TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1237
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....nternational transactions, a reference was made to the Transfer Pricing Officer [TPO]. 3. The learned TPO passed an order under Section 92CA(3) of the Act proposing a transfer pricing adjustment of Rs. 6,84,70,678/- in respect of international transactions, which related to provision of software development services provided by the Assessee to its overseas associated enterprises as well as interest on the outstanding receivables. 4. The Assessee furnished its transfer pricing study report and selected eight comparable entities which, according to the Assessee, were comparable on the basis of Function, Assets and Risk [FAR] profile. The Assessee had used Transactional Net Margin Method [TNMM] as the most appropriate method and adopted Operating Profit / Total Operating Costs as the Profit Level Indicator [PLI]. The TPO accepted selection of TNMM as the most appropriate method. 5. The learned TPO accepted some of the entities selected by the Assessee as comparables but rejected the others for various reasons. The learned TPO rejected the five entities selected by the Assessee as comparables and included nine others as comparable entities. The final list of entities, as set out in ....
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.... built test suites for SAP and Oracle. * The acquisition of Gallop Solutions Inc had a significant impact on the revenue of the company. Revenue during the year increased to INR 5,552.12 lacs as against INR2,356.75 lacs million, during FY 2013-14. * Cigniti has INR 54.86 crores worth of intangible fixed assets in the nature of brands, trademarks goodwill, patents and copyrights. As per annual accounts, * It is the third largest independent testing software services company. * The intangible are 54.86 Cr out of total fixed assets of 91.77 Cr and computers are only 15.84 Cr. The FAR is different. The is functionality not similar. It should be excluded. 2. Cybercom Datamatics Information Solutions Ltd The Company provides business aligned next generation solutions to a wide range of industry verticals that help enterprises across the world overcome their business challenges and achieve operational efficiencies. These solutions leverage innovations in technology, of business process, and domain expertise to provide clients a competitive edge. It is considered as a comparable to the assessee. * Act as consultants and advisors on information /internet systems and surveryors o....
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....hanged. As per the annual accounts the revenue recognition is primarily from software services-Revenue from software development on time-and-material basis is recognized as the related services are rendered. Revenue from fixed price contracts is recognized using the proportionate completion method, which is determined by relating the actual project cost of work performed to date to the estimated total project cost for each contract. Functionally the company is similar. The change in segment reporting does not change the primary function. The intangibles are Rs.17.10 Cr. (which includes softwares of Rs.15.50 Cr. and intectual property is only Rs.1.50 Cr.) as against the operating revenue of Rs.3081.00 Cr. FAR is similar. In TNMM broad functional similarity is to be seen. It should be retained. 4 Persistent Systems Ltd Persistent Systems Ltd. is an OPD speciality company, offering the customers the benefits of offshore delivery. The company designs, develops and maintains software systems and solutions, creates new applications and enhances the functionality of the customers' existing software products. This company is engaged in software services and is functionally comparabl....
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.... Significant related party transaction i.e. 87.68% (Refer page no. 395 of paperbook) * Engaged in providing diversified business operations which include IT Consultancy, SAP implementation and maintenance, providing networking solutions, CAD/CAM engineering & design consultancy. * Segmental information is not available. * Earns revenue from sale in software services and is functionally comparable of third party software products and software development. * Much larger scale of operations (Sales INR 886.18 crores vs Assessee - INR 43.5 Crores). As per annual accounts the company is engaged in providing difference services including IT Consultancy, SAP implementation and maintenance, providing networking solutions and CAD/CAM engineering and design consultancy. The company provides Engineering and Design Services and Product Lifecycle Management product and services to manufacturers and their suppliers in international automotive, aerospace and engineering markets. The company recognizes revenue from sale of services (Rs.762.89 Cr) sale of products (Rs.122.12 Cr) and commission income (Rs.1.17Cr) The company's accounts are maintained business segment wise. In the segment repor....
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....oducts but no segmental data is available. The company is also engaged in significant R&D activities Further, two subsidiaries, Wipro Technology Service Limited and Wipro Energy IT Services Limited amalgamated with Wipro Limited, and one unit of the company demerged from the company. The company has significant intangible assets, and exceptionally high turnover, earning supernormal profits (31.26%) FAR of the company is different. Besides extra-ordinary events and brand ownership make the company not comparable. It should be excluded." 10. Insofar as the comparables selected by the learned TPO are concerned, the DRP accepted that two of the comparables, namely Cigniti Technologies Limited and Wipro Limited, were required to be excluded; however, the remaining entities, were found to be comparable on the FAR analysis. Insofar as the comparables entities proposed by the Assessee, which were rejected by the learned TPO are concerned, the learned DRP accepted that two of the entities [Sagarsoft (India) Limited and Maveric Systems Limited] are required to be included. 11. In addition, the learned DRP also issued further directions. Based on the same the learned AO passed the final a....