Transfer pricing adjustment for comparable selection was challenged due to functional dissimilarity. The...

Transfer pricing adjustment for comparable selection was challenged due to functional dissimilarity. The assessee provided IT-enabled services and back-end credit card operations, while the comparables suggested were involved in Knowledge Process Outsourcing activities, leading to their exclusion. Regarding the nature of expenses for license fees, the Assessing Officer treated it as a capital asset or intangible asset. However, the court held that the right to use the software did not provide enduring benefit, and the payment was merely license fees, not acquisition of a capital asset. The assessee did not acquire ownership of the software, and after termination, rights remained with the licensor. Relying on previous decisions, the license fees paid were considered revenue expenditure deductible u/s 37. No substantial question of law was raised. .....

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