TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1609
X X X X Extracts X X X X
X X X X Extracts X X X X
....sfer Pricing Officer on page no.192 of the Transfer Pricing order. The method applied for benchmarking these services was Transactional Net Margin Method, which was not disputed by the ld. Transfer Pricing Officer and similarly, the profit level indicator was not disputed by the ld. Transfer Pricing Officer. The ld. Counsel for the assessee submitted that the issue is squarely covered by the decision of the co-ordinate Bench in assessee's own case for A.Y. 2020-21. The ld. Counsel for the assessee submitted that the two comparable namely; Tata Elxsi Limited ("Tata Elxsi") and Sasken Technologies Limited ("Sasken") as appeared in the final list of comparable considered in the final assessment order are excluded then the available margin earned by the comparable companies worked out to 11.91%. Since, the Margin of the appellant is 11.88%, which is in the permissible limit of +/-3%. The ld. Counsel for the assessee therefore submitted that relying on the said order of the Tribunal these comparables may kindly be excluded. 3.2. The ld. DR on the other hand fairly agreed that the Tribunal in assessee's own case in A.Y. 2020-21 has excluded these comparable while calculating the avera....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that provides segment wise breakup and revenue from software development services available [Refer page No. 7732 of the Paper book-Part 11 of 11 and page no. 112 of the annual report Judicial precedence: Mavenir Systems (P.) Ltd. [2023] 152 taxmann.com 655 (Bangalore - Trib.) [AY 2017-18] The Hon'ble ITAT has held that the said company cannot be considered as a comparable for benchmarking transaction in the software development segment due to the reasons identical to those raised by the Appellant before the lower authorities viz. this company is involved in R&D activities and own huge patents which is not akin to a captive service provider. Prayer: In view of the foregoing, we have to request the Bench to direct the TPO to exclude the aforementioned companies from the list of comparable. On exclusion of the aforesaid companies, the average margin earned by the comparable companies will work out to be 11.66%, accordingly, the margin of the Appellant i.e. 9.94% [refer page no. 40 of TP order falls within +/-three percent. Accordingly, there would be no transfer pricing adjustment worked out as under: 09. We note that....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l the relevant details in respect of the comparables that needs to be verified by the Ld.TPO/AO. We thus direct the Ld.AO/TPO to recompute the margins in accordance with law. Accordingly this ground stands allowed for statistical purposes. 6. Ground no. 2 is related to the transfer pricing adjustment with respect to outstanding receivables. Primarily the Ld.AR has objected by submitting that no interest is attributable as the same was not charged by the AEs on any delayed payment by the assessee. However, assessee submitted that only two invoices payment were delayed to be paid by the AE with respect to 15 days and one day. In any event, if at all any interest is to be computed, LIBOR rate is to be applied as submitted by the Ld.AR. The Ld.DR relied on the order passed by authorities below. We have perused the submissions advanced by both sides in the light of records placed before us. Admittedly attributing interest to the delayed payment is an international transaction. 6.1 The Ld.AR submitted that the Ld.TPO proposed transfer pricing adjustment in respect of outstanding receivables in respect of trade creditors being the AEs ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....outset, the ld. Counsel for the assessee submitted that the issue has been decided in assessee's own case for A.Y. 2009-10 to 2016-17 and 2020-21. Since, the facts of the case in the current assessment year are same, therefore, the ground may be allowed by following the decision of the co-ordinate Bench in the preceding and succeeding assessment years. 4.2. The ld. DR per contra fairly agreed that the issue has been decided by the co-ordinate bench in favour of the assessee. 4.3. After hearing the rival contentions and perusing the materials available on record, we find that the issue is squarely covered by the co-ordinate bench in ITA no. 1960/Kol/2024 for A.Y. 2020-21, vide para no.11 and 12 deciding in favour of the assessee. For the sake of ready reference, we extract the para as under: - "011. The issue raised in ground no.3 is against the transfer pricing adjustment of Rs.108,79,48,589/- on account of Intra Group Services ('IGS') received by the assessee. 012. We note that this is a recurring issue in the case of the assessee which has been decided by the co-ordinate Bench in favour of the assessee in ITA No. 226/KOL/2021, vide order dated 06.09.2022 f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isement, marketing and promotion expenses. 015. We note that the impugned issue is recurring one and has been decided by the co-ordinate Bench in assessee's own case for A.Y. 2010-11 to 2016-17. The operative part of the decision in ITA No. 226/KOL/2021 for A.Y. 2016-17 is extracted below:- "7. Issue raised in ground no. 3 is in respect of determination of arm's length price and an adjustment made on account thereof towards advertisement, marketing and promotion expenses. 8. Having heard rival submission and perusing the material on record we find that issue is squarely covered by the decisions of the Co-ordinate Benches in earlier assessment years in assessee's own case from AY 2010-11 to 2015-16. Accordingly we set aside the DRP direction on this issue and direct the AO/TPO to delete the adjustment made and consequently ground no. 3 is allowed." 016. Considering the facts of the instant assessment year being similar to ones as decided by the co-ordinate Bench in assessee's own case, we hold that the advertisement, marketing and promotion expenses do not an international transaction and accordingly, the TP adjustment made by the ld. Transfer Pri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ble with the assessee in so far as the supplemental profit and loss in respect of the research and development activity of TCG are not available. Consequently, we are of the view that both ADTL and TCG cannot be taken as a comparable while computing the transfer pricing adjustment in regard to the contract, research and development services. The said two companies are excluded. Admittedly, the average comes to only 10.52% which is well within the 3% margin which is permissible. Consequently, the addition made on account of the said transfer pricing adjustment stands deleted. Consequently, ground nos. 6 the assessee's appeal stand allowed." 7.2. We therefore respectfully following the decision of the co-ordinate bench direct the ld. AO/Transfer Pricing Officer to exclude the comparable in the case of Aurigene Discovery Technologies Ltd. Accordingly, the ground no.6 is allowed. 8. The issue raised in grounds no.7 and 8 is in respect of double disallowance of interest paid to MSMED of Rs.55,226/- and double addition of deemed income u/s 41(1) of the Act of Rs.70,66,297/-. 8.1. After hearing the rival contentions and perusing the materials available and after examining the ord....