ARIBA TECHNOLOGIES INDIA PRIVATE LIMITED,BENGALURU V. ACIT , BENGALURU

CO 10/BANG/2025

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The case involves Ariba Technologies India Pvt. Ltd., which appealed against the transfer pricing adjustments made by the Assistant Commissioner of Income Tax (ACIT) for the assessment years 2013-14 and 2015-16. The primary contention revolved around the selection and exclusion of comparables used to determine the arm's-length price of international transactions. The Tax Officer (TPO) had rejected several comparables selected by the assessee and included others, leading to a significant upward adjustment in the transfer pricing. The CIT(A) later modified the TPO's selection, which was contested by both the Revenue and the assessee in their respective appeals and cross-objections before the Income Tax Appellate Tribunal (ITAT). The Tribunal's decision emphasized the relevance of turnover as a criterion for comparability, supported by judicial precedents and the OECD Transfer Pricing Guidelines.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840541 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-02-2026
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2015-2016
• Appeal Filed On: 19-02-2025
• Other Referred Cases: Fiberlink Software (P.) Ltd. v. DCIT, Citrix R&D India Pvt. Ltd. v. DCIT, M/s Societe Generale Global Solution Centre Pvt. Ltd. v. DCIT, M/s Vmoksha Technologies Pvt. Ltd. v. DCIT, M/s Genisys Integrating (P.) Ltd. v. DCIT, Robert Bosch Engineering and Business Solutions Pvt. Ltd. vs. DCIT, Yokogawa Technology Solutions India Pvt. Ltd. vs. DCIT
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DIVYA K.J
• Assessee Lawyers: ALIASGAR RAMPURWALA
• Keywords: Opportunity of being heard; Transfer pricing; International transaction; Question of law; Related party transaction
• Section: 6

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER IT(TP)A No.2487 & 2512/Bang/2024 Assessment Year: 2013-14 & 2015-16 The Asst. Commissioner of Income Tax, Circle – 1(1)(1), Bengaluru. Vs. Ariba Technologies India Pvt. Ltd., 7th Floor, Plot C1, 8A Campus, Sarjapur RMZ Ecoworld, Marathahalli Outer Ring Road, Bangalore – 560 103. PAN – AADCA 0918 P APPELLANT RESPONDENT CO No.9 & 10/Bang/2025 Assessment Year: 2013-14 & 2015-16 Ariba Technologies India Pvt. Ltd., 7th Floor, Plot C1, 8A Campus, Sarjapur RMZ Ecoworld, Marathahalli Outer Ring Road, Bangalore – 560 103. PAN – AADCA 0918 P Vs. The Asst. Commissioner of Income Tax, Circle – 1(1)(1), Bengaluru. APPELLANT RESPONDENT Assessee by : Shri Aliasgar Rampurwala, CA Revenue by : Dr. Divya K.J, CIT(DR) Date of hearing : 12.02.2026 Date of Pronouncement : 24.02.2026 Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 2 of 22 . O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The present appeal and the Cross Objections have been instituted by the Revenue and the assessee against the order of the Ld. CIT(A) passed u/s 250 of the Act dt. 18.10.2024 for AY 2013-14. 2. In the memo of appeal, the Revenue has raised as many as 23 grounds of appeal challenging the addition made on the issue of Transfer pricing adjustment, we for the sake of brevity and convenience, are not inclined to reproduce the same here. 2.1 The issues raised by the revenue in Grounds Nos. 2 and 3 are interconnected and pertain to fresh economic analysis conducted by the TPO and inclusion and exclusion of certain comparables by the TPO and by the learned DRP for computing the ALP of the international transactions carried out by the assessee with its AE. 2.2 The brief facts of the case on hand are that the assessee, a private limited company, is engaged in the business of providing Software Development Services (SWD) and Information Technology Enabled Services (ITeS) to its AEs on cost plus mark-up basis. At the outset, we note that the ITeS segment of the assessee is not disputed by the Revenue. The Assessee company filed the return of income for the A.Y. 2013-14 on 29.11.2013 declaring an income of Rs. 25,47,72,130/- only. Subsequently, the case of the assessee was selected for scrutiny through CASS. 2.3 The assessee benchmarked its international transactions under SWD segment by adopting TNMM as the most appropriate method and Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 3 of 22 . further PLI as OP/OC which was arrived at 16.2%. The assessee for the comparability analysis under SWD segment selected 07 comparables. 3. However, the TPO during the assessment proceedings rejected 05 comparables out of 07 comparables selected by the assessee. The assessee’s comparables accepted by the TPO are detailed as under: (1) R S Software India Private Limited. (2) Mindtree Limited (IT Services). 