EGEN DATA PRIVATE LIMITED (FORMERLY SPRINGML INDIA DEVELOPMENT CENTER P. LTD.),HYDERABAD vs. DCIT, CIRCLE -3(1), HYDERABAD

ITTPA 229/HYD/2026Status: DisposedITAT Hyderabad09 September 2026AY 2022-2312 pages
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What did the Tribunal hold?

The Tribunal held that Infosys Limited, Wipro Limited, and LTI Mindtree Limited cannot be considered good comparables to the assessee. For Infosys Limited, the Tribunal noted its status as a leading provider of diverse services, significant product portfolio, numerous patents, large client base, and substantial revenue and R&D expenditure, making it different from a captive service provider. Similarly, Wipro Limited was found to be engaged in diversified activities, incurring significant R&D expenditure, owning numerous patents and trademarks, and assuming significant strategic, marketing, and financial risks, unlike the assessee. LTI Mindtree Limited was also found to be engaged in diversified activities across various sectors, possessing significant intangible assets and brand value exceeding one billion dollars, which distinguishes it from the assessee's captive service model. The Tribunal followed the decision of the ITAT, Hyderabad Bench in the case of HighRadius Technologies Vs. DCIT, which dealt with similar comparables. Therefore, the Tribunal directed the AO/TPO to exclude these three companies from the list of comparables and recompute the transfer pricing adjustment. The ground relating to the limitation in passing the final assessment order was kept open for future decision.

What were the facts?

The assessee, Egen Data Private Limited (formerly SpringML India Development Center P. Ltd.), filed its return for Assessment Year 2022-23 declaring a total income of Rs. 4,80,05,383/-. The case was selected for scrutiny, and a reference was made to the Transfer Pricing Officer (TPO) regarding international transactions for software development services to its Associated Enterprise (AE), amounting to Rs. 30,91,20,485/-. The assessee adopted the Transactional Net Margin Method (TNMM) with an Operating Profit/Operating Cost of 15%. The TPO rejected the assessee's comparables and conducted a fresh study, selecting 22 comparables with a median PLI of 26.15%, leading to an adjustment of Rs. 2,38,66,654/-. The Assessing Officer (AO) passed a draft assessment order incorporating this adjustment. The Dispute Resolution Panel (DRP) upheld the TPO's adjustment. The AO passed the final assessment order on 19.11.2025, determining total income at Rs. 7,18,72,037/-.

What were the issues?

1. Whether Infosys Limited, Wipro Limited, and LTI Mindtree Limited are valid comparables for benchmarking the software development services provided by the assessee to its AE, considering the assessee's status as a captive service provider with limited risk and the nature of the selected companies' operations (diversified activities, brand value, R&D, scale, intangibles)? (Question of mixed law and fact, concerning Section 92C of the Income Tax Act, 1961). Assessee's Contention: The assessee argued that Infosys Limited, Wipro Limited, and LTI Mindtree Limited are not comparable due to significant differences in FAR analysis, including huge brand value, R&D activities, diversified operations, different scale, substantial intangibles, and substantial R&D expenditure. The assessee is a captive service provider with limited risk operating on a cost-plus markup basis. Relied on ITAT Hyderabad Bench decision in HighRadius Technologies Private Limited Vs. DCIT. Revenue's Contention: The revenue, through the CIT-DR, supported the orders of the TPO and DRP, arguing that exclusion or inclusion of comparables should be based on FAR analysis, and the companies selected by the TPO are functionally similar to the assessee. Scale or area of operations should not be the sole basis for exclusion.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 144C(13),Section 144B,Section 92CA(3),Section 144C(1),Section 144C(5),Section 92C,Section 153

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Income Tax Appellate Tribunal, Hyderabad “B” Bench, Hyderabad

PER MANJUNATHA G., A.M :

This appeal filed by the assessee company is directed against the final assessment order passed by the Assessing Officer under section 143(3) r.w.s. 144C(13) r.w.s. 144B of the Income Tax Act, 1961 (in short “the Act”), dated 19.11.2025 in pursuant to the order of the Learned Tran

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