SAS Research and Development (India) Private Limited Vs additional / Joint / Deputy/ACIT/ITO (ITAT Pune)
The Pune ITAT partly allowed the assessee’s appeal against the assessment order passed under Sections 143(3), 144C(13), 143(3A) and 143(3B) of the Income-tax Act for AY 2016-17. The dispute arose from a transfer pricing adjustment relating to software development support, consultancy and training services rendered by the assessee to its Associated Enterprises (AEs). The assessee had benchmarked its international transactions under the Transactional Net Margin Method (TNMM), which was also accepted by the Transfer Pricing Officer (TPO) as the most appropriate method. However, the TPO selected a different set of comparable companies and proposed a transfer pricing adjustment of Rs. 8,69,53,667, which was upheld by the Dispute Resolution Panel (DRP).
At the outset, the Tribunal recorded that the assessee did not press Grounds Nos. 1, 2, 5, 6, 7, 8, 9, 10 and 11. Consequently, those grounds were dismissed as not pressed, leaving only the issues relating to inclusion and exclusion of comparable companies.
Before examining the disputed comparables, the Tribunal considered the assessee’s functional, asset and risk (FAR) profile. It noted that the assessee was a wholly owned subsidiary of SAS USA and rendered software development support, consultancy and training services under the direction and supervision of its AE. Its activities included software development, coding, design support, consultancy, training and initial testing, while the AE remained responsible for conceptualisation, product design and final user acceptance testing.
