NTS Technology Services Pvt. Ltd. Vs DCIT (ITAT Bangalore)
The ITAT Bangalore considered an appeal by NTS Technology Services Pvt. Ltd. against the final assessment order for AY 2018-19, involving transfer pricing adjustments relating to software development services and interest on outstanding receivables. The assessee, a wholly owned subsidiary of News Singapore, provided IT support and IT infrastructure support services exclusively to News UK and its subsidiaries. The assessee reported income of Rs. 9,06,17,064/-. Its international transactions included provision of IT support services of Rs. 58,80,32,678/-, issue of equity shares at premium of Rs. 27,23,74,143/- and cost allocation from AEs of Rs. 82,30,726/-. Using TNMM, the assessee reported a 15.02% margin and selected 15 comparables with a median of 6.10%. The TPO applied various filters, selected 20 comparables with a median of 23.60%, and proposed a transfer pricing adjustment of Rs. 4,38,68,697/- together with Rs. 12,70,088/- towards interest on outstanding receivables. Following DRP directions, the final transfer pricing adjustment was reworked to Rs. 4,05,37,561/-.
The Tribunal admitted the assessee’s additional ground seeking exclusion of Larsen & Toubro Infotech Ltd. on the turnover filter, relying on National Thermal Power Co. Ltd. Vs. CIT and Jute Corporation of India Ltd. Vs. CIT. On the turnover issue, the Tribunal held that the 10 companies—Exilant Technologies Pvt. Ltd., Tech Mahindra Ltd., Larsen & Toubro Infotech Ltd., Mindtree Ltd., Nihilent Ltd., Persistent Systems Ltd., Wipro Ltd., Tata Elxsi Ltd., Infosys Ltd. and Cybage Software Pvt. Ltd.—were to be excluded for failing the turnover filter. The Tribunal relied on decisions including Dell International Services India (P) Ltd. Vs. DCIT and Autodesk India Pvt.Ltd. Vs. DCIT, which recognised turnover as a relevant criterion for comparability.
