TaxTMI 
TaxTMI 
2017 (4) TMI 1508
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...., is a wholly owned subsidiary of Pivotal Corporation Canada, previously known as CDC Software India P. Ltd, is primarily engaged in software development services in various sectors for clients of the holding company. It provides programming, customisation, modification and support services to the holding company's information technology software and systems also. It has entered into a service agreement with the holding company to render these services which are charged to the holding company on a fully loaded cost basis at a predetermined mark-up on such costs. For the impugned assessment year, it filed its return on 29.11.2012 declaring a total income of Rs. 6,44,51,680/-. The TPO passed an order u/s.92CA determining the average net opera....
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....ment Services (SWDS) SI No Name of the comparable Company 1 InfoTech ltd 2 Persistent Systems Ltd 3 Mind Tree Ltd t) The authorities below failed to appreciate that the appellant being a captive service provider runs a 'single customer risk' and the comparables since dealing in open market are prone to the marketing and technical risks. Accordingly, the authorities failed to provide suitable risk adjustment on the facts of the case. g) Determination of ALP in terms of Rule was not undertaken. h) The authorities below erred in rejecting the application of Rule 10(B)(4) and Rule In view of above facts, pleading and submission, it is prayed tha....
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....cal risks and hence hold that the TPO, DRP and the AO further erred in not appreciating that the appellant renders services only to their parent company and thus suitable risk adjustment needs to be made in case of the appellant under the facts and circumstances of the case. 9. Hold that the determination of ALP must be done in accordance with Rule of the Rules; and thus hold that even if one of the comparables selected by the appellant satisfies the computation mechanism for determination of the ALP, the determination of ALP by using arithmetic mean of different comparables is not warranted under the facts and circumstances of the case. 10. Hold that the TPO, DRP and the Assessing Officer erred in not granting the benefit....
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....sp; Earlier, the ITAT had accepted the turnover range of Rs. 1 to 200 crores. The ITAT observed that this range cannot be fixed, as facts may vary from case to case. But this method of adopting 200 crores without proper basis or logic resulted in unreasonable judgements. Hence, the ITAT in the McAfee ruling, supra, held that a range of upper limit at ten times and lower limit of ten times i.e., one tenth can be adopted. The ITAT in the above case also held that there could margin of variations but these broad parameters could be adopted on uniform basis. In the assessee's case, its turnover is 38.07 crores. Therefore, following McAfee ruling, the turnover range that could be taken in the comparables should be 3.8 crores to 380 crores.....