ALTERA DIGITAL HEALTH (INDIA) LLP (FORMERLY KNOWN AS ALLSCRIPTS (INDIA) LLP),VADODARA vs. THE DY.CIT, CIRCLE-1(1)(1), VADODARA

Facts

The assessee, a software development service provider, filed its income tax return and was later subjected to transfer pricing adjustments by the TPO. The DRP upheld the TPO's findings. The assessee also raised grounds related to deductions, interest, and TDS credit.

Held

The Tribunal held that certain comparables (Kellton Tech Solutions Ltd., Magnasoft Consulting India Pvt. Ltd., and Interglobe Technology Quotient Ltd.) were functionally dissimilar and should be excluded. Consequently, the assessee's operating margin of 15.25% fell within the arm's length range, and the transfer pricing adjustment was deleted. The appeal concerning Section 10AA deduction and interest under Section 234A was allowed for statistical purposes, and the matter was restored to the AO.

Key Issues

Whether the comparables selected by the TPO were functionally similar to the assessee's software development services and whether the transfer pricing adjustment was justified. Also, issues regarding deduction under Section 10AA and interest under Section 234A were raised.