The Tax Publishers2020 TaxPub(DT) 3884 (Bang-Trib)

INCOME TAX ACT, 1961

Section 92C

Employee costs incurred by Acropetal Technologies Ltd. was 11.5% of total operating revenue, thus, it failed employee cost filter of at least 25% of total operating revenue, as applied by TPO and, therefore, it could not be considered as comparable to assessee's case (SWO services).

Transfer pricing - Determination of ALP - Selection of comparables - Falling of employee cost filter

Assessee rendered software development services to its AE abroad. TPO considered Acropetal Technologies Ltd. as comparable to assessee. Held: Employee costs incurred by Acropetal Technologies Ltd. was 11.5% of total operating revenue thus it failed employee cost filter of at least 25% of total operating revenue, as applied by TPO and, therefore, it could not be considered as comparable to assessee's case.

Relied:Applied Materials India Pvt. Ltd. v. Asstt. CIT [IT(TP)A Nos. 17 & 39/Bang/2016], Finastra Software Solutions (India) (P.) Ltd. v. Asstt. CIT [(2018) 93 Taxmann.com 460 (Bang-Trib.), Electronic Imaging India (P.) Ltd. v. Dy.CIT [(2017) 85 Taxmann.com 124 (Bang-Trib) : 2017 TaxPub(DT) 4187 (Bang-Trib) and Commscope Networks (I) Pvt. Ltd. v. ITO [TS-161-ITAT-2017(Bang)-TP.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12


INCOME TAX ACT, 1961

Section 92C

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