3.1 Thereafter, the TPO applied own filter and selected 07 additional comparable companies inclusive of 03 assessee’s comparables. The final TPO’s comparables are detailed as under: (1) R S Software India Private Limited (2) Mindtree Limited (Segment) (3) CG – VAK Software Exports Limited (4) ICRA Techno Analytics Limited (5) Larsen and Toubro Infotech Limited (6) Persistent Systems Limited (7) Tech Mahindra Limited (Segment) 3.2 The average PLI/margin of the comparables companies was computed at 20.90% with respect to SWD Segment. Accordingly, an upward TP adjustment was made by the TPO for Rs. 5,73,45,574/- only. 4. Aggrieved by the order of the AO/TPO, the assessee preferred an appeal before the Ld. CIT(A). Regarding the inclusion/exclusion of comparables, the assessee before the Ld. CIT(A) submitted as follows: S.No. Name of Comparables Contention of Assessee 1. CG-VAK Software and Exports Limited Comparable is functionally different 2. Larsen and Toubro Infotech Pvt. Limited This comparable has significant amount of Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 4 of 22 . intangible assets, has significant Brand value 3. Persistent Systems Ltd Comparable is functionally different, is engaged in diversified operations, has non-availability of segmental information and has engaged in research and development activities 4. Tech Mahindra Ltd This comparable is functionally different, has non-availability of segmental information, fails the related party transaction to sales filter and has engaged in research and development activities 5. Akshay software Technologies Ltd. Comparables are functionally similar 6. Spry Resources India Pvt Ltd. Comparables are functionally similar 4.1 For exclusion of the comparables mentioned at S. Nos. 1 to 4, the assessee placed reliance on the decision of the Bangalore Bench in Fiberlink Software (P.) Ltd. v. DCIT [2022] 138 taxmann.com 301 (Bang- Trib), wherein the said companies were directed to be excluded while determining the arm’s-length price of similar international transactions under SWD segment. It was submitted that the functional profile of the assessee is comparable to that of the assessee in the said decision and, therefore, consistent view ought to be taken. Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 5 of 22 . 4.2 For inclusion of the comparables mentioned at S. Nos. 5 and 6, the assessee relied on the decision in Citrix R&D India Pvt. Ltd. v. DCIT for AY 2013-14, wherein these companies were included in the final set of comparables while determining the arm’s-length price of international transactions in the software development segment. It was contended that the facts being similar, the said companies deserve to be retained in the present case as well. 4.3 The Ld. CIT(A), after considering the submissions of the assessee and placing reliance on the judicial precedents referred to above, accepted the contention of the assessee in respect of the inclusion and exclusion of the comparables. Accordingly, the Ld. CIT(A) directed the AO/TPO to exclude the comparables mentioned at S. Nos. 1 to 4 and to include the comparables mentioned at S. Nos. 5 and 6 while determining the arm’s-length price of the international transactions carried out by the assessee with its AE. 5. Being aggrieved by the order of the ld. CIT-A, both the Revenue and assessee are in appeal and cross objection before us. 5.1 The Ld. DR before us submitted that the Ld. CIT(A) erred in excluding certain comparables on the basis of turnover differences. It was contended that the Bangalore Bench of the Tribunal in the case of M/s Societe Generale Global Solution Centre Pvt. Ltd. in IT(TP)A No. 1188/Bang/2011 and in M/s Vmoksha Technologies Pvt. Ltd. in IT(TP)A No. 595/Bang/2013 dated 26.08.2016 for AY 2005-06 has categorically held that turnover, by itself, is not a relevant criterion for determining comparability under the transfer pricing provisions. 5.2 The Ld. DR further submitted that the Ld. CIT(A) was not justified in holding that there exists a co-relation between turnover and operating margin of an entity. According to the Revenue, no significant material Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 6 of 22 . was brought on record to demonstrate that higher turnover necessarily results in materially different margins so as to warrant exclusion of such companies. 5.3 It was also contended that the transfer pricing guidelines do not mandate exclusion of comparables merely on account of differences in turnover, unless it is established that turnover has a direct and demonstrable impact on profitability, such as through economies of scale or other quantifiable factors. 6. On the other hand, the Ld. AR drew our attention to a separate one-page chart indicating the comparable companies which, according to the assessee, are liable to be excluded on account of turnover differences. It was submitted that the said chart clearly demonstrates that the turnover of the impugned companies is substantially higher than that of the assessee and that such disparity materially affects comparability. 6.1 The Ld. AR drew our attention to a one-page chart placed in the paper book, setting out the name of the comparable companies, their turnover for the relevant year and the reasons for exclusion based on the turnover filter of ₹0 to ₹200 crores. The chart indicates that companies such as Larsen & Toubro Infotech Ltd. (₹3613.42 crores), Mindtree Ltd. (₹1640.80 crores), Persistent Systems Ltd. (₹996.75 crores), RS Software Ltd. (₹294.43 crores) and Tech Mahindra Ltd. (₹5595.70 crores) have turnover substantially exceeding ₹200 crores and therefore fall outside the turnover range applicable to the assessee. 