“ comparable companies ”

DCIT v. Quark Systems (P.) Ltd.

Knowledge Process Outsourcing (KPO) service providers are functionally dissimilar to Business Process Outsourcing (BPO) or Information Technology Enabled Services (ITeS) providers and cannot be compared for transfer pricing purposes, even under the Transactional Net Margin Method (TNMM). Further, companies with significantly different business models, such as those with extensive subcontracting, should be excluded as comparables.

38 SOT 307 · 2010 · ITAT

179

CIT v. Agnity India Technologies (P.) Ltd.

An assessee is not estopped or precluded from seeking the exclusion of a company from its Transfer Pricing study comparables, even if initially selected, if it can demonstrate valid reasons for non-comparability.

36 Taxmann.com 289 · 2013 · High Court

171

Chryscapital Investment Advisors (India) Pvt. Ltd. v. DCIT

The Delhi High Court holds that Infosys Ltd. is not comparable to a captive software development service provider for transfer pricing analysis, given its huge turnover, high profit margins, ownership of intangible intellectual property rights, branded products, and differing risk profile.

376 ITR 183 · 2015 · High Court

170

Autodesk India Pvt.Ltd. v. DCIT

For transfer pricing comparability analysis, companies should not be excluded solely based on higher turnover if they are otherwise functionally comparable, unless the turnover difference reflects fundamental functional dissimilarities, brand value, or risk profiles that materially impact profitability.

96 Taxmann.com 263 · 2018 · ITAT

116

SAP Labs India Pvt. Ltd. v. ACIT

A high turnover criterion, such as above Rs. 200 crores, is a valid ground to exclude companies from the list of comparable companies in a transfer pricing analysis, as such companies are not comparable to those with significantly lower turnover.

44 SOT 156 · 2011 · ITAT

100

Mentor Graphics (Noida) (P) Ltd. v. DCIT

Foreign exchange fluctuation gains or losses are operational in nature and must be included in the computation of the operating margin for both the assessee and comparable companies when determining the Arm's Length Price.

109 ITD 101 · 2007 · ITAT

Avenue Asia Advisors Pvt. Ltd. v. DCIT

A working capital adjustment is mandated and a prerequisite for correctly determining the Arm's Length Price (ALP) under Rule 10B(1)(e) and Rule 10B(3) of the Income Tax Rules, 1962. This adjustment accounts for differences in working capital and outstanding receivables between the assessee and comparable companies.

398 ITR 120 · 2017 · High Court

ITA 418/BANG/2016[2011-12]Status: DisposedITAT Bangalore31 Jan 2022AY 2011-12

The Delhi High Court holds that a detailed functional and working capital analysis, considering various factors, is essential before treating outstanding receivables as a separate international transaction for transfer pricing adjustments on notional interest. Simply making an adjustment based on receivables alone without such study distorts the transaction's character.

Judgments citing comparable companies

Global E Business Operations Private Limited, Bangalore vs. DCIT, Bangalore

In the result, the revenue’s appeal is partly allowed for statistical purposes

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Sharath Rao, CAFor Respondent: Shri Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru

Section 10ASection 143(3)

Honorable DRP have erred in not appreciating that the debtors outstanding above 6 months to the total sales of the comparable companies is 5.14 percent and that of the Appellant is only 0.17 percent which reflects that the working capital cycle of comparable Companies is higher than that ... been paid to the AE creditors on the outstanding payables. Further the debtors outstanding above 6 months to the total sales of the comparable companies is 5.14% and that of the assessee is only 0.17% which reflects IT(TP)A No.418 & 250/Bang/2016 Page 6 of 21 the working capital cycle

Asst.C.I.T., Bangalore vs. M/S Global E- Business Operations Pvt. Ltd., Bangalore

In the result, the revenue’s appeal is partly allowed for statistical purposes

ITA 250/BANG/2016[2011-12]Status: DisposedITAT Bangalore31 Jan 2022AY 2011-12

Bench: Shri Chandra Poojari & Smt. Beena Pillai

For Appellant: Shri Sharath Rao, CAFor Respondent: Shri Sumer Singh Meena, CIT(DR)(ITAT), Bengaluru

Section 10ASection 143(3)

Bharti Airtel Services Ltd., New Delhi vs. DCIT, Circle-4(2), New Delhi

ITA 6272/DEL/2018[2012-13]Status: DisposedITAT Delhi31 Jan 2022AY 2012-13

Bench: Shri Amit Shukla & Dr. B.R.R. Kumar(Through Video Conferencing)

