TaxTMI 
2026 (11) TMI 524
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....based portal, mobile application, and other platforms. 3. The assessee filed its return of income on 9 November 2022, declaring a loss of Rs. 395,26,88,944. The return was selected for scrutiny, and the Assessing Officer issued a notice under section 143(2) on 1 June 2023. As the assessee had entered into international transactions, the matter was referred to the learned Transfer Pricing Officer to determine the arm's-length price. 4. The assessee primarily operates the online gaming platform Mobile Premier League, which offers a wide range of games, including fantasy sports, adventure, and action games, to provide users with an immersive gaming experience. It also provides software development and support services to M League under an agreement that defines the scope of services and provides for remuneration on a cost-plus basis. According to the assessee's declaration, it entered into nine international transactions with its associated enterprises, principally involving two segments: software development services and IT-enabled services. Revenue from software development services provided to associated enterprises was Rs. 166,74,06,684, while revenue from IT-enabled service....
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....e 65th percentile, after which the assessee was issued a show-cause notice. Using these comparables, the learned TPO determined the arm's-length price at Rs. 12,73,35,873, compared with the transaction value of Rs. 119,383,704, resulting in an adjustment of Rs. 7,952,169. 11. The learned Transfer Pricing Officer considered the assessee's overdue receivables to warrant imputation of interest. Rejecting the assessee's request to aggregate them with the software development and ITeS transactions, he computed interest of Rs. 33,347,374 at the SBI PLR of 12.26%, allowing a 30-day credit period. 12. Accordingly, the Joint Commissioner of Income Tax (Transfer Pricing)-1(3), Bangalore (the learned TPO), by order dated 23 January 2025 under section 92CA(3) of the Act, proposed a total adjustment of Rs. 124,248,190 under section 92CA of the Act. 13. Based on the above, the assessee's Assessment Unit passed a draft assessment order on 25 February 2025 under section 144C(1) of the Act, incorporating the transfer-pricing adjustment. 14. During the assessment proceedings, the learned Assessing Officer also examined transactions of Rs. 360 lakhs with Monsoleill Traders Private Limited....
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....d objections before the learned Dispute Resolution Panel, which issued its directions on 29 November 2025. Giving effect to those directions under section 144C of the Act, the learned Transfer Pricing Officer passed an order on 18 December 2025 reducing the arm's-length price adjustment for the software development services segment from Rs. 82,948,647 to Rs. 58,502,732. The adjustments of Rs. 7,952,169 for the ITeS segment and Rs. 33,347,374 for interest on delayed receivables were retained. Consequently, the total transfer-pricing adjustment was reduced from Rs. 124,248,190 to Rs. 9,98,02,281. The disallowance of Rs. 104,607,000 under section 37 of the Income-tax Act was also sustained, and the total loss was determined at Rs. 3,748,279,663. The assessee has appealed against this order. 17. Assessee has raised the following grounds of appeal: 1. Jurisdictional Grounds Grounds relating to notice under section 143(2) issued without jurisdiction 1.1 The learned AU has erred in law in passing the assessment order under section 143(3) read with section 144C(13) read with section 144B without having any jurisdiction to pass the same. 1.2 The learne....
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....lopment Services Segment 2.5 The Ld. TPO / Ld. AO / Hon'ble Panel erred in facts and in law by not applying the appropriate upper turnover filter of INR 200 Crores and selecting the following companies having high turnover in the final list of comparable companies: Sr.No. Name of Company 1 Tata Elxsi Ltd. 2 Tata Consultancy Services Ltd. 3 Cybage Software Pvt. Ltd. 4 Robosoft Technologies Pvt. Ltd. 5 Happiest Minds Technologies Ltd. 6 Ltimindtree Ltd. 7 Mindtree Ltd. [Merged] 2.6 The Ld. AO / Ld. TPO / Hon'ble Panel has erred in law and on facts by rejecting the following functionally comparable companies selected by the Appellant: • Rheal Software Pvt Ltd • Toxsl Technologies Pvt. Ltd. • Data Collection Infotech (India) Pvt. Ltd. • Enlighten Software Services Pvt. Ltd. • Digital Mesh Softech (India) Pvt. Ltd. 2.7 The Ld. AO / Ld. TPO / Hon'ble Panel erred in law and on facts, in including the below mentioned comparable companies pertaining to the SWD segment having significant brand presence: • Mindtree Ltd. [Merged] â€....
