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Facts
HighRadius Technologies Private Limited, a captive software development service provider to its AE, filed its return for AY 2020-21. The TPO made a transfer pricing adjustment of INR 10,58,23,162 for software development services, which the DRP substantially upheld. Additionally, the AO made an addition of INR 13,13,770 under Section 43B for leave encashment expenses, based on an intimation under Section 143(1)(a) issued after a Section 143(2) notice was already served.
Held
The Tribunal held that several comparables (Larsen & Toubro Infotech Ltd., Tata Elxsi Ltd., Infosys Ltd., Wipro Ltd., Nihilent Ltd., Great Software Laboratory Pvt. Ltd.) selected by the TPO/DRP were functionally dissimilar and thus excluded them. However, R. Systems International Ltd. was directed to be included as its data could be extrapolated. The intimation under Section 143(1)(a) issued after the Section 143(2) notice was deemed without sanctity and the disallowance under Section 43B based on it was set aside.
Key Issues
1. Validity of transfer pricing comparables selected by the TPO/DRP for benchmarking software development services. 2. Validity of an intimation issued under Section 143(1)(a) and related disallowance under Section 43B when a notice for regular assessment under Section 143(2) had already been issued.
Sections Cited
143(3), 144C(13), 144B, 92CA(1), 143(1), 43B, 274, 270A, 143(2), 154
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Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad
आदेशकी �ितिलिप अ�ेिषत/ Copy of the order forwarded to:- 1. िनधा�रती/The Assessee : M/s HighRadius Technologies Private Limited, First Floor, Building 12C, Raheja Mindspace IT Park, Madhapur Road, Hyderabad 2. राज�/ The Revenue : The DCIT, Circle-2(1), Signature Towers, Hyderabad 3. The Principal Commissioner of Income Tax, Hyderabad 4. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, हैदराबाद / DR, ITAT, Hyderabad 5. गाड�फ़ाईल / Guard file
आदेशानुसार / BY ORDER
Sr. Private Secretary ITAT, Hyderabad