Infor (India) Pvt. Ltd. Vs ACIT (ITAT Hyderabad)
The assessee, engaged in sale of user licences of enterprise application software, software development and software-related services, filed its return for AY 2015-16 declaring total income of Rs.8,63,65,260. The assessee had international transactions with its Associated Enterprises (AEs) amounting to Rs.267,28,58,059. The Transfer Pricing Officer (TPO) proposed a total adjustment of Rs.9,82,73,154 comprising adjustments for software development services (SDS), IT-enabled services and interest on receivables. Following the Dispute Resolution Panel (DRP) directions, the final assessment order made an adjustment of Rs.4,60,53,538 relating to SDS and interest on receivables.
For SDS, the assessee had adopted TNMM and reported an OP/OC margin of 15.43%, against a comparable margin of 10.70%, claiming that no adjustment was warranted. The TPO rejected the assessee’s transfer pricing study, applied revised filters and selected 16 comparables. Using a median margin of 27.37%, the TPO proposed an SDS adjustment of Rs.4,82,45,245, which was reduced by the DRP to Rs.3,54,72,020.
The assessee sought exclusion of several companies from the final comparable set. The Tribunal noted that the assessee did not press exclusion of Aspire Systems (India) Pvt. Ltd., Nihilent Technologies Ltd., Inteq Software Pvt. Ltd., Rheal Software Pvt. Ltd., R.S. Software (India) Ltd. and Infobeans Technologies Ltd.; those grounds were dismissed as not pressed.
