TaxTMI 
TaxTMI 
2024 (3) TMI 1382
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.... erred in law & on facts in deleting addition made by the AO on account of ALP adjustment of international transaction from associated enterprises? B. Whether the Hon'ble ITAT was justified in laying down stringent standards of comparability and attempting to identify exact replica of the taxpayer for comparability analysis, whereas the Indian Law and the international jurisprudence recognize the reality that there cannot be an exact comparable in a given situation without any difference without appreciating that such astringency will defeat the purpose of flexibility provided in comparability analysis for determination of ALP? C. Whether Hon'ble ITAT erred in excluding comparable when none of the pre-conditions mentioned in Rul....
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....een shown from software development services and products and there is no separate segment of the software development services available in the annual report of the company. In such a huge turnover, the composition of revenue from the software development services and from sale of the software products is not separately available in the annual report. In such circumstances, the company cannot be termed as functionally similar at entity level with the assessee, who was engaged in providing software services to its associated enterprises. In view of the aforesaid dissimilarity, we direct the learned AO/TPO to exclude this company from the final set of the comparables." 4. That then takes us to the rejection of Wipro as a comparable and in r....
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....ansactions. Ld.TPO did not accept assessee's contention of related party transactions and proceeded to include it in the final set of comparables. On the contrary, Ld. DR submitted that there is no related party transaction during the year under consideration. We have heard the rival submissions of both sides in the light of record placed before us. Ld. Counsel submitted that Wipro Technology Services Limited (formerly Citi Technology Services Limited) ('The Company') was incorporated on 15 September 2004. The entire share capital of the Company was held by Citicorp Banking Corporation, a company incorporated under laws of Delaware, USA, upto 20 January, 2009. It was submitted that Wipro Limited (Wipro) executed agreement with Citig....
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....ribunal in Saxo India Pvt. Ltd vs. ACIT (supra) as under : "We have noticed above from the language of Rule 1OB(1)(e)(ii) that it is the net profit margin realized from a comparable uncontrolled transaction, which is considered for the purposes of benchmarking. The ITA No. 6001/Del/2015 Element K India Pvt. Ltd. epitome of 'comparable uncontrolled transaction' is that the companies or transactions in order to fall within the ambit of sub-clause (ii) of rule 1OB(1)(e), should be both comparable as well as uncontrolled. 'Uncontrolled transaction' has been defined in Rule 1OA(a) to mean: 'a transaction between enterprises other than associated enterprises, whether resident or non-resident.' This shows that in order to be....
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....wo associated enterprises, it ceases to be an 'uncontrolled transaction' and, thereby, goes out of reckoning under Rule JOB(])(e)(ii). Adverting to the facts of the instant case, we find that Wipro Technology Services Ltd. earned revenue from Master services agreement with Citigroup Inc. for the delivery of technology infrastructure services. This agreement was, in fact, executed between the assessee's AE, Wipro Ltd., and Citigroup Inc., a third person. This unfolds that the transaction of earning revenue from software development support and maintenance services by Wipro Technology Services Ltd., is an international transaction because of the application of section 92B(2) i.e., there exists a prior agreement in relation to su....