Citrix R&D India Pvt. Ltd. Vs DCIT (ITAT Bangalore)
The Income Tax Appellate Tribunal (ITAT), Bangalore Bench, partly allowed the appeal of Citrix R&D India Pvt. Ltd. for Assessment Year 2016-17 relating to transfer pricing adjustments in the software development (SWD) and IT enabled services (ITES) segments. The Tribunal held that the assessee, a captive service provider rendering routine software development and ITES to its associated enterprises on a cost-plus basis, was entitled to working capital adjustment and remitted the issue to the Assessing Officer/Transfer Pricing Officer for fresh computation after examining the claim. It also directed correction of the margins of the comparables ultimately retained. In the SWD segment, the Tribunal ordered exclusion of Inteq Software Pvt. Ltd., Larsen & Toubro Infotech Ltd., Persistent Systems Ltd., Infobeans Technologies Ltd., Thirdware Solutions Ltd., Infosys Ltd., Aspire Systems (India) Pvt. Ltd., Nihilent Technologies Ltd. and Cybage Software Pvt. Ltd., holding them to be functionally dissimilar, diversified, owners of significant intangibles or brands, affected by extraordinary events, lacking appropriate segmental information, or otherwise not comparable with a routine captive software service provider. For the ITES segment, the Tribunal considered the assessee’s objections to Tech Mahindra Business Services Ltd., Infosys BPM Ltd., SPI Technologies India Pvt. Ltd. and eClerx Services Ltd. on turnover and comparability grounds, relying on earlier judicial precedents while examining the issue. The appeal was partly allowed for statistical purposes.
