2019 (9) TMI 1595

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....t arises for consideration in this appeal by the assessee is with regard to the correctness of determination of Arms Length Price (ALP) of the international transaction for rendering software development services (SWD) by the assessee to its Associated Enterprises (AE) under the provisions of section 92 of the Act. 2. The assessee provides SWD services to its AE. For the services so rendered, the assessee received a sum of Rs. 19,36,24,825/-. Besides the aforesaid international transaction, there were also other international transactions and those international transactions were considered by the Transfer Pricing Officer (TPO) to be at arms length. The operating profit to operating cost of the assessee in SWD services segment was arrive....

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....the DRP is concerned, the company which the assessee seeks to exclude is L & T Infotech Ltd. The learned Counsel for the assessee submitted that this company was functionally different and cannot be compared with the SWD services company such as the assessee and in this regard, he placed reliance on decision of the ITAT, Bangalore Bench in the case of M/s. Metric Stream Infotech India Vs. DCIT in IT(TP)A Nos.1418 and 2735/Bang/2017 for Assessment Year 2013-14, order dated 27.02.2019. In this decision, the Tribunal took a view following the decision of the ITAT Hyderabad Bench in the case of M/s. EPAM Systems India Pvt. Ltd., Vs. ACIT in ITA No.2122/Hyd/2017 for Assessment Year 2013-14 order dated 20.11.2017 that L & T Infotech Ltd., was int....

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.... & Toubro Infotech Ltd, we find that there is no discussion on these two aspects that this company is having significant amount of cost of bought-out items for resale and it is engaged in sale of services and products to its related parties and hence, in our considered opinion, this Tribunal order cannot be considered as a binding precedence because this Tribunal order is silent on these two important aspects as to this aspect that this company is having sizeable amount of bought out items for resale and have related party transactions in respect of sales of services and products. We also find that in the case of remaining three Tribunal orders i.e.Microsoft Research Lab India Pvt. Ltd.'s case (supra), WM Global Technology Services (Ind....

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....tful debts. The learned Counsel for the assessee filed before us copy of the decision of the Hon'ble Karnataka High Court in the case of Principal CIT Vs. Business Process Outsourcing India Pvt. Ltd., (2018) taxcorp (DT) 73195 (HC Karnataka) wherein in an appeal against the order of the Tribunal holding that provision for bad and doubtful debts should be considered as part of the operating expenditure, the Hon'ble High Court confirmed the order of the Tribunal and dismissed the appeal of the Revenue as one not giving rise to any substantial question of law. 9. In the light of the aforesaid decision, we are of the view that provision for bad and doubtful debts should be treated as operating expense while computing the PLI OP/OC of the com....