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TMI Blog2024 (3) TMI 1382X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of which the ITAT found that Wipro had rendered similar services pertaining to software development and consequently was functionally similar to the assessee. However, the aforesaid comparable came to be excluded in light of the tainted and controlled transactions which it had with Citi Technology Services Ltd. Zylog is concerned, the reasoning for its exclusion is identical to that ascribed to L T Ltd. In that view of the matter and on an overall conspectus of the aforesaid, we find no infirmity in the view as expressed by the ITAT. No substantial question of law. - HON'BLE MR. JUSTICE YASHWANT VARMA And HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV For the Appellant : Mr. Sanjay Kumar, Ms. Easha Ms. Hemlata Rawat, Adv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... functions rather than strictly focusing on product/service comparability? 2. The grievances essentially appears to stem from the exclusion of Larsen and Toubro Infotech Ltd. [ L T ], Wipro Technology Service Ltd. [ Wipro ] and Zylog Systems Ltd. [ Zylog ] from the list of comparables for the purposes of completion of the transfer pricing exercise and determination of the Arm s Length Price [ ALP ]. 3. Insofar as the case of L T is concerned, it appears to have been urged before the ITAT that although financials of that entity were on record, it was impossible to bifurcate and identify the revenues that may have been obtained by it from software development services and products with precision. It is this aspect which appears to have weighed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 and 14.4 of its judgment which are reproduced hereinbelow: 14.3 We have heard rival submission and perused the relevant material on record. As far as the function of the company is concerned, in our opinion the assessee has also rendered similar services of the software development and maintenance including information technology related services to its Associated Enterprises and, therefore, it is functionally similar to the company. But as far as the transaction of the company with Citigroup company held as tainted/ controlled transactions and exclusion of the company on this ground, in the case of Element K India Private Limited (supra), the Tribunal has given the detailed finding to reject the company on the ground of transactions cove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Company ) on 16 March 2009. It is observed from the above that, Wipro Technology Services Ltd., which was earlier Citi Technology Services Ltd., was held by Citi Corp. Banking Corporation, USA upto 20th January, 2009. Wipro Ltd., parent company of which executed agreement with Citi Group Inc., for acquiring Citi Technology Services Ltd., now called Wipro Technology Services Ltd. On 21.1.2009, Wipro Ltd. signed master agreement with Citi Group Inc., for the delivery of technology Infrastructure Services and application development and maintenance services for the period of six years, which also includes the year under consideration. This shows that income from software development support and maintenance services was earned by Wipro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevant transaction between such other person and the associated enterprise. or the terms of the relevant transaction are determined in substance between such other person and the associated enterprise'. On going through sub-section (2) of section 92B, it is clearly borne out that a transaction with non-AE shall be deemed to be a transaction entered into between two AEs, if there exists a prior agreement in relation to the relevant transaction between third person and the AE, or the terms of relevant transaction are determined in substance between the third person and AE. When we consider section 92B(2) in combination with Rule 1OA(a), it follows that transaction between non- AEs shall be construed as a transaction between two AEs, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direct removal of this company from the list of comparables. Respectfully following the same we also direct removal of this company from the list of comparables. 14.4 The Hon'ble Delhi High Court m the case of PCIT Vs Cashedge India Private limited (supra) has held as under: 6. As far as the first company i.e. Persistent Systems Ltd. is concerned, the material on record as found by the ITAT shows that this company was involved in software development, software products and marketing. Furthermore and perhaps more importantly, published segmental data was not available. In these circumstances, having regard to the specificity of the Transfer Pricing Rules under Rule 10(b) to 10(e) of the Income Tax Rules, the data of the said firm, i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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