Wipro GE Healthcare Pvt. Ltd. Vs DCIT (ITAT Bangalore)
Summary: Wipro GE Healthcare Pvt. Ltd. challenged the assessment order passed under section 143(3) read with section 144C(13), pursuant to the directions of the Dispute Resolution Panel dated 23.03.2025. The appeal concerned transfer-pricing adjustments across contract manufacturing, medical-products distribution, software and engineering design services and ITeS, together with corporate-tax issues.
The Tribunal held that provision for doubtful debts has a direct relationship with sales and realization of trade receivables and therefore constitutes an operating expense for computing operating margins. Applying the principle of consistency and following the judicial precedents referred to in the order, the AO/TPO was directed to treat the provision as operating in nature. The Tribunal similarly held that routine rates and taxes, including statutory levies such as customs duty and road tax arising from regular business operations, are operating expenses. It rejected the Revenue’s reliance on Rule 10TA for treating such expenditure as non-operating and directed recomputation of the operating margins.
In the software and engineering design segment, the Tribunal considered the comparability of several companies. It held that the TPO’s search matrix is a guiding tool and not a statutory condition for determining comparability. Functional comparability under FAR analysis remains the primary test. Accordingly, Infomile Technologies Ltd., KALS Information Systems Ltd., Rheal Software Ltd. and Yudiz Solutions Pvt. Ltd. were directed to be included. Aptus Software Labs Pvt. Ltd., Consilient Technologies Pvt. Ltd., Cybage Software Pvt. Ltd., Great Software Laboratory Pvt. Ltd., Indianic Infotech Ltd., Net4nuts Ltd., Nihilent Ltd., Orion India Systems Ltd. and Tata Elxsi Ltd. were directed to be excluded on functional-comparability considerations.
