Autodesk India Pvt. Ltd. Vs DCIT (ITAT Bangalore)
Autodesk India Pvt. Ltd. challenged the assessment order for AY 2013-14 passed under section 143(3) read with section 144C of the Income-tax Act, 1961, pursuant to the directions of the Dispute Resolution Panel (DRP). The assessee provided technical support and research and development services to its Associated Enterprises, which were clubbed under the Software Development Services segment for transfer-pricing benchmarking.
The assessee’s turnover from the Software Development Services segment was Rs.22.50 crore. It adopted the Transactional Net Margin Method (TNMM), using Operating Profit/Operating Cost as the Profit Level Indicator. Its PLI was 10%, compared with an average margin of 8.92% for the seven comparables initially selected by the assessee.
The TPO accepted the benchmarking method but rejected most of the assessee’s comparables and selected seven companies. After working-capital adjustment, the TPO determined an adjusted margin of 18.10% and proposed a transfer-pricing adjustment of Rs.1,65,69,946. The DRP excluded Tech Mahindra Ltd. but retained the other comparables, resulting in a final transfer-pricing adjustment of Rs.1,67,94,970.
The assessee sought exclusion of Persistent Systems Ltd., Larsen & Toubro Infotech Ltd. and Mindtree Ltd. It submitted that its turnover was Rs.22.50 crore and that companies having turnover exceeding Rs.200 crore should not be considered comparable.
