IN THE ITAT DELHI BENCH ‘I’
Interra Information Technologies (India) (P.) Ltd.
Versus
Deputy Commissioner of Income-tax, Circle 11(1), New Delhi
IT APPEAL NOS. 5568 (DELHI) of 2010
and 5680 (DELHI) OF 2011
[ASSESSMENT YEARS 2006-07 & 2007-08]
OCTOBER 31, 2012
ORDER
J. Sudhakar Reddy, Accountant Member
These appeals filed by the assessee are directed against the order of the Assessing Officer passed under sec. 143(3) read with sec. 144C of the Income-tax Act, 1961 (the Act).
2. Facts in brief – Interra Information Technologies (India) Private Limited, a company incorporated under the Companies Act, 1956, is a 100% subsidiary of Interra IT Inc., a US based company. Interra IT Inc. enters into contract with customers and subcontracts a part/whole of the work to Interra India. Interra Information Technologies (India) Private Limited is registered under the Software Technology Park (STP) Scheme of the Government of India and is primarily engaged in software development for its parent company. Besides these, Interra India also enters into direct contracts with end customers.
3. The Transfer Pricing Officer at Page 2 brought out the portfolio of the assessee in the following words:-
“Interra IT India has significant expertise in developing distributed enterprises software. It delivers high-quality, robust and scalable software services and solutions using multi-tiered client-server architecture. The software solutions can be distributed between IBM Mainframes, Unix Platforms and Microsoft Windows 2000 and XP. In many projects, the engineers in Interra have successfully applied their ingenuity in marrying legacy applications on the IMB Mainframe to today’s web-based client-server techniques to provide cost-effective solutions to complex problems.
The entire effort is backed by considerable experience in the state-of-the-art technologies like Microsoft DNA (Distributed Internet Architecture). Universal Data Access (UDA), MTS, IIS, COM/DCOM/COM+, OLAP AND COMTI. The team uses a host of development tools like Visual C++, Visual Basic and Visual InterDev, SQL server 7.0, Essbase. Interra India has recently started developing intranets and Microsoft Exchange based work flows.
Interra KIT India is also engaged in developing software applications on the IBM Mainframe. Focussed on financial and revenue management, these applications are hosted on the MVS and OS/390 platforms on IBM’s newsiest S/390 series Mainframe with Parallel Sysplex. The software is developed on Cobol and Assembly language, and uses DB2/5.x as the RDBMS and CICS 4.x as the transaction processor. The R&D center is connected online to the Microsoft Developer Network as well as IBM Developer Connection to have access to technology as it emerges in the market. The majority of consultants have an advanced degree in engineering from reputed institutions and considerable years of software development experience in top branded international software companies. The team has significant experience of executing complex software projects for high-profile global customers. To maintain consistency in quality, the company has adopted the best of practices in developing software with strict compliance to object-oriented modeling techniques, use of CASE tools and adhering to component-based development. To ensure that the engineers are in tune with the latest technology, they are encouraged to attend regular professional developer’s conference to upgrade their knowledge and skills.
Interra IT India has obtained ISO 9001 certification and CMM level 5 certification in Quality. The primary motivation for ISO 9001 & CMM 5 certification are to use the opportunity to review existing practices, which has been acclaimed by customers worldwide.
Software Services
The primary software services that the company provides are
• Multi-tier client-server application integrating Microsoft and IBM Platforms.
• Internet technologies.
• IBM Mainframe S/390.
• IBM AS/400
• Enterprise-wide business solutions using OLAP and data warehousing application.
• ERP (enterprise resource planning)
• Euro conversion
• Conversion, migration and porting
• E-Commerce and Supply Chain Management
• On-site Consultancy
• Product Development.”
4. During the year the assessee entered into the following international transactions:-
