“information technology software”

Payments for software licenses do not constitute royalty under the provisions of the Income-tax Act, and therefore, disallowance under section 40(a)(ia) is not applicable.

Provisions for doubtful debts are not part of operating costs and are considered non-operating in nature when calculating operating profit. Only receipts and expenditures directly related to determining profit should be included.

Companies engaged in providing Software Development ('SWD') services to Associated Enterprises (AEs) can be excluded from comparable lists if they are primarily software product companies and lack specific segmental information for SWD services.

The Tribunal confirmed that information technology services received from an associated enterprise and paid service charges are considered international transactions. These transactions can be clubbed with other international transactions and assessed using the Transactional Net Margin Method (TNMM) with external comparables.