6.2 It was submitted that the assessee, being a captive service provider with comparatively lower turnover, cannot be compared with companies having multiple-fold higher turnover and significant scale advantages. The Ld. AR placed reliance on judicial precedents of the Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 7 of 22 . Bangalore Bench wherein a turnover filter of ₹0 to ₹200 crores has been applied in similar circumstances. 6.3 Both the ld. DR and AR before us vehemently supported the order of the authorities below as favourable to them. 7. We have considered the rival submissions of both the parties and perused the materials on record. At the outset, it is noted that in respect of CG-VAK Software Exports Ltd. and ICRA Techno Analytics Ltd. (S. Nos. 1 and 2), the Ld. AR submitted that the assessee is not pressing the issue. Accordingly, no adjudication is required in respect of the said companies. 7.1 The surviving issue raised by the Revenue is against the action of the Ld. CIT(A) in excluding Larsen & Toubro Infotech Ltd., Mindtree Ltd., Persistent Systems Ltd., RS Software Ltd. and Tech Mahindra Ltd. It is well settled that turnover is a relevant criterion in determining comparability under the transfer pricing provisions. The scale of operations directly impacts profitability owing to economies of scale, market position, bargaining power, asset base and risk profile. Companies operating at a significantly higher turnover level cannot be mechanically compared with a captive service provider operating at a substantially lower scale. This approach is in line with the OECD Transfer Pricing Guidelines in para 3.43 which states that Size criteria in terms of Sales, Assets or Number of Employees. The size of the transaction in absolute value or in proportion to the activities of the parties might affect the relative competitive positions of the buyer and seller and therefore comparability and the guidance note on transfer pricing issued by ICAI in para 5.50 which states under TNMM where margins are to be compared, the margin of a 1,000 crore company cannot be compared with that of a 10 crore company. The two most obvious reasons are the Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 8 of 22 . size of the two companies and the relative economies of scale under which they operate. 7.2 Further paragraph 15.4 of the ICAI Guidance Note on Transfer Pricing emphasizes that significant differences in company size and turnover, such as comparing a Rs. 1,000 crore entity to a Rs. 10 crore entity, materially affect profitability and comparability under Rule 10B(2) of Income Tax Rule. 7.3 It is well settled that turnover is a relevant criterion for determining comparability, as the scale of operations has a direct bearing on profitability owing to economies of scale. Companies having significantly higher turnover enjoy cost efficiencies and market advantages which are not available to smaller entities. For the ready reference, the view taken by the coordinate bench of this tribunal in Autodesk India (P) Ltd. v. DCIT reported in (2018) 96 taxmann.com 263 reads as under: \"17.7. We have considered the rival submissions. The substantial question of law (Question No. 1 to 3) which was framed by the Hon'ble Delhi High Court in the case of Chryscapital Investment Advisors (India) (P.) Ltd., (supra) was as to whether comparable can be rejected on the ground that they have exceptionally high profit margins or fluctuation profit margins, as compared to the Assessee in transfer pricing analysis. Therefore as rightly submitted by the learned counsel for the Assessee the observations of the Hon'ble High Court, in so far as it refers to turnover, were in the nature of obiter dictum. Judicial discipline requires that the Tribunal should follow the decision of a non- jurisdiction High Court, even though the said decision is of a non-jurisdictional High Court. We however find that the Hon'ble Bombay High Court in the case of CIT v. Pentair Water India (P.) Ltd. Tax Appeal No. 18 of 2015 judgment dated 16-9-2015 has taken the view that turnover is a relevant criterion for choosing companies as comparable companies in determination of ALP in transfer pricing cases. There is no decision of the jurisdictional High Court on this issue. In the circumstances, following the principle that where two views are available on an issue, the view favourable to the Assessee has to be adopted, we respectfully follow the view of the Hon'ble Bombay High Court on the issue. Respectfully following the aforesaid decision, we uphold the order of the DRP excluding 5 companies from the list of comparable companies chosen by the TPO on the basis that the 5 companies turnover was much higher compared to that the Assessee. Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 9 of 22 . 