AMD India Private Limited Vs ACIT (ITAT Bangalore)
The Income Tax Appellate Tribunal (ITAT), Bangalore, considered the appeal filed by AMD India Private Limited against the final assessment order passed under Sections 143(3), 144C(13), 143(3A) and 143(3B) of the Income-tax Act, 1961 for Assessment Year 2018-19. The assessee, a wholly owned subsidiary of AMD Inc., provided software development services and marketing support services to its associated enterprises on a cost-plus basis. The Assessing Officer referred the international transactions to the Transfer Pricing Officer (TPO) for determination of the arm’s length price. The TPO rejected the transfer pricing study, selected fresh comparables, proposed transfer pricing adjustments for the software development segment, marketing support services segment, and notional interest on trade receivables, and the Assessing Officer also disallowed depreciation on goodwill. After directions of the Dispute Resolution Panel (DRP), the final assessment order incorporated transfer pricing adjustments of ₹50.82 crore and disallowance of goodwill depreciation.
The Tribunal recorded that the grounds challenging the legality of the transfer pricing reference and alleging absence of tax evasion motive were not argued and were left open. The ground challenging the fresh transfer pricing analysis in the software development segment was not pressed.
On the related party transaction (RPT) filter, the Tribunal followed its decisions in the assessee’s own cases for Assessment Years 2016-17 and 2017-18. It directed the Assessing Officer/TPO to compute the RPT ratio on an aggregate basis by considering both related party income and related party expenses as a proportion of sales and to apply the RPT filter in accordance with the directions contained in those earlier orders.
