Wipro GE Healthcare Pvt. Ltd. Vs ACIT (ITAT Bangalore)
The ITAT Bangalore considered Wipro GE Healthcare Pvt. Ltd.’s appeal against the assessment order under Section 143(3) read with Section 144C(13) of the Income-tax Act for AY 2018-19. The assessee, a joint venture between General Electric Company, USA and Wipro Limited, challenged transfer-pricing adjustments of Rs.2,19,25,70,261, including royalty of Rs.9,41,83,707, a distribution-segment adjustment of Rs.1,24,42,65,469, software-development adjustment of Rs.85,35,47,785 and interest on delayed receivables of Rs.5,73,300. It also challenged other disallowances under Section 37 and non-grant of TDS credit.
On royalty, the Tribunal followed its earlier decisions in the assessee’s own case and allowed the ground. The earlier orders had directed that where no proper comparable for royalty was found, the royalty could be considered as part of the international transaction in the trading segment and treated as operating cost for determining the margin. The Tribunal noted that the same issue had consistently been decided in the assessee’s favour in earlier assessment years and therefore allowed the royalty ground.
On the distribution segment, the TPO had applied TNMM and made an adjustment of Rs.1,24,42,65,469. The assessee submitted that the adjustment should be confined to international transactions involving AE purchases and that earlier Tribunal orders had adopted the Resale Price Method. The Tribunal followed its earlier orders, including those for AYs 2012-13, 2016-17 and 2017-18, and held that on parity of reasoning the TP adjustment in the trading segment was to be deleted.