17.8. In view of the above conclusion, there may not be any necessity to examine as to whether the decision rendered in the case of Genisys Integrating (supra) by the ITAT Bangalore Bench should continue to be followed. Since arguments were advanced on the correctness of the decisions rendered by the ITAT Mumbai and Bangalore Benches taking a view contrary to that taken in the case of Genisys Integrating (supra), we proceed to examine the said issue also. On this issue, the first aspect which we notice is that the decision rendered in the case of Genisys Integrating (supra) was the earliest decision rendered on the issue of comparability of companies on the basis of turnover in Transfer Pricing cases. The decision was rendered as early as 5-8-2011. The decisions rendered by the ITAT Mumbai Benches cited by the learned DR before us in the case of Willis Processing Services (supra) and Capegemini India (P.) Ltd. (supra) are to be regarded as per incurium as these decisions ignore a binding co-ordinate bench decision. In this regard the decisions referred to by the learned counsel for the Assessee supports the plea of the learned counsel for the Assessee. The decisions rendered in the case of M/S.NTT Data (supra), Societe Generale Global Solutions (supra) and LSI Technologies (supra) were rendered later in point of time. Those decisions follow the ratio laid down in Willis Processing Services (supra) and have to be regarded as per incurium. These three decisions also place reliance on the decision of the Hon'ble Delhi High Court in the case of Chriscapital Investment (supra). We have already held that the decision rendered in the case of Chriscapital Investment (supra) is obiter dicta and that the ratio decidendi laid down by the Hon'ble Bombay High Court in the case of Pentair (supra) which is favourable to the Assessee has to be followed. Therefore, the decisions cited by the learned DR before us cannot be the basis to hold that high turnover is not relevant criteria for deciding on comparability of companies in determination of ALP under the Transfer Pricing regulations under the Act. For the reasons given above, we uphold the order of the CIT(A) on the issue of application of turnover filter and his action in excluding companies by following the ratio laid down in the case of Genisys Integrating (supra)\". 7.4 Further, we find that this Tribunal subsequently in the case of Robert Bosch Engineering and Business Solutions Pvt. Ltd. vs. DCIT in IT(TP)A No. 593/Bang/2020 followed the decision in the case of Autodesk India (P) Ltd. supra and excluded the company with turnover exceeding 200 crores from the comparable set. 7.5 Against the order the of the Tribunal the revenue filed appeal before the Hon’ble Karnataka High Court in ITA No.146/2025). In the said case, the Hon’ble High Court did not admit the Revenue’s grounds of appeal on this issue by observing as under: Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 10 of 22 . “10. Indisputably, a company that has a significantly large turnover cannot be considered as a comparable with an assessee, whose turnover is a small fraction of that of the said entity. 11. The question whether the entities are comparable is required to be determined on the basis of similar FAR [Functions, Assets and Risks] profile. It would be erroneous to assume that the size of an entity and its turnover has no bearing on the FAR profile. It is erroneous to suggest that a company of a huge size and a large turnover would be subjected to the same risks as that of a smaller entity, whose turnover is a small fraction of the other entity. The entities would also not be comparable when one considers the value of assets. Additionally entities having a large turnover, would have the benefit of economies of scale, which would not be available to companies with a relatively lower turnover. 7.6 In the light of the above facts, once the order of the Tribunal in the case of Robert Bosch Engineering and Business Solutions Pvt Ltd.(supra) was carried in appeal before the Hon’ble Karnataka High Court in ITA No. 146/2025, and the Hon’ble High Court declined to admit the Revenue’s grounds on the turnover filter issue, the doctrine of merger comes into operation. The order of the Tribunal, to the extent it was subject matter of challenge before the High Court and was examined by it, stands merged with the order of the High Court. In other words, the reasoning and conclusion of the Tribunal on exclusion of companies having turnover exceeding ₹200 crores cannot thereafter be viewed as a mere Tribunal view indeed it attains affirmation at the level of the Hon’ble jurisdictional High Court. 7.7 The Hon’ble High Court has categorically observed that a company having significantly large turnover cannot be compared with a small entity and that size and turnover have a direct bearing on FAR analysis, asset base, risk profile and economies of scale. Once such findings are recorded by the Hon’ble jurisdictional High Court while dealing with the appeal arising out of the Tribunal’s order, the Tribunal’s decision on this aspect merges with the High Court’s order. The consequence is that the principle laid down on the relevance of turnover Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 11 of 22 . filter is no longer open to re-agitation before subordinate authorities within the State. 