Transfer pricing comparables for software development services...

Transfer pricing comparables for software development services should exclude companies with substantially higher turnover where their inclusion would distort the margins of a smaller captive service provider. Applying the accepted turnover range of Rs. 1 crore to Rs. 200 crores, the Tribunal directed exclusion of companies exceeding the upper limit and recomputation of the arm's length price. Foreign-currency receivables from associated-enterprise transactions were treated as international transactions for transfer pricing purposes. However, the interest adjustment was not accepted at the rate previously applied; it was directed to be recomputed using LIBOR plus 2%. The appeal was allowed for statistical purposes.