AMD India Private Ltd. Vs DCIT (ITAT Bangalore)
12% Mark-Up on Free Assets Deleted as No Taxable Benefit Exists; Large Turnover and Functional Differences Justify Exclusion of Comparables; Provisions for Bad Debts Treated as Operating Expense in TP Analysis; Transfer Pricing Adjustment Nullified; Revenue Appeal Dismissed
The case involved cross appeals by the assessee and the Revenue for Assessment Year 2013–14 against the appellate order dated 31.07.2024. The assessee is engaged in providing software development services relating to semiconductor design and application solutions, as well as marketing support services, to its associated enterprise on a cost-plus basis. During scrutiny, transfer pricing adjustments were proposed after the Transfer Pricing Officer rejected the assessee’s comparables, applied fresh filters, and arrived at higher margins for both software development and marketing support segments, resulting in a total adjustment of ₹11.72 crore.
Separately, the Assessing Officer noted that the assessee had received equipment valued at ₹3.86 crore free of cost from its holding company for testing purposes. Treating this as a benefit, the Assessing Officer taxed the entire value under Section 28(iv). On appeal, the Commissioner (Appeals) granted substantial relief on transfer pricing issues but sustained an addition by directing that only a 12% mark-up on the value of the free-of-cost assets be brought to tax.