7.8 Further, under the rule of judicial precedence, the decision of the Hon’ble jurisdictional High Court is binding on the Tribunal and all lower authorities within its territorial jurisdiction. Therefore, after the High Court’s order in ITA No. 146/2025, the issue of exclusion of high turnover companies from the comparable set, on the reasoning approved by the Hon’ble High Court, is settled within the jurisdiction. Any contrary view taken earlier by coordinate benches or relied upon from other jurisdictions cannot prevail over the binding effect of the Hon’ble jurisdictional High Court’s decision. 7.9 Likewise, we also find that the Hon’ble jurisdictional High Court of Karnataka also taken similar view in the case of CIT vs. Yodlee Infotech (P.) Ltd. reported in 111 taxmann.com 121 and has dismissed the revenue ground of appeal on the issue of exclusion of comparable company with turnover exceeding 200 cores. The relevant question raised by the Revenue and finding of the bench reads as under: (2) Whether on the facts and in the circumstances of the case the Tribunal is right in law in accepting the claim of assessee to adopt turnover filter of Rs.200 Crores following the decision of Co-ordinate Bench in the case of M/s. Genisys Pvt. Ltd v. DCIT reported in 64 DTR page 225 even when said decision has not reached finality and without appreciating that the turnover is not a relevant filter in the software industry, as the size of the turnover and margins are not linked and the Economics of scale are relevant factor only in capital intensive companies which have substantive fixed assets in the form of plant and machinery? Regarding substantial question of law No.2: \"20. We have to hold that assessee can seek exclusion of comparables which were a part of its own list, at a later stage, and therefore, we are constrained to reject the line of argument of the learned DR. Coming to the arguments of the learned AR that M/s Tata Elxsi Ltd., M/s Sasken Communication Ltd., M/s Persistent Systems Ltd., M/s L & T Infotech and M/s Infosys Ltd., had turnover in excess of Rs. 200 Crores and were to be excluded, we are of the opinion that turnover filter can be applied for selection of comparables. This has been the view consistently taken by the Co-ordinate Benches of this Tribunal in a number of cases. In the case of M/s Genisys (P.) Ltd. v. DCIT [2011] 64 DTR 225 it was held by this Tribunal as under at paras-8 to 09 of its order: Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 12 of 22 . 8. According to learned counsel for the assessee size is an important fact of an enterprise level difference. He submitted that comparables should have something similar or equivalent and should possess same or almost the same characteristics. To use a simile, he submitted that a Maruti 800 car cannot be compared to a Benz car, even though both are cars only. He submitted that unusual pattern, stray cases, wide disparities have to be eliminated as they do not satisfy the test of comparability. Companies operating on large scale benefit from economies of scale, higher risk taking capabilities, robust delivery and business models as opposed to the smaller or medium sized companies and therefore, size matters. Two companies of dissimilar size therefore, cannot be assumed to earn comparable margins and the impact of difference in size could be removed by a quantitative adjustment to the margins or price being compared if it is possible to do so reasonably accurately. He submitted that size as one of the selection criteria has also been approved by various Benches of the Tribunal, in the following cases: 8.1 He further submitted that size as a criteria for selection of comparables is also recommended by OCED in its TP guidelines. The observation of OCED in para 3.43 of the chapter on guidelines reads as follows: ** ** ** 8.2 The learned counsel for the assessee submitted that similar observations were also made by ICAI in para 15.4 of TP guidance note. He submitted that TPO's range of Rs. 1 crore to infinity has resulted in selection of companies like M/s Infosys which is having a turnover of Rs. 9,028 crores which is 1,1007 times bigger than the assessee company which has a turnover of Rs. 8.15 crores. He further submitted that NASSCOM has also categorized the companies based on the turnover as follows: 8.3 The learned Departmental Representative rebutted this argument and submitted that the Act or Rules does not provide for the turnover filter. He submitted that as rightly pointed out by the TPO in the case of service sector, the size of the company does not matter because, the infrastructure layout is very less and it will not affect the profit ratio in any way. He drew out attention to the particular portion of TPO's order wherein the TPO has the reasoning given for rejecting the turnover filter. 