Transfer pricing adjustments for software services, corporate guarantees, expense characterisation and foreign tax credit affirmed under arm's length and DTAA

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....Transfer pricing: comparability analysis found M/s. Nihilent functionally dissimilar to software development provider and thus excluded from comparable set, affecting arms length price determination. Corporate guarantee: corporate guarantee treated as a deemed international transaction after statutory amendment, and a guarantee fee of 0.5% was accepted as appropriate for ALP, rejecting reliance on bank guarantee benchmarks. Expense characterisation: hardware and software procured for supply under contracts were treated as revenue expenditure (not capital) as they formed part of supply to customers. Foreign tax credit: credit for taxes payable in the source state was to be granted under the DTAA even where tax was not paid due to a specific local exemption.....