Galaxe E Solutions India Pvt Ltd vs ITO
The assessee company is wholly owned subsidiary of M/s Galax E Solutions Inc. providing software development services to its AE relating to internet client-server. The TPO has made transfer pricing adjustment in respect of Provision of software development services only.The assessee adopted Transactional Net Margin Method as most appropriate method. It adopted Operating Profit/Operating Cost (OP/OC) as the Profit level indicator. The TPO rejected the transfer pricing study of the assessee and he finally selected following 13 comparables. The Ld DRP directed the AO/TPO to exclude ten companies and it upheld the selection of three companies.
Consistent with the view taken by the co-ordinate benches in the case of Applied Materials India P Ltd and in the case of M/s LG Soft India P Ltd, we direct exclusion of aforesaid three comparable companies. Bangalore ITAT directs the AO/TPO to compute the ALP of the international transaction, after affording adequate opportunity of being heard to the assessee.