9. Having heard both the parties and having considered the rival contentions and also the judicial precedents on the issue, we find that the TPO himself has rejected the companies which are making losses as comparables. This shows that there is a limit for the lower end for identifying the comparables. In such a situation, we are unable to understand as to why there should not be an upper limit also. What should be upper limit is another factor to be considered. We agree with the contention of the learned counsel for the assessee that the size matters in business. A big company would be in a position to bargain the price and also attract more customers. It would also have a broad base of skilled employees who are able to give better output. A small company may not have these benefits and therefore, the turnover also would come down reducing profit margin. Thus, as held by the various Benches of the Tribunal, when companies which are loss making are excluded from comparables, then the super profit making companies should also be excluded. For the purpose of classification of companies on the basis of net sales or turnover, we find that a reasonable classification has to be made. Dun & Bradstreet and NASSCOM have given different ranges. Taking the Indian scenario into consideration, we Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 13 of 22 . feel that the classification made by Dun & Bradstreet is more suitable and reasonable. In view of the same, we hold that the turnover filter is very important and the companies having a turnover of Rs. 1 Crore to Rs. 200 crores have to be taken as a particular range and the assessee being in the range having turnover of Rs. 8.15 crores, the companies which also have turnover of Rs. 1 to Rs. 200 crores only should be taken into consideration for the purpose of making TP study.\" The appeal filed by the Revenue against the judgment of the Hon'ble Tribunal in the case of Genisys (P.) Ltd. v. Dy.CIT [2011] 64 DTR 225 has been considered by this Court in ITA No.17/2012 and the same has been dismissed on 09.07.2018 as no substantial questions of law arose for consideration. 7.10 Accordingly, on the principle of merger and judicial discipline, the view that companies with turnover exceeding ₹200 crores are not comparable with small or medium scale stands affirmed and binding within the jurisdiction of the Hon’ble Karnataka High Court. 7.11 Before parting, we note that the Ld. DR also relied on the decision of ITAT in the case of M/s Yokogawa Technology Solutions India Pvt. Ltd. vs. DCIT in IT(TP)A No. 2328/Bang/2024, where the Tribunal held that while an upper turnover filter should be applied based on the assessee’s turnover, but it is not necessary that the limit must always be ₹200 crores. Hence, we note that tribunal in this case has held that upper turnover filter should apply. Only issue was therein that upper limit of Rs. 200 cannot be applied in each case which we agree. In our considered view what should be the upper turnover will depend upon the facts and circumstances involved in particular case. In the present case the appellant assessee turnover is of Rs. 54 crores only whereas the comparable companies have turnover of Rs. 265 cored to 49 thousand cores which is substantially high and such large-scale companies cannot be compared to the assessee company. Hence the view taken by the Tribunal in M/s Yokogawa Technology Solutions India Pvt. Ltd. (supra) is distinguishable from the present facts of the case. Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 14 of 22 . 7.12 In view of the above and following the binding decision of the Hon’ble Karnataka High Court (Supra) affirming the Bangalore ITAT order, we hold that companies having disproportionately high turnover compared to the assessee cannot be considered as valid comparables and are liable to be excluded by applying an appropriate upper turnover filter. 7.13 In the present case, the comparables excluded by the Ld. CIT(A) have turnover running into several hundreds and thousands of crores, whereas the assessee is a captive service provider operating at a much lower scale. The Revenue has not brought any material on record to demonstrate that such vast disparity in turnover does not affect profitability or FAR profile. 7.14 In view of the consistent judicial position and the factual matrix on record, we find no infirmity in the order of the Ld. CIT(A) in applying an upper turnover filter and excluding the aforesaid companies. Accordingly, the grounds raised by the Revenue on this issue are dismissed. 8. The Revenue has raised some other grounds in the appeal. However, no specific arguments were made before us on those grounds. No separate submissions or supporting material were placed on record to show how the order of the Ld. CIT(A) is incorrect on those issues. 8.1 Since no arguments were advanced and the issues are either already covered in the discussion above or are consequential in nature, these grounds do not require separate adjudication. Accordingly, the remaining grounds raised by the Revenue are dismissed as infructuous. 9. In the result, the appeal filed by the Revenue is hereby dismissed. Coming to CO 9/Bang/2025 for the AY 2013-14 and the additional ground of appeal of the assessee Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 15 of 22 . 