TPG Software Pvt Ltd Vs DCIT (Delhi High Court)
Delhi High Court held that order is liable to be set aside and matter remanded to ITAT since ITAT failed to provide appropriate reasoning with regard to functionality of comparable while undertaking transfer pricing adjustment.
Facts- During scrutiny assessment, TPO passed an order u/s. 92CA(3) of the Act proposing a transfer pricing adjustment of ₹6,84,70,678/- in respect of international transactions, which related to provision of software development services provided by the Assessee to its overseas associated enterprises as well as interest on the outstanding receivables.
The Assessee filed its objections before the Dispute Resolution Panel [DRP], including objections relating to the selection of comparables – exclusion of comparables selected by the Assessee and inclusion of other comparables by the TPO.
DRP accepted that two of the comparables, namely Cigniti Technologies Limited and Wipro Limited, were required to be excluded; however, the remaining entities, were found to be comparable on the FAR analysis. Insofar as the comparables entities proposed by the Assessee, which were rejected by the learned TPO are concerned, the learned DRP accepted that two of the entities [Sagarsoft (India) Limited and Maveric Systems Limited] are required to be included.
