Appeal Reject on Ground of Functional Differences (Transfer Pricing Case) - ITAT Hyderabad, ITA 419 / HYD / 2014

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH “A”, HYDERABAD, favoured case in hand of assessee on ground of TPO selection of comparables companies with functional differences.

Income Tax Appellate Tribunal, Hyderabad Benches, Hyderabad

CASE DETAILS

Appeal Number - ITA 419 / HYD / 2014

Filed On - 11/03/2014

Assessment Year - 2009-10

Bench Allotted - DB-A        

Case Status - Disposed in Favour of Assessee

Date of Tribunal Order – 13/02/2015

Appellant - M/s TNS INDIA Pvt Ltd., Hyderabad

vs

Respondent - DCIT, Circle- 2(3),  Hyderabad

- Where TPO made an addition to assessee’s ALP in respect of rendering ITeS services to It’s AE, in view of the fact that some comparables companies selected by TPO were developing software products and thus, there existed a functional difference, such addition was to be set aside and the matter was to be remanded back for disposal afresh. Where TPO determined ALP of management fee paid by assessee to its AE at Nil by merely applying benefit test and without bringing any comparable case on record, the order so passed deserved to be sir aside. While computing operating profit margin of comparable companies under TNMM. Provisions for bad and doubtful debts and bad debts would form part of operating expenditure.

Click here for details ITAT Order - https://www.itat.gov.in/files/uploads/categoryImage/-71531583001486430791351REFNO604_419_h_14_TNS_India_pvt_ltd.pdf