PRELUDESYS INDIA PRIVATE LIMITED,KANCHIPURAM vs. INCOME TAX OFFICER, CORPORATE WARD 5(2), CHENNAI

Briefly the facts of the case are that appellant is a Company incorporated under the provision of the Companies Act, 1956. It is engaged in the business of providing advisory, development, integration, configuration and maintenance services to Six AEs. The return of income for the Assessment Year 2022-23 was filed on 29.11.2022declaring income of Rs.1,50,73,270/-. The appellant reported the following international transaction in its Form 3CEB : S.No. Nature of International Amount in INR Method Transactions adopted 1 Provision of services 48,16,30,850 TNMM 2 Advances Received against 4,81,37,509 services TOTAL 52,97,68,359

The appellant company sought to justify that the above international transactions are at Arm’s Length Price by submitting the TP study, wherein the assessee company had adopted Transactional Net Margin Method(TNMM) as the most appropriate method. On noticing the above international transactions, the Assessing Officer referred the matter to the TPO for the purpose of benchmarking the above international transactions, u/s.92CA of the Act. The TPO vide order dated 22.01.2025 passed u/s.92CA(3) of the Income Tax Act, 1961 determining the Arm’s Length price of above international transaction by adopting TNMM Method as most appropriate method and suggested upward adjustment of Rs.4,20,56,280/- in respect of provision of software services and also suggested upward adjustment of Rs.2,39,028/- in respect of advances received. Thereafter, the Assessing Officer passed the Draft Assessment Order on 28.02.2025 proposing TP adjustment of Rs.5,79,68,578/-.

On receipt of the assessment order, the appellant filed objections before DRP. The DRP vide order dated 27.11.2025 confirmed the Draft Assessment Order. On receipt of the directions of DRP, final assessment order was passed by the Assessing Officer u/s.143 r.w.s 144C(13) read with section 144B of the Income Tax Act, 1961 on 29.12.2025.

Being aggrieved by the final assessment order, the appellant is in appeal before us in the present appeal. At the outset, we find that the appellant company had characterized its services as ITES Company whereas, the TPO sought to benchmark the international transaction by adopting the comparable which are into the software development services, therefore, we are of the considered opinion that the matter requires a fresh benchmarking analysis. Therefore, matter is restored to the file of Assessing Officer/Transfer Pricing Officer for denovo assessment in accordance with after affording opportunity of being heard to the appellant.

In the result, appeal filed by the assessee is partly allowed for statistical purpose.

In the result, stay application filed by the Assessee is dismissed as infructuous. Order pronounced in the open Court on 29th May, 2026.