10. At the time of hearing, the ld. counsel for the assessee submitted that he has been instructed by the assessee not to press the grounds raised in the cross objection and the additional ground of appeal. Accordingly, we dismiss the same as not pressed. In the result, the CO filed by the assessee is dismissed as not pressed. Coming to IT(TP)A No. 2487/Bang/2024 Ariba Technologies India Private Limited AY 2015-16 11. The brief facts of the case are that the TPO rejected TP study conducted by the assessee. The TPO did not accept the filters applied by the assessee and proceeded to carry out a fresh search. While doing so, the TPO applied his own set of filters and selected a new set of comparables separately for the SWD and ITeS segments. 11.1 For the SWD segment, the TPO selected 16 comparables. Based on the arithmetic mean margin of the selected companies, the TPO proposed an upward adjustment of ₹18,71,17,835 to the value of international transactions. For the ITeS segment, the TPO selected 5 comparables. On the basis of the mean margin computed for these companies, the TPO proposed an upward adjustment of ₹3,41,32,369.00 only 11.2 Accordingly, a total transfer pricing adjustment of ₹22,12,50,204 was proposed in respect of the international transactions entered into by the assessee with its AEs. 12. Aggrieved by the order of the AO/TPO, the assessee preferred an appeal before the Ld. CIT(A). Regarding the inclusion/exclusion of comparables in respect of SWD segment, the assessee before the Ld. CIT(A) submitted as follows: S.No. Name of Comparables Contention of Assessee 1. Aspire Systems (India) Pvt. Comparables are functionally Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 16 of 22 . Ltd., M/s Thirdware Solutions Ltd., M/s Infosys Ltd & M/s Nihilent Technologies Ltd. different, fails related party transactions filter, are engaged in diversified activities, presence of significant brand value and intangibles, significant onsite activity 2. M/s Persistent Systems Ltd., M/s Larsen and Toubro Infotech Ltd., M/s Mindtree Ltd. These comparable are functionally dissimilar and lack segmental data, has significant amount of intangible assets, has significant Brand value, has significant onsite activity 3. M/s Cybage Software Pvt. Ltd. Comparable is engaged in diversified operations and has non- availability of segmental information 4. I2T2 India Ltd. and M/s Cigniti Technologies Ltd. Comparables are functionally similar and passes the filters 5. Infomile Technologies Ltd. Comparables are functionally similar and passes the filters 12.1 For exclusion of the comparables mentioned at S. No. 1, the assessee placed reliance on the decision of the Bangalore Bench in M/s Marvell India Private Limited for AY 2015-16. For the exclusion of the comparable mentioned at S. No. 2, the assessee placed reliance on the decision of the Bangalore Bench in M/s Yahoo Software Development India Private Limited for AY 2015-16 and for exclusion of the comparables mentioned at S. No. 3, the assessee placed reliance on the Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 17 of 22 . decision of the Bangalore Bench in M/s Capco Technologies Private Limited for AY 2015-16 wherein the said companies were directed to be excluded while determining the arm’s-length price of similar international transactions. It was submitted that the functional profile of the assessee is comparable to that of the assessee in the said decision and, therefore, consistent view ought to be taken. 12.2 For inclusion of the comparables mentioned at S. No. 4 the assessee relied on the decision in Citrix R&D India Pvt. Ltd. v. DCIT for AY 2015-16, and for inclusion of the comparable mentioned at S. No. 5, the assessee relied on the decision in M/s SAP Labs India Pvt. Ltd. v. DCIT for AY 2015-16 wherein these companies were included in the final set of comparables while determining the arm’s-length price of international transactions in the software development segment. It was contended that the facts being similar, the said companies deserve to be retained in the present case as well. 12.3 With regard to exclusion of comparables in respect of ITeS segment, the assessee before the Ld. CIT(A) with respect to M/s Infosys Ltd submitted that Comparable is functionally different, and presence of significant brand value. The assessee further relied on the judicial precedent in the case of M/s Ocwen Financial Solutions Private Limited for AY 2015-16 wherein the said comparable was directed to be excluded while determining the arm’s-length price of similar international transactions. It was submitted that the functional profile of the assessee is comparable to that of the assessee in the said decision and, therefore, consistent view ought to be taken. 