical facts and circumstances. We therefore deem it convenient to pass a common order.
2. We shall first take up for consideration the cross appeals for assessment year 2010-11. The assessee is a subsidiary of VMware International Unlimited Company, Ireland (formerly known as VMware International Limited), which is an affiliate of VMware Inc., USA. It provides software development services ('SWD services' for short), Information Technology Enabled Services ('ITES' for short) and marketing support services ('MSS services' for short) to VMware group companies, as a captive service provider. For all the above services, the Assessee is compensated by the Associate Enterprise (AE) on a cost plus mark up basis. In terms of section 92B of the Income Tax Act, 1961 (Act), the above transactions were international transactions. In terms of section 92 of the Act, any income arising out of an international transaction has to be determined having regard to Arm's Length Price (ALP). The revenue from the international transactions are as follows :--
Details of international transactions entered into by the Assessee with its AE, as reflected in the TP order are as follows :--