Verifone India Technology Private Limited vs. Deputy Commissioner of Income Tax

Parties Involved

Facts Summary

Verifone India Technology Private Limited, the assessee/appellant, filed an appeal against the appellate order dated 30 July 2024 passed by the Commissioner of Income Tax (Appeals), Bengaluru. The assessee challenged the assessment order dated 30 January 2017 passed under section 143(3) read with section 144C(3) by the Assistant Commissioner of Income Tax, Circle-7(1)(2), Bengaluru. The assessee raised several grounds of appeal related to transfer pricing and the levy of consequential interest under Section 234B of the Income-tax Act. The assessee submitted that the learned CIT(A) had subsequently passed an order under section 154 of the Income-tax Act on 20 February 2025, which deleted the negative working capital adjustment. The assessee contended that once the appeal-effect order is passed, its margins would fall within the permissible range and no transfer pricing adjustment would survive.…

Legal Issues

• 1. The assessment order dated 30 July 2024 passed by the Honourable Commissioner of Income Tax (Appeals) is contrary to the facts and circumstances of the present case and is not in accordance with law.
• 2. The learned Assessing Officer, the learned Transfer Pricing Officer and the Hon'ble CIT(A) grossly erred in law and on facts, in adjusting the transfer price by INR 3,00,75,897/- with respect to the international transaction rendered by the Appellant under section 92CA of the Income-tax Act, 1961 ('the Act').
• 3. The learned AO/learned TPO/ Hon'ble CIT(A) grossly erred in rejecting the Transfer Pricing (TP') documentation maintained by the Appellant by invoking provisions of sub-section (3) of section 92C of the Act.
• 4. The learned AO/ learned TPO/ Hon'ble CIT(A) grossly erred in rejecting comparability analysis undertaken in the TP documentation and in conducting a fresh comparability analysis by introducing various filters for the purpose of determining the Arm's Length Price ('ALP') of the international transaction thereby following a non-transparent approach.
• 5. The learned AO/learned TPO/ Hon'ble CIT(A) should have restricted the threshold limit of export earnings filter to 25 percent of the total sales.
• 6. The learned AO/learned TPO/ Hon'ble CIT(A) erred in not applying the upper limit for the turnover filter.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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