For Appellant: S/Shri Rahul Mitra, NininFor Respondent: Shri Mrinal Kumar Das

ITA 3183/DEL/2018[2013-14]Status: DisposedITAT Delhi31 Jan 2022AY 2013-14

margin earned by the assessee of 9.26% for the assessment year 2012- 13 which is significantly higher than the adjustment margin earned by the comparable companies for which detail computation has been filed at page 178 of the Paper book for the assessment year 2012-13. Similarly, at page ... paper book for the assessment year 2013- 14, the working capital adjustment of the comparable companies has been arrived at net operating margin of 4% as against the net profit earned by the assessee at 9%. Thus, it has been submitted that no further adjustment is called for. In support

Bharti Airtel Services Ltd., Gurgaon vs. DCIT, Circle-4(2), New Delhi

Bench: Shri Amit Shukla & Dr. B.R.R. Kumar(Through Video Conferencing)

For Appellant: S/Shri Rahul Mitra, NininFor Respondent: Shri Mrinal Kumar Das

ITA 8259/DEL/2018[2014-15]Status: DisposedITAT Delhi27 Jan 2022AY 2014-15

Luxottica India Eyewear Pvt. Ltd., Gurgaon vs. ACIT, Circle- 15(2), New Delhi

In the result, the appeal filed by the assessee is allowed with

Bench: Sh. Saktwit Dey & Sh. N. K. Billaiya

Section 143Section 92B

length nature of the alleged international transaction by comparing the net margin earned by the Appellant with adjusted net margins of comparable companies ("intensity adjustment'), without giving any reasons for rejecting the Resale Price Method ("RPM") used by the Appellant which has been upheld as the most appropriate method ... performed to metefmine the ALP of the alleged AMP transaction, the same should be performed on the gross profit margins of comparable companies while applying the RPM as the most appropriate method as selected by the Appellant. 3.7 That on the facts of the case

Munjal Showa Ltd, Gurugram vs. JCIT, Special Range-6, New Delhi

In the result, appeal of the assessee in ITA No

ITA 8227/DEL/2018[2014-15]Status: HeardITAT Delhi27 Jan 2022AY 2014-15

Bench: Shri Saktijit Dey & Shri N.K. Billaiya

For Appellant: Ms. Sweta Gupta, CAFor Respondent: Shri Surender Pal, CIT-DR

ITA 472/DEL/2017[2010-11]Status: FixedITAT Delhi25 Jan 2022AY 2010-11

export sales as an appropriate factor for comparability analysis. 8. Considering the past history of the assessee, we direct the TPO to exclude the comparable companies where export sales are more than 10% of the total sales and decide the issue afresh. With these directions, the appeal is allowed

Xavient Information Systems (I) Pvt. Ltd., Noida vs. DCIT, New Delhi

The appeal of the assessee stands dismissed

Section 120Section 127Section 143(1)Section 143(3)Section 92A(2)(b)

failing to take cognizance of the differences in risk profile of the appellant (being a captive service provider to its AE) and the alleged comparable companies selected by him by not allowing the risk adjustment made by the appellant. Xavient Information Systems (I) Pvt. Ltd. vs. DCIT 10. That ... DCIT, New Delhi erred in not allowing an adjustment on account of difference in working capital position of the appellant and the alleged comparable companies. 11. That on the facts and circumstances of the case and in law that DCIT, New Delhi has erred in computing the margin

Swiss Re Global Business Solutions India Private Limited, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-6(1)(2), Bangalore

In the result, the appeal of the assessee is partly allowed

ITA 397/BANG/2021[2016-17]Status: DisposedITAT Bangalore21 Jan 2022AY 2016-17

Bench: Shri N.V. Vasudevan & Shri Chandra Poojari

For Appellant: Shri Nageswar Rao, AdvocateFor Respondent: Shri Manjunath Karkihalli, CIT(DR)(ITAT), Bengaluru

Section 133(6)

Appellant's international transactions are not at arm's length; 4. Learned AO / TPO / DRP have erred, in law and facts, by rejecting certain comparable companies following different accounting year (i.e. companies following accounting year other than March 31); 5. Learned AO / TPO / DRP have erred in law and facts ... application of filter i.e. by rejecting companies whose export services income is less than 75% of turnover for the purpose of selection of comparable companies; 7 Learned AO / TPO / DRP have erred in law and facts, by applying only the lower turnover filter of less than INR 1 crore

