By Geeta Jani, Dhishat B Mehta, Chartered Accountants
14. [2017] 81
taxmann.com 169 (Bangalore – Trib)
CGI Information System & Management Consultants (P) Ltd
vs. DCIT
A.Y:2005-06, Date of Order: 21st April, 2017
Facts
The Taxpayer had rendered software development services to
its AEs in US, Canada, Australia and UK. AEs of Taxpayer in USA and Canada had
approached respective competent authorities for resolution of TP adjustment
dispute insofar as it related to software development services provided by the
Taxpayer with regard to international transactions through MAP under DTAA.
Under MAP, arm’s length price was determined at 117.5%. The Taxpayer had
maximum international transactions with its AEs in USA and Canada while those
with its AEs in UK and Australia were minimal.
In respect of International transactions of the Taxpayer with
AEs in Australia and UK, the AO adopted 25.32 % profit margin.
Held
– In J. P. Morgan Services (P) Ltd vs. Dy
CIT [2016] 70 taxmann.com 228 (Mum. – Trib) held that whatever margin has
been applied through MAP with respect to major international transactions, the
same should be applied for the remaining transactions.
– The maximum international
transactions were undertaken by the Taxpayer with its AEs in Canada and USA.
Only two transactions were undertaken with AEs in Australia and UK. Therefore,
the same ALP of 117.50 % should be applied with respect to remaining two
international transactions.