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....€¢ Ltimindtree Ltd. • Happiest Minds Technologies Ltd. • Systango Technologies Ltd. • Tata Elxsi Ltd. • Robosoft Technologies Pvt. Ltd. • Tata Consultancy Services Ltd • I D S Infotech Ltd. • Cybage Software Pvt. Ltd. • Wipro Ltd. 2.13 The Ld. AO / Ld. TPO / Hon'ble Panel erred in law and on facts, in including the below mentioned comparable companies having "significant onsite revenue" towards the arm's length analysis of the SWD segment: • Mindtree Ltd. [Merged] • Tata Elxsi Ltd. 2.14 The Ld. AO / Ld. TPO / Hon'ble Panel erred in law and on facts, in including "Robosoft Technologies Pvt. Ltd." As a comparable companies in spite of recording an "extraordinary event" in the books of account towards the arm's length analysis of the SWD segment 2.15 The Ld. AO / Ld. TPO have erred in facts in not giving effect to the specific directions of the Hon'ble DRP to verify the quantitative filters and include "Signity Software Solutions Private Limited" in the final list of comparable companies. 2.16 The Ld. AO / Ld. TPO/ Ho....
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....¢ Tech Mahindra Business Services Ltd. [Merged] • Sagacious Research Pvt. Ltd • T T E C India Customer Solutions Pvt. Ltd. 2.22 The Ld. AO / Ld. TPO / Hon'ble Panel erred in law and on facts, in including the below mentioned comparable companies undertaking "research and development functions" towards the arm's length analysis the ITES segment: • Tech Mahindra Business Services Ltd. [Merged] • Sagacious Research Pvt. Ltd 2.23 The Ld. AO / Ld. TPO / Hon'ble Panel erred in law and on facts, in including the below mentioned comparable companies incurring "advertisement and promotion expenses" towards the arm's length analysis the ITES segment: • E Care India Pvt. Ltd • Tech Mahindra Business Services Ltd. [Merged] • Sagacious Research Pvt. Ltd • Bahar Infocons Pvt. Ltd 2.24 The Ld. AO / Ld. TPO / Hon'ble Panel erred in law and on facts by not accepting additional comparable companies submitted before Hon'ble Panel during the appeal proceedings that qualifies all quantitative and qualitative filters: • Silgate Solutions Ltd. • Sav....
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....RP have erred in making an adjustment towards alleged interest on delayed receivables without demonstrating any pattern or trend of significant outstanding receivables, and without establishing that the receivable period of the Assessee is abnormal or inconsistent with industry norms. Without prejudice to the above grounds, 2.35 The Ld. AO / Ld. TPO / Hon'ble Panel have erred in computing interest on delayed receivables on a gross basis without adjusting for the Appellant's outstanding payables to its AEs. 2.36 The Ld. AO / Ld. TPO have erred in facts by applying the prime lending rate of State Bank of India ("SBI PLR") for computation of interest on delayed receivables despite the explicit directions from Hon'ble Panel to consider the LIBOR as the reference rate for computing the notional interest. 3. Corporate Tax Grounds 3.1 The Ld. AO / Hon'ble Panel have erred in law and on facts by disallowing the Appellant's business expenditure of INR 10,46,07,000 under section 37(1) of the Act relating to transactions with M/s Monsoleill Traders Private Limited and M/s Innovation Software Exports Limited, and incorrectly holding that the....
