EXUSIA INDIA PVT LTD,PUNE vs. A.C.I.T,CIRCLE-1(1), PUNE, PUNE

ITA 2460/PUN/2024Status: DisposedITAT Pune25 September 2026AY 2021-2234 pages
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What were the facts?

The assessee, Exusia India Private Limited, filed its return of income for Assessment Year 2021-22 declaring NIL income. The case was selected for scrutiny, and international transactions totaling Rs. 51,86,87,075/- were undertaken with associated enterprises (AEs) Exusia Inc. USA and Exusia South Africa (Pty) Ltd. The assessee used the Transactional Net Margin Method (TNMM) in its Transfer Pricing (TP) study report, claiming an arm's length margin of 15%. The Transfer Pricing Officer (TPO) proposed adjustments by disregarding the assessee's segmental profit determination, rejecting its comparables, and conducting a fresh benchmark. The TPO arrived at a revised range of 15.50% to 25.31% with a median of 20.31% against the assessee's entity-level margin of 6.36%. This led to a TP adjustment of Rs. 4,94,97,641/-, which was reflected in the draft assessment order. The assessee filed objections before the Dispute Resolution Panel (DRP). The final assessment order, pursuant to DRP directions, made a TP adjustment of Rs. 3,68,66,486/-.

What did the Tribunal hold?

The Tribunal held that the inclusion of Ksolves India Pvt Ltd, Consilient Technologies pvt ltd, Great Software laboratories pvt ltd, IDS Infotech Itd, Systango Technologies ltd, Sagarsoft Ltd, and Data Collection Infotech (India) Pvt Ltd as comparable companies was not appropriate when compared to the activities and turnover of the assessee. The Tribunal found that the TPO/DRP had erred in including these companies as valid comparables. Consequently, the Tribunal directed the TPO to exclude these companies and recompute the Profit Level Indicator (PLI). Regarding the computation of working capital adjusted margins, the Tribunal set aside the issue to the file of the TPO for verification and to grant appropriate relief if required. The Tribunal also noted that grounds relating to penalty initiation were premature and other grounds were not argued.

What were the issues?

1. Whether the Transfer Pricing Officer (TPO) and Dispute Resolution Panel (DRP) erred in including certain companies (Ksolves India Pvt Ltd, Consilient Technologies pvt ltd, Great Software laboratories pvt ltd, IDS Infotech Itd, Systango Technologies ltd, Sagarsoft Ltd, and Data Collection Infotech (India) Pvt Ltd) as valid comparable companies to the assessee, considering functional dissimilarity and turnover differences, thereby impacting the Arm's Length Price (ALP) determination under Section 92CA of the Income Tax Act, 1961? Assessee's Contention: The assessee argued that the selected companies were functionally dissimilar, had high turnovers not comparable to its own, and lacked detailed segmental information. Reliance was placed on various Tribunal decisions. The assessee also contended that the TPO/DRP erred in disregarding its detailed FAR and benchmarking analysis and in modifying/introducing new filters without cogent reasons. Revenue's Contention: The revenue, through the learned DR, relied on the orders of the TPO/DRP and prayed for confirmation of their findings.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “C”, PUNE

Before: SHRI RAMA KANTA PANDA & Ms. ASTHA CHANDRA

For Appellant: Shri Darpan Kirpalani
For Respondent: Smt. Sudha Gupta, CIT-DR

PER ASTHA CHANDRA, J.M.:

The appeal filed by the assessee is directed against the order dated 27-09-2024 of the Ld. Assessing Officer (“AO”) passed u/s.143(3) r.w.s. 144C(13) r.w.s. 144B of the Income Tax Act, 1961 (the “Act”), pertaining to Assessment Year (“AY”) 2021-22. 2. Briefly stated, the facts of the case are that the assessee, Exusia India Private Limited (“Exusia India”) was incorporated on 13-07-2013 having its registered office in Pune, Maharashtra. It is engaged in providing software consulting and IT support services including implementation and post-production support services to its Associated Enterpri

The order continues below.

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