G2.COM INDIA PRIVATE LIMITED,BANGALORE vs. DCIT, CIRCLE 3(1)(1), BANGALORE

ITTPA 735/BANG/2026Status: DisposedITAT Bangalore10 September 2026AY 2022-2311 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the Transfer Pricing Officer (TPO) rejected the assessee's Transfer Pricing Study Report (TPSR) on incorrect grounds. The TPO had accepted most of the assessee's filters and data but made minor tweaks to some filters, leading to the rejection of the entire study. The Tribunal found that the information and data used in the assessee's computation were not stated to be unreliable or incorrect. Therefore, Ground No. 1 of the assessee's appeal was allowed. The Tribunal directed the Assessing Officer (AO) to examine whether the arm's length price could be determined by modifying the filters that the TPO disagreed with, using the 491 comparable companies identified by the assessee. The assessee was directed to provide the database and accept/reject matrix to the AO. Grounds 2 and 3 were dismissed as they did not require adjudication in light of the decision on Ground 1. Regarding Ground 4 (interest on delayed trade receivables), the Tribunal found that interest on outstanding receivables could constitute a separate international transaction if not aggregated with profit margins. It also held that outstanding payables and receivables do not correlate, and no set-off can be granted. However, as the issue of determining the arm's length price for software development was restored to the AO, this issue also needed to be addressed by the assessee before the AO. Therefore, Ground No. 4 was restored to the file of the AO. Ground No. 5 (initiation of penalty proceedings) was dismissed as no arguments were advanced, and it was considered premature. The appeal was partly allowed for statistical purposes.

What were the facts?

The assessee, G2.com India Private Limited, filed an appeal against the assessment order dated December 12, 2025, passed by the assessment unit of the Income Tax Department for Assessment Year 2022-23. The assessing officer determined the total income at ₹110,557,550, an upward adjustment from the returned income of ₹57,682,730. This adjustment included ₹22,723,000 for software development services provided to an Associated Enterprise (AE) and ₹24,847,270 for interest on delayed receivables from the AE, treated as a separate international transaction. The total adjustment amounted to ₹47,570,270. The assessee's original return was filed on November 30, 2022, and revised on December 31, 2022. The case was selected for scrutiny, and a reference was made to the Transfer Pricing Officer (TPO) on August 3, 2023.

What were the issues?

1. Whether the Transfer Pricing Officer (TPO)/National Faceless Assessment Centre (NFAC) erred in rejecting the assessee's Transfer Pricing (TP) Study by deeming the filters applied for comparable company selection inappropriate (Ground 1.1). The assessee argued that the TPO erred in rejecting its TP documentation and the arm's length analysis based on inappropriate filters. The revenue's contentions are not explicitly recorded on this point, but the TPO's action implies disagreement with the assessee's methodology. 2. Whether the TPO/NFAC erred in conducting a fresh benchmarking analysis using non-contemporaneous data and substituting the assessee's analysis (Ground 2.1). The assessee contended that the TPO's fresh analysis was based on conjectures and should be quashed. The revenue's position is not recorded. 3. Whether the Dispute Resolution Panel (DRP)/TPO erred in rejecting comparables selected by the assessee, such as Toxsl Technologies Private Limited and Batchmaster Software Private Limited, and in rejecting the 10-times turnover filter (Grounds 2.2, 2.3). The assessee argued these rejections were unjustifiable and arbitrary. The revenue's contentions are not recorded. 4. Whether the DRP/TPO erred in selecting inappropriate comparables like Sagarsoft (India) Ltd, QSG Technologies Pvt. Ltd., Happiest Minds Technologies Ltd., Systango Technologies Ltd., Tata Elxsi Ltd., Robosoft Technologies Pvt. Ltd., Tata Consultancy Services Ltd., IDS Infotech Ltd., Cybage Software Pvt. Ltd., Nintec Systems Ltd., and Apttus Software Pvt. Ltd., based on functions, assets, risks, related party transactions, and data (Grounds 2.4, 2.5). The assessee argued these companies were not comparable. The revenue's position is not recorded. 5. Whether the TPO erred in wrongly computing the margins of certain comparable companies (Ground 2.6). The assessee's contention is that the computation was factually erroneous. The revenue's position is not recorded. 6. Whether the TPO erred in using non-contemporaneous data not available in the public domain at the time of the TP study (Ground 3.1). The assessee argued this was an error in law. The revenue's position is not recorded. 7. Whether the DRP/TPO erred in treating outstanding receivables from the AE as a separate international transaction and charging notional interest, neglecting the higher average outstanding payables (Grounds 4.1, 4.2, 4.3). The assessee argued this recharacterization was erroneous and the interest calculation was factually incorrect due to ignoring payables. The revenue's position is not recorded. 8. Whether penalty proceedings under Section 270A, 271B, and 272A(1)(d) were wrongly initiated (Grounds 5.1, 5.2, 5.3). The assessee argued there was no basis for initiating penalty proceedings. The revenue's position is not recorded.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144B,Section 92CA,Section 143(2),Section 270A,Section 274,Section 271B,Section 272A(1)(d)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI PRASHANT MAHARISHI & SHRI SOUNDARARAJAN K.

For Respondent: Smt. Divya K.J, CIT-DR

PER SHRI PRASHANT MAHARISHI, VICE PRESIDENT

01.

This appeal is filed by G2.com India Private Limited [The Assessee/ the Appellant] against the assessment order dated 12 December 2025, passed under section 143(3) read with sections 144C (13) and 144B of the Income Tax Act, 1961 [The ACT] by the assessment unit of the Income Tax Department, determining the t

The order continues below.

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