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....ossessed significant brand value, and that their functional profiles, asset bases, and scalability rendered them incomparable to the assessee. ii. Regarding the ITeS segment, he submitted that the assessee, with a turnover of only Rs. 11.94 crore, had been compared with companies whose turnover was substantially higher. He contended that applying an appropriate turnover filter would exclude those companies because their scale of operations and asset bases made them incomparable to the assessee. He Stated that Sutherland Global Services ltd { Turnover of Rs 1944 Crs] Tech Mahindra Business Services Ltd [ Turnover of Rs 889.20 Crs] are not at all comparable because of Brand of Mahindra as well. iii. Regarding the interest imputed on overdue receivables from associated enterprises, he submitted that granting the assessee a working-capital adjustment would eliminate the need for the separate adjustment made by the learned Transfer Pricing Officer. 20. The learned CIT-DR, Smt Divya K.J., supported the orders of the lower authorities. Regarding the application of a high-turnover filter, she submitted that the Income-tax Rules do not prescribe turnover as a criterion ....
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....ages in bargaining power, scalability, and operating efficiency. Its turnover of Rs.2,471 crore further reflects a scale of operations materially different from that of the assessee. 27. The same considerations apply to Tata Consultancy Services Ltd., which has a turnover of Rs.160,341 crore, owns substantial intangible assets, and benefits from the strong brand support of the Tata Group. 28. Mindtree Ltd., with a turnover of Rs.10,525 crore, is engaged in diversified activities, including consulting and implementation solutions, and does not provide segmental details. It also benefits from the strong Larsen & Toubro brand and owns intangible assets, including patents, intellectual property, and business-alliance relationships acquired through business reorganisation. Its asset base is therefore materially different from that of the assessee. 29. Similarly, LTIMindtree Ltd., with a turnover of Rs. 14,640 crore and the backing of the Larsen & Toubro brand, has an asset base materially different from that of the assessee. 30. The request to exclude the remaining comparables solely on the basis of turnover is rejected, as their inclusion otherwise satisfies the comparabili....
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.... us on the issues raised. Accordingly, all other sub-grounds of Ground No. 2, other than those dealt with above, are dismissed. 38. Ground No. 3 concerns the disallowance of Rs.10,46,07,000 under section 37(1) of the Act in respect of transactions with Monsoleill Traders Private Limited and Innovation Software Exports Limited. 39. The Ld. Assessing Officer dealt with the issue of this corporate disallowance in his assessment order as under: - 4. Transactions with M/s Monsoleill Traders Pvt. Ltd., of Rs. 3,60,00,000/- and M/s Innovation software Exports Ltd. of Rs. 5,26,50,000/- (Verification report upload through VRU) In regards to transactions with above parties, the assessee was requested to justify its claim by providing following information, vide Notices issued u/s. 142 of the I. T. Act dated 12.10.2023 and 16.9.2024. "As per information received from Pr. Additional Director General, DGGSTI, Bengaluru Zone that based on intelligence received investigation was carried out on you. During the course of investigation it was noticed that you had engaged in wrong availment of Input Tax Credit against the fake invoices issued by M/s Monsoleill Traders....
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.... a part of proceedings, we have duly submitted the invoices received, Payment proof as the same was paid through normal Banking channels and also the said invoices were getting reflected in our respective GSTR2A (which proves that the vendor has filed his GSTR1 furnishing the above invoices). 7.2. Further, during the course of investigation, we were informed that the credentials of above-mentioned vendor's were doubtful and the above vendor's have used ineligible ITC to pay the output and on account of that, ITC is ineligible to us. In view of this information provided to us, being a law-abiding assessee and in the interest of cooperating with the GST department, we have agreed to voluntarily reverse the ITC under section 73 of the CGST Act, 2017. We again want to reiterate that we have never accepted that the invoices issued are bogus or that we have not received any services against the same. 7.3. Further, we would like to humbly submit that there are various judicial precedents in the GST era which states that service recipients who have acted in a bona fide manner cannot be penalised due to a default on the part of the Supplier of services. In the afor....