Societe Generale Global Solution Centre Pvt Ltd, Bengaluru vs. Deputy Commissioner of Income Tax, Circle-6(1)(2), Bengaluru

In the result, the assessee’s appeal is partly allowed

ITA 2580/BANG/2017[2013-14]Status: DisposedITAT Bangalore21 Jan 2022AY 2013-14

Bench: Shri N.V. Vasudevan & Shri Chandra Poojari

For Appellant: Shri T. Suryanarayana, Sr. CounselFor Respondent: Dr. Manjunath Karkihalli, CIT(DR)(ITAT), Bengaluru

Section 10ASection 115JSection 143(3)Section 271Section 274

basis. However, the TPO observed that as per the OECD guidelines the mark=- up should be done at a value lower than that of comparable companies having similar FAR. Accordingly, he made a mark-up of 5% on services rendered by the assessee to the AE in respect of travel ... order to benchmark the international transactions. The assessee had benchmarked the arm's length price of all the transactions by comparing results of the comparable companies which were found to be at arm's length price. The assessee had also furnished the segmental Profit & Loss Account for the exports

Cisco Systems Services B.V, Bangalore vs. Deputy Commissioner of Income Tax International Taxation Circle-1(1), Bangalore

In the result, the appeal by the assessee is allowed

ITA 961/BANG/2017[2012-13]Status: DisposedITAT Bangalore19 Jan 2022AY 2012-13

Bench: Shri. Chandra Poojari & Smt. Beena Pillaiit(It)A No. 961/Bang/2017 Assessment Year : 2012-13 M/S. Cisco Systems Services B.V. – India The Deputy Branch, Commissioner Of Brigade South Parade, Income Tax, No. 10, International Taxation, Mahatma Gandhi Road, Circle – 1(1), Vs. Bangalore – 560 001. Bangalore. Pan: Aaccc4836D Appellant Respondent Assessee By : Shri Rajan Vora, Ca : Dr. Manjunath Karkaihalli, Revenue By Cit Dr Date Of Hearing : 19-01-2022 Date Of Pronouncement : 19-01-2022 Order Per Beena Pillaithis Appeal By Assessee Is Directed Against The Order Of The Ld.Ao Dated 27.02.2017 Passed U/S. 143(3) R.W.S. 144C(14) Of The Income- Tax Act, 1961 [The Act] On The Following Grounds: “Based On The Facts & Circumstances Of The Case & In Law, Cisco Systems Services B.V. - India Branch (Hereinafter Referred To As The 'Appellant.) Respectfully Craves Leave To Prefer An Appeal Against The Order Passed By The Deputy Commissioner Of Income-Tax (International Taxation) - Circle 1(1) ('Assessing Officer' Or 'Ao') Dated February 27, 2017 In Pursuance Of The Directions & The Revised Directions Issued By The Dispute Resolution Panel ('Drp'), Bangalore Dated December 29, 2016 & January 16. 2017 Respectively, Under Section 253 Of The Income-Tax Act, 1961 ('Act) On The Following Grounds:

For Appellant: Shri Rajan Vora, CA

Section 143(3)Section 253Section 92C

criteria: 6. The learned TPO/ learned AO have erred, in law and in facts, by wrongly computing the operating margins of some of the comparable companies identified in the transfer pricing order 7. The learned TPO/ learned AO have erred, in law and in facts, by not applying a higher ... Appellant vis-a-vis the comparables. 10. The learned TPO/ learned AO have erred, in law and in fact, by rejecting certain comparable companies Page 3 of 17 IT(IT)A No. 961/Bang/2017 identified by the Appellant using the export sales less than 75% of the sales as a comparability

Xchanging Solutions Limited, Bangalore vs. ITO, Bangalore

In the result, the appeals of the assessee are partly allowed and that of the revenue are dismissed

ITA 556/BANG/2016[2011-12]Status: DisposedITAT Bangalore19 Jan 2022AY 2011-12

Bench: Shri N.V. Vasudevan & Shri Chandra Poojari

For Appellant: Shri Vikram Raghavan, AdvocateFor Respondent: Shri Arunkumar, CIT(DR)(TP)(ITAT), Bengaluru

