Sprinklr India Private Limited Vs DCIT (ITAT Bangalore)
The appeal arose from the final assessment order for Assessment Year 2017-18 incorporating transfer pricing adjustments relating to the assessee’s software development and support service transactions with its associated enterprises. The Transfer Pricing Officer (TPO) proposed adjustments of ₹11.89 crore in the software development segment and ₹74.16 lakh in the market support services segment, which were incorporated into the final assessment order after the Dispute Resolution Panel (DRP) substantially rejected the assessee’s objections. Before the Tribunal, the assessee primarily challenged the selection of comparables in the software development segment by seeking application of an upper turnover filter of ₹200 crore.
The Tribunal observed that while the TPO had excluded companies with turnover below ₹1 crore, no upper turnover filter had been applied despite substantial differences in the size of comparable companies. Referring to the Dun & Bradstreet classification of software companies and earlier Tribunal decisions, the Tribunal held that companies with turnover between ₹1 crore and ₹200 crore constitute small-sized companies. Since the assessee’s turnover was approximately ₹134 crore, companies having turnover exceeding ₹200 crore could not be regarded as comparable. Accordingly, the Tribunal directed the Assessing Officer/TPO to apply the upper turnover filter and exclude Larsen & Toubro Infotech Ltd., Nihilent Ltd., Persistent Systems Ltd., Tata Elxsi Ltd., Infosys Ltd., Mindtree Ltd., and Cybage Software Pvt. Ltd. from the final list of comparables.
