ADP (P.) Ltd. v. Dy. CIT - Taxpublishers.in

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The Tax Publishers2016 TaxPub(DT) 3336 (Hyd-Trib) ADP (P.) Ltd. v. Dy. CIT INCOME TAX ACT, 1961 --Transfer pricing--Computation of arm's length priceSelection of comparables----Where segmental details of operating income of software development services and sale of software products were not available for two companies selected by TPO as comparables, such companies could not be selected as comparable in case of assessee.--Assessee was engaged in software development services. In the transfer pricing document, assessee selected a set of 43 comparables whereas TPO selected 26 comparables in his study and proposed TP adjustment accordingly. Assessee claimed that two companies were to be excluded as segmental details were not available for both companies but TPO rejected assessee's claim. DRP confirmed the action of TPO and directed AO to work out arm's length price on the basis of comparables selected by TPO. *Held :* In the case of Sumtotal Systems India (P.) Ltd. v. Asstt. CIT (2014) 65 SOT 48 (Hyd-Trib.), it was held that since segmental details of operating income of software development services and sale of software products were not available, two companies could not be taken into account for comparison with assessee. In view of the above decision, assessee's appeal was allowed and AO was directed to exclude the two companies from the scope of comparable analysis. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2016 TaxPub(DT) 3336 (Hyd-Trib)

ADP (P.) Ltd. v. Dy. CIT

INCOME TAX ACT, 1961

--Transfer pricing--Computation of arm's length priceSelection of comparables----Where segmental details of operating income of software development services and sale of software products were not available for two companies selected by TPO as comparables, such companies could not be selected as comparable in case of assessee.--Assessee was engaged in software development services. In the transfer pricing document, assessee selected a set of 43 comparables whereas TPO selected 26 comparables in his study and proposed TP adjustment accordingly. Assessee claimed that two companies were to be excluded as segmental details were not available for both companies but TPO rejected assessee's claim. DRP confirmed the action of TPO and directed AO to work out arm's length price on the basis of comparables selected by TPO. Held : In the case of Sumtotal Systems India (P.) Ltd. v. Asstt. CIT (2014) 65 SOT 48 (Hyd-Trib.), it was held that since segmental details of operating income of software development services and sale of software products were not available, two companies could not be taken into account for comparison with assessee. In view of the above decision, assessee's appeal was allowed and AO was directed to exclude the two companies from the scope of comparable analysis.