HOTEL HUB LLP,KARNATAKA vs. THE DEPUTY COMMISSIONER OF INCOME TAX,CIRCLE 4(3)(1), BENGALURU, KARNATAKA

ITTPA 618/BANG/2026Status: DisposedITAT Bangalore07 September 2026AY 2022-236 pages
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What did the Tribunal hold?

The Tribunal held that the inclusion of the four companies, Tata Consultancy Services, LTI Mindtree Ltd., Mindtree Ltd., and Tata Elxsi Ltd., as comparables was not justified. The Tribunal noted that these companies had turnovers of Rs. 1,60,341 crores, Rs. 14,406 crores, Rs. 10,525 crores, and Rs. 2,471 crores respectively, which were significantly higher than the assessee's turnover of Rs. 33 crores. Applying the principle established in several coordinate bench decisions, which allows for the exclusion of companies with extremely high turnovers and brand value, and considering that companies within a turnover range of up to 10 times the assessee's turnover could be considered for proper comparability, the Tribunal found that these four companies exceeded this limit. Therefore, the Tribunal allowed grounds 3, 4, 5, and 7 of the assessee, directing the AO to exclude these companies from the comparability analysis and recompute the ALP after providing the assessee with a reasonable opportunity of being heard. The issue related to ground no. 22 was remitted to the AO for decision in accordance with law. Other grounds not pressed were not adjudicated.

What were the facts?

The assessee, M/s. Hotel Hub LLP, engaged in IT software services for its UK-based associated enterprise, Travel Centric Technology Ltd., filed its return for Assessment Year 2022-23. The case was selected for scrutiny due to large international transactions. The Transfer Pricing Officer (TPO) rejected the assessee's transfer pricing study and proposed an adjustment of Rs. 2,41,59,148. The Assessing Officer (AO) passed a draft order incorporating this. The Dispute Resolution Panel (DRP) directed the TPO to adopt margins from annual reports and compute the Profit Level Indicator (PLI) margin. The TPO subsequently revised the adjustment to Rs. 1,91,92,953. The AO incorporated this revised adjustment, leading to the assessee's appeal to the ITAT.

What were the issues?

1. Whether the inclusion of Tata Consultancy Services, LTI Mindtree Ltd., Mindtree Ltd., and Tata Elxsi Ltd. as comparables for determining the Arms Length Price (ALP) for international transactions with an associated enterprise is justified, considering their significantly higher turnovers compared to the assessee's turnover of Rs. 33 crores? (Question of mixed law and fact, turning on Section 92C of the Income Tax Act, 1961). Assessee's Contention: The assessee argued for the exclusion of these four companies due to their disproportionately high turnovers compared to the assessee, citing that companies with very huge turnovers should not be considered comparable. They relied on the principle of turnover filter applied in various coordinate bench decisions, which suggested excluding companies with turnovers more than 10 times that of the assessee. The assessee also argued that these companies were functionally different. Revenue's Contention: The revenue contended that the TPO had rejected the assessee's transfer pricing study with valid reasons, which was confirmed by the DRP, and therefore prayed for the dismissal of the appeal.

Which sections of the Income-tax Act were involved?

Section 92C,Section 143(2),Section 142(1),Section 144C(1),Section 144C(5),Section 92CA(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, BANGALORE BENCHES, BANGALORE

Before: SHRI WASEEM AHMED & SHRI SOUNDARARAJAN K.

For Respondent: Smt. Nandini Das, CIT – DR

PER SHRI SOUNDARARAJAN K., JUDICIAL MEMBER:

This is an appeal filed by the assessee challenging the final assessment order dated 29/12/2025 in respect of the A.Y. 2022-23. IT(TP)A No. 618/Bang/2026

2.

The brief facts of the case are that the assessee is a firm and in the business of rendering information technology software

The order continues below.

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