TiVo Tech Private Limited Vs DCIT (ITAT Bangalore)
Background and Issues
This appeal by the assessee, TiVo Tech Private Limited, arose from the final assessment order dated 09.04.2021 for AY 2016-17 passed under sections 143(3), 144C(13), 143(3A) and 143(3B) of the Income-tax Act, 1961.
The assessee, a wholly owned subsidiary of Veveo Inc., USA and part of the Rovi Group, provided IT, ITES and MSS services to Associated Enterprises. It declared total income of Rs. 8,03,16,570. Following reference to the TPO, a transfer pricing adjustment of Rs. 4,49,24,168 was made in the SWD segment and the TPO separately determined interest on delayed receivables of Rs. 2,91,451. Various expense disallowances were also made under section 37.
The Tribunal considered, among other matters, the turnover filter for comparables, exclusion of R S Software (India) Ltd., interest on delayed receivables, expense disallowances, trade payables and consequential interest and advance-tax credit.
Turnover Filter for Comparables
The assessee had selected eight comparables under TNMM and reported an OP/OC margin of 16.57%. The TPO rejected six comparables, selected 17 companies and determined the median margin at 25.64%, resulting in a transfer pricing adjustment of Rs. 4,49,24,168.
The assessee contended that the TPO should have applied an upper turnover filter and excluded companies whose turnover exceeded Rs. 200 crore. Relying on Autodesk India (P) Ltd. V. DCIT (2018) 96 taxmann.com 263 (Bang Trib) and Razorpay Software Pvt. Ltd., the assessee sought exclusion of seven companies.
