UST Global Technology Services (India) Private Limited Vs DCIT (ITAT Cochin)
ITAT, Cochin: Directs AO/TPO to apply the upper turnover filter since it adopted a lower turnover limit of Rs. 1 crore
Facts: The assessee, UST Global Technology Services (India) Pvt. Ltd., is a subsidiary of USIPL and engaged in providing IT services to its Associated Enterprises (AEs) as a captive service provider. For AY 2021–22, the assessee filed its return of income on 23.10.2022, declaring income of Rs. 11.83 crores. In Form 3CEB, it reported international transactions comprising provision of IT services amounting to Rs. 1564.71 crores, benchmarked under the Transactional Net Margin Method (TNMM).
The Assessing Officer (AO) referred the matter to the Transfer Pricing Officer (TPO) under section 92CA(1) of the Act. The TPO, vide order dated 09.10.2023, rejected the assessee’s transfer pricing study and applied a fresh set of filters. These included use of current year data, exclusion of companies with non-March year ends, exclusion of companies with turnover less than Rs. 1 crore, exclusion where IT services revenue was less than 75% of total revenue, exclusion where related party transactions exceeded 25%, exclusion where export income was less than 75%, and exclusion where employee cost was less than 25% of turnover. Based on these filters, the TPO selected comparables, including very large IT companies such as Infosys, Wipro, Tata Consultancy Services (TCS), L&T Infotech, Mindtree, and others.