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....e not filled up fully i.e. delivery note, mode/terms of payment, supplier's Ref., other reference, buyer's order no., Date, Despatch Document no., delivery note date despatched through, destination and terms of Delivery etc. the extract of the bills are as under for sake of convenience. Copy of ledger submitted Further, from the ledger a/c and bills received, it is noticed that the assessee claimed to have made Payment made of Rs.6.10.74.000/- (1,99.58,400 +14,78,400+3,96,37,200) whereas Bills of \Rs.6,21,27,000/-(4,03,20,600 +2.18.06.400) was claimed to have raised by alleged parties. From these facts, it can be noticed that the amount of bills and payments made by the assessee do not match each other. There is a difference in bill amount and payment made, even then, the ledger account of the alleged party does not show any amount payable. In respect of the case laws relied upon regarding non-compliance with the notice issued under section 133(6) and the disallowance of purchases, it is respectfully submitted that in the assessee's case, the parties from which the assessee claimed to have availed services did not comply with the notices issue....
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....an independent inquiry or an opportunity for the assessee to rebut the sellers' statements. He also relied on the decision of the Hon'ble Bombay High Court in Ashok Kumar Gupta [301 Taxman 580; 474 ITR 160]. 43. The learned departmental representative strongly supported the orders of the lower authorities. Referring to paragraph 14 of the assessment order and the supporting report, she submitted that the assessee had obtained bogus invoices without receiving the corresponding services. According to her, the assessee had not produced evidence establishing the actual rendition of services by the parties. She contended that the ledger accounts, invoices, agreements, payment records, and other documents relied upon by the assessee did not, by themselves, prove that the services had in fact been rendered. 44. In reply, the learned authorised representative submitted that the dispute concerned only the alleged availment of ineligible input tax credit, which the assessee had already reversed. He further stated that the parties' balance sheets and confirmation letters had been furnished before the learned Assessing Officer. Accordingly, he contended that the invoices could not be tre....
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....eiving the corresponding goods or services, rendering the related purchases non-genuine. The assessee denied making any such admission and maintained that the services had been received in the ordinary course of business. It explained that, after being informed that the vendors' credentials were doubtful and the input tax credit might be ineligible, it voluntarily reversed the credit under section 73 of the Central Goods and Services Tax Act, 2017, without admitting that the underlying goods or services had not been received. To substantiate its claim, the assessee produced the vendors' ledger accounts, bank statements evidencing payment, and copies of the agreements. On examining the invoices, the learned Assessing Officer found several particulars incomplete, including delivery-note details, payment terms, supplier references, buyer-order details, dispatch documents, destination, and delivery terms. He also noted discrepancies between the invoice values and the payments recorded in the ledgers, as well as unexplained instances of two invoices for identical amounts and services being issued on the same date. The vendors did not comply with notices issued under section 133(6) of th....
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....nji & Company Limited [2020] 117 taxmann.com 625; 423 ITR 220 (Bom.) is misplaced because the facts are distinguishable. In that case, information from the Sales Tax Department alleged that two parties had not supplied the goods purchased by the assessee. In response to the Assessing Officer's notice, the assessee produced invoices and corresponding entries in its books of account relating to purchases of glass mosaic tiles from one party and a stainless-steel top from the other. Nevertheless, the Assessing Officer treated the purchases as non-genuine and made an addition under section 69C of the Act. In the present case, however, the assessee admitted before the GST authorities that the input tax credit claimed was ineligible. The cited decision therefore does not assist the assessee. 49. The assessee also relied on the decision of the Hon'ble Bombay High Court in Ashok Kumar Gupta v. Income-tax Officer [474 ITR 160], in which the High Court reversed the coordinate Bench's order and directed the Assessing Officer to delete the percentage-based addition. That decision is also distinguishable. There, the Assessing Officer relied solely on information received from the State Sales....
