2020 (5) TMI 650

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... assessee is aggrieved by the Transfer pricing adjustment made in respect of payment made to its AE towards Maintenance services relating to software licenses. 3. The assessee company is engaged in the business of marketing of software license of its AE, sales support service, maintenance of software, consulting and training activities. During the year under consideration, the assessee has purchased software licences from its AE named PTC, USA for resale in India. It has also entered into maintenance services with its customers who purchased the software licenses. The assessee has remitted 40% of the sales realisation to its AE towards the cost of purchase of software. It has also remitted 40% of the maintenance charges collected from it....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....o it. 2 First level remote support service Telephonic support, web based online support by application engineers and support engineers done by taxpayer. No function of AE. Taxpayer provides this support from 8m to 5pm from Monday to Friday. It as to maintain a running call centre, which is the core activity in maintenance service provision. Call centre. Employees and support engineers are maintained by taxpayer. 60% of total maintenance service fees received is for this function. 3 Site visit to resolve defects/errors Personnel of taxpayer visit customer to rectify errors when remote support service does not work. They also visit to provide general maintenance services. No function of taxpayer. Taxpayer's applica....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ncome arising out of any particular transaction or class of transactions is to be split between the parties to the transaction. Since in the transaction relating to maintenance services the assessee and AE were involved, PSM is the most appropriate method to find out the ratio in which the income needs to be split between the two. The TPO has rightly divided the maintenance services into different tasks or functions and also determined the nature of responsibility or functions performed by each party. Maximum weight was given to the core activity and then revenue was split between parties on the basis of these tasks. So there doesn't appear to be any infirmity in the order of the TPO...." Even though the assessee has countered the ob....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ke a different view in this year alone. By placing reliance on the decision rendered by Hon'ble Supreme Court in the case of Radhaswomy Satsangh (193 ITR 321), the Ld A.R submitted that the Principle of Consistency should have been followed by the tax authorities. 8. The Ld D.R submitted that the TPO has found that the maintenance services are separate functions. The Transfer Pricing Officer has further analysed the nature of services performed by the assessee and its AE and accordingly arrived at the conclusion that payment of 10% of the maintenance charges collected by the assessee would be at arms length as per functions performed by each of them. He submitted that the assessee has, however, given different kind of explanation bef....