INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Determination of ALP - Selection of comparables - Significant intangibles and scale of operation

Assessee rendered software development services to its AE abroad. TPO considered Infosys Ltd. as comparable to assessee's case. Held: Risk profile of assessee showed that it operated at minimal risk as 100% services were provided to AEs whereas Infosys Ltd. operated as full-fledged risk-taking entrepreneur. Further, assessee provided software development testing support and technical support services whereas Infosys Ltd. provided end to end solutions, technical consultancy, design development, re-engineering maintenance etc. along with software products. Infosys Ltd. lacked segmental details and bifurcation of expenditure for software development and product was not available. The scale of operation was completely different. Assessee's income was at Rs. 252 crores whereas that of Infosys was Rs. 36,765 crores. Assessee did not own intangibles or goodwill whereas, Infosys Ltd. had goodwill of Rs. 1,091 crores and IPR at 49 crores and further Infosys spent Rs. 250 crores on R&D expenditure. For these reasons, Infosys Ltd. was to be excluded from the list of comparables.

REFERRED :

FAVOUR : in assessee's favour

A.Y. : 2013-14

INCOME TAX ACT, 1961

Section 92C

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