The ITAT Bangalore has excluded Infosys and three other comparables from the transfer pricing benchmarking, allowing for working capital adjustment and granting Section 10A deductions on enhanced profits.
ITAT Bangalore's Exclusion of Comparables
In a significant ruling, the ITAT in Bangalore has excluded Infosys and three additional comparables from the transfer pricing benchmarking assessment. This ruling follows a comprehensive review of the relevant financials and methodologies utilized for setting arm's length price. The tribunal allowed adjustments for working capital, which are essential for accurate profit calculation.
Furthermore, the tribunal granted a Section 10A deduction, acknowledging the enhanced profits attributable to the approved adjustments. This aligns with the provisions of the Income Tax Act that permit certain deductions based on the income derived from export-oriented units (EOUs).
For practitioners, this ruling emphasizes the importance of meticulous benchmarking processes and the allowance for working capital adjustments, thus helping to ensure compliance and optimized tax outcomes for their clients.
Citations
- ITAT Bangalore (2026)
