M/S ARCTERN CONSULTING PVT LTD,BANGALORE vs. INCOME TAX OFFICER WARD-1(1)(2), BANGALORE

The Assessee filed a Transfer Pricing Study (TP Study) to justify the price paid in the international Transaction as at ALP by adopting the Transaction Net Margin Method (TNMM) as the Most Appropriate Method (MAM) of determining ALP. The Assessee selected Operating Profit/Operating Cost (OP/OC) as the Profit Level Indicator (PLI) for the purpose of comparison. During the previous year relevant to the assessment year 2009-10, two of the international transactions that took place between the assessee and its AEs were the provision of the provision of ITe Services by the assessee at a price of Rs. 3,24,84,774/- in respect of which an adjustment of Rs.62,66,504/- was made by the Transfer Pricing Officer (TPO) and SWD services by the assessee at a price of Rs. 18,46,18,296/, for which a TP Adjustment was made by the TPO to an extent of Rs.2,32,81,079/-. Initially, a draft assessment order dated 15.03.2013 under section 143(3) read with section 144C of the Income-tax Act, 1951 (“the Act”) came to be passed by the Assessing Officer (‘AO’ for short) upon incorporating the aforesaid TP adjustments.

Aggrieved, the assessee filed its objections before the DRP which, vide its directions dated 30.12.2013, rejected the objections to a large