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.... LT4909TN1992PLC023734 Mobilo No. +91 7289975064 Tex Invoice MARG, NEW DELHI hea Delhl, Dehl 110001 GSTROUIN: CFAAACISSOICIZT Seite Nama ; Delhi. Code: OF Buyer Saki Saberman, 61: Fhor, Green Layout. Ceilandur, BongAl ura-510/100 CASTNIIIN 2014H0031971ZV State Name : Kunwaka Codo :29 HANBAC ILZA Compara PAN AMACISMC SERware E fe INNOVATION SOFTWARE, EXPORTERLIMITED (O.) - HOVOR This is a Corrouter Corveranad Irvoce RENOVATION SOFTWARE EXPORTS LIMITED (DL) IND Unta CTMPLOCH, FLAT NO.SO7,ANT FRIOSHE EHANEN, 22. K.G 21-2201/15/01 17Nov-2021 Delivery Nona Mojufama af Flyman Wieler'e Rel Otter Motinanajat GALACTUS FINVARE TECHNOLOGY PRIVATE UMITED Hingu's Corien him Osied Dewouh DurumaniNo. Detvery Now Due Dinguched through Destretol Tarta of Dudvary 6 rotan DILORO Gety PROUNE R Sofware Supert Servicen 2 IGST 8 18% 1623 18 % 3,41,70,000 00 41.50,600:00 atsk 1,03,20,000.00 ANEN Dag --- Caor BIEN Pour Grore Thuen Lakh Twenty Thousand Sha Hundred Only ROCK wagndes Tax TO VEID Ampimr T& Arcant 18 0150.500010 15010000 1134,0/0 0150,10400 Tex inantiinateto 1 NR Saty One Lakh Fif....
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....with In the ch pulated dme For Monsoleill Traders (Opc) Pvt Ltd. JATIN agiday Dux: 2001:06.11 12:49:20-0529 Auth. Sign PLOT NO 76-D. UDYOG VIHAR PHASE-4, GURUGRAM, HARYANA-122001 Invoice Details Invoice No MIT/006 Date 11-06-2021 Place Of Service (29) Kamataka Charges Order Rett NA Description of Service MSNISAC Code Amount Online Marketing 998311 Rs. 1,80,00,000.00 Tax 3240000.00 Amount In Rupees 2- Two Crore Twelve Lac Fourty Thousand Only. rivolce Value ± 1.80.00.000.00 GST 2 32,40,000.00 Other Rs. 0.00 Ro #0.00 Total Value Rs. 2.12,40,000.00 Copy of ledger account submitted is as under. GALACTUS FUNWARE TECHNOLOGY PVT LTD Parent Company : M-LEAGUE PTE LTD (L1A) : GALACTUS FUNWARE TECHNOLOGY PVT LTD A/P Register-With Filter 1 April 2021 - 31 March 2022 Nun Type - Growwetenwar Yanke - O- - -- Mousseta Puyılils GD.Xd Thà nh Paty Trade Payslasa la D.J. / 20092121 DLMY9040100044 MDO25 Re: 14,41.000:00 Re.14. 48.000.00 MT026 Rs 14,41,008:00 Ps:28.84.000 0€ Bll Cat 29062121 MT.005 MENDONZH MONDOLERL TRACERS-JOPC) PRIMATE Beng Payment muyde Rx 12 dl 100 :00 Pm E5....
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....a. 6.21,27,000/, Ôn thin, the company has deleted TOS-w/t THC la. NO, 53,000/- khách muốn the nạn payable to the vendor en lu. 6, 10,70,000/4, 14 free, in pes == = ahace payment which was made to the sender, the company has detailed To on atwee payment (oder 2) - DARF00027 and DYR-400014!), which is newmed vie doenel ------- - -- -- - - ip- of 166 uhr boing ----- 1.5 Penoe, tại the purpose of checking the trail poprend made to the umdor, pue good unif needs te ypore the llo osetioel three journal entries, which has a nulflying impact on the lodger und inesnad quindides Äe tà i cÆ¡n ÄÆ¡n giá ta the vendor, -dich amor ta lạ. 4.10,74,000/- -- - ak -pp aneet thịơn to get to the vende in lalyens. A serwery of the ladyer for your saty nelerenon & shoun Beliour a Hải: --- - --- - - /08/02/ ------------------ gegenet -o doikded and ag met igen. kasim shared by the vendor we in stendere formet und tontiein -------- 1.7 Hin, since the sil vando as a service provider and tance schemes las delivery soia, doanh dogvære ----------------- ---------------- ------- ÄÆ¡n felh could not seen thon the series von net roueio....