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| The Tax Publishers2020 TaxPub(DT) 3866 (Mum-Trib) INCOME TAX ACT, 1961
Section 92C
Size does matter for the purpose of comparability study. Turnover of assessee was only Rs. 11 crores, whereas turnover of Infosys was Rs. 25,385 crores. Further, functions, risks and various assets held by Infosys were far bigger and superior compared to assessee. Accordingly, Infosys could not be taken as suitable comparable to assessee.
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Transfer pricing - Determination of ALP - Selection of comparables - Significant difference in turnover
Assessee rendered software development services to its AE abroad. TPO considered as comparable to assessee's case. Assessee challenged this on the ground of Infosys having huge turnover. As per TPO, turnover by itself would not be a reason to differentiate profitability of comparable. Held: Size does matter for the purpose of comparability study. Turnover of assessee was only Rs. 11.38 crores, whereas turnover of Infosys was Rs. 25,385 crores. Further, functions, risks and various assets held by Infosys were far bigger and superior compared to assessee. Accordingly, Infosys could not be taken as suitable comparable to assessee.
REFERRED :
FAVOUR : In assesssee's favour
A.Y. : 2011-12
INCOME TAX ACT, 1961
Section 92C
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