ITAT ruled on transfer pricing comparable selection for...

ITAT ruled on transfer pricing comparable selection for appellant engaged in software development services to associated enterprise on cost-plus markup basis. Tribunal excluded six companies from comparables: Tata Elxsi Limited due to diversified activities including animation/VFX services creating functional dissimilarity; Persistent Systems Limited for functional dissimilarity and being giant company; Aspire Systems for extraordinary amalgamation event and turnover filter; Infosys Limited as captive service provider incomparable to appellant's cost-plus model; Thirdware Solutions for functional differences and intangible asset ownership; Cybage Software for providing different services. However, Larsen & Toubro Infotech Limited and Infobeans Technologies Limited were retained as comparables since appellant originally selected them in transfer pricing documentation. Regarding bad debt provisions, ITAT upheld that provisions are not operating expenses for profit level indicator computation, distinguishing from actual write-offs.