ITA 402/BANG/2016[2011-12]Status: DisposedITAT Bangalore19 Jan 2022AY 2011-12

Infosys Technologies Limited ► Tata Elxsi Limited 8. The learned AO and the learned TPO have erred, in law and in facts, by rejecting certain comparable companies based on unreasonable comparability criteria: i. the learned AO and the learned TPO erred in rejecting the following comparable companies identified by the Appellant ... other than 12 months): ► R Systems International Limited ► Helios and Matheson Information Technology Ltd ii. the learned AO / TPO erred in rejecting the following comparable company identified by the Appellant where consolidated results had been used for analysis: ► Saven Technologies Limited IT(TP)A No.492 & 451/B/2015 & 402 & 556/B/2016 Page

ITO, Bangalore vs. M/S Xchanging Solutions Ltd., Bangalore

In the result, the appeals of the assessee are partly allowed and that of the revenue are dismissed

Bench: Shri N.V. Vasudevan & Shri Chandra Poojari

For Appellant: Shri Vikram Raghavan, AdvocateFor Respondent: Shri Arunkumar, CIT(DR)(TP)(ITAT), Bengaluru

ITA 492/BANG/2015[2010-11]Status: DisposedITAT Bangalore19 Jan 2022AY 2010-11

Xchanging Solutions Limited, Bangalore vs. DCIT, Bangalore

In the result, the appeals of the assessee are partly allowed and that of the revenue are dismissed

Bench: Shri N.V. Vasudevan & Shri Chandra Poojari

For Appellant: Shri Vikram Raghavan, AdvocateFor Respondent: Shri Arunkumar, CIT(DR)(TP)(ITAT), Bengaluru

ITA 459/BANG/2015[2010-11]Status: DisposedITAT Bangalore19 Jan 2022AY 2010-11

DCIT, Bangalore vs. M/S Xchanging Solutions Ltd., Bangalore

In the result, the appeals of the assessee are partly allowed and that of the revenue are dismissed

Bench: Shri N.V. Vasudevan & Shri Chandra Poojari

For Appellant: Shri Vikram Raghavan, AdvocateFor Respondent: Shri Arunkumar, CIT(DR)(TP)(ITAT), Bengaluru

ITA 843/DEL/2021[2016-17]Status: HeardITAT Delhi17 Jan 2022AY 2016-17

Shahi Exports Pvt. Ltd., New Delhi vs. ACIT, New Delhi

In the result, appeal of the assessee in ITA No

Bench: Shri Saktijit Dey & Shri N.K. Billaiya

For Appellant: Shri M.P. Rastogi, AdvFor Respondent: Shri Mahesh Shah, CIT-DR

Section 143(3)Section 234ASection 37Section 40A(2)Section 80ISection 92BSection 92C

case of the assessee in Assessment Year 2017-18 and by taking the average power purchase cost [Rs./kwh] of these comparable companies in the relevant Assessment Year.” 24. Before us, the Id. AR stated that the rate applied by the assessee is not correct

Olympus Medical Systems India Pvt. Ltd., Gurugram vs. ACIT, Circle- 3(1), Gurugram

In the result, appeal of the assessee in ITA No

ITA 873/DEL/2021[2016-17]Status: HeardITAT Delhi13 Jan 2022AY 2016-17

Bench: Shri Saktijit Dey & Shri N.K. Billaiya

For Appellant: Shri Nageshwar Rao, AdvFor Respondent: Shri Mahesh Shah, CIT-DR

Section 143(3)Section 144B

routine AMP expenditure, which has been overruled by the Hon’ble High Court. 18. in the absence of any supernormal profits vis-a-vis comparable companies, PSM cannot be applied to benchmark the alleged transaction of AMP. 19. that on the facts and in circumstances of the case ... objections raised by the assessee are dismissed. The assessee has raised the objection there are certain inaccuracies in the computation of margins of comparable companies selected for calculating the residual PLI to be conferred to AE which ought to be rectified. DRP directs the Ld. TPO to correct the inaccuracies

Cenduit (India) Services Private Limited, Bangalore vs. The Deputy Commissioner of Income Tax, Circle-2(1)(1), Bangalore

In the result, the assessee’s appeal is partly allowed for statistical purposes

ITA 227/BANG/2021[2016-17]Status: DisposedITAT Bangalore12 Jan 2022AY 2016-17

Bench: Shri N.V. Vasudevan & Shri Chandra Poojari

For Appellant: Shri Ketan K. Ved, CAFor Respondent: Shri Sunil Kumar Singh, CIT(DR)(ITAT), Bengaluru