13. The Ld. CIT(A), after considering the submissions of the assessee and the judicial precedents relied upon, examined the functional comparability of the disputed companies. Placing reliance on the Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 18 of 22 . decisions cited by the assessee, the Ld. CIT(A) directed inclusion or exclusion of the concerned comparables, as the case may be, in line with the findings recorded in those judgments. Accordingly, relief was granted to the assessee to the extent the precedents were found applicable to the facts of the present case. 14. Aggrieved by the order of the Ld. CIT(A), the revenue and the assessee preferred appeal and the CO before us. 15. The Ld. DR before us submitted that the Ld. CIT(A) erred in excluding certain comparables on the basis of turnover differences. It was contended that the Bangalore Bench of the Tribunal in the case of M/s Societe Generale Global Solution Centre Pvt. Ltd. in IT(TP)A No. 1188/Bang/2011 and in M/s Vmoksha Technologies Pvt. Ltd. in IT(TP)A No. 595/Bang/2013 dated 26.08.2016 for AY 2005-06 has categorically held that turnover, by itself, is not a relevant criterion for determining comparability under the transfer pricing provisions. 15.1 The Ld. DR further submitted that the Ld. CIT(A) was not justified in holding that there exists a co-relation between turnover and operating margin of an entity. According to the Revenue, no empirical material was brought on record to demonstrate that higher turnover necessarily results in materially different margins so as to warrant exclusion of such companies. It was also contended that the transfer pricing guidelines do not mandate exclusion of comparables merely on account of differences in turnover, unless it is established that turnover has a direct and demonstrable impact on profitability, such as through economies of scale or other quantifiable factors. 16. On the other hand, the Ld. AR placed on record a two pages chart and drew our attention indicating the comparable companies which, according to the assessee, are liable to be excluded on account of Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 19 of 22 . turnover differences. It was submitted that the said chart clearly demonstrates that the turnover of the impugned companies is substantially higher than that of the assessee and that such disparity materially affects comparability. 16.1 The Ld. AR drew our attention to a two-pages, setting out the name of the comparable companies, their turnover for the relevant year and the reasons for exclusion based on the turnover filter of ₹0 to ₹200 crores. The chart indicates that companies such as E-Zest Solutions Ltd. (₹443.70 crores), Tata Elxsi Ltd. (Segment) (₹781.85 crores), Mind Tree Ltd. (Segment) (₹3,547.40 crores), Larsen and Toubro Infotech Limited (₹47,444 crores), RS Software Private Ltd. (₹345.50 crores), Persistent Systems Ltd. (₹1,289.61 crores), Nihilent Technologies Ltd. (₹267.83 crores), Infosys Ltd. (₹47,300 crores), Thirdwave Solutions Ltd. (₹230.07 crores) and Cybage Software Private Ltd. (₹641.43 crores) have turnover substantially exceeding ₹200 crores and therefore fall outside the turnover range applicable to the assessee. 16.2 It was submitted that the assessee, being a captive service provider with comparatively lower turnover, cannot be compared with companies having multiple-fold higher turnover and significant scale advantages. The Ld. AR placed reliance on judicial precedents of the Bangalore Bench wherein a turnover filter of ₹0 to ₹200 crores has been applied in similar circumstances. 16.3 The assessee further sought inclusion of two comparables, namely I2T2 India Limited and Cigniti Technologies Limited. In support, reliance was placed on the decisions of the Bangalore Bench in the cases of SAP Labs India Private Limited (150 Taxmann.com) and Cypress Semiconductor Technology India Private Limited (IT(TP)A No. Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 20 of 22 . 2427/Bang/2019), wherein these companies were directed to be included as comparables in similar circumstances. 17. Both the ld. DR and AR before us vehemently supported the order of the authorities below as favourable to them. 18. We have considered the rival submissions of both the parties and perused the materials on record. As regards the issue relating to the difference in the amount of turnover of the assessee vis-a-vis of the comparable companies, we have already decided the identical issue in favour of the assessee in the revenue’s appeal bearing No. 2512/Bangalore 2024 vide paragraph number 7 of this order. Accordingly, we dismiss the ground raised by the revenue relating to inclusion of certain comparables discussed above on account of difference in the turnover. 18.1 Moving further, at the outset, it is noted that in respect of Kals Information System Ltd., CG-VAK Software Exports Ltd., Rheal Software Pvt. Ltd., Infobeans Technologies Ltd., Aspire Systems (India) Pvt. Ltd. and Inteq Software Pvt. Ltd., the Ld. AR submitted that the assessee is not pressing the issue. Accordingly, no adjudication is required in respect of the said companies. Regarding the inclusion of the comparables namely I2T2 and Cigniti, from a perusal of the appellate order, it is seen that the learned CIT(A) has merely reproduced and relied upon the findings in the decisions i.e. M/s Citrix R & D India Pvt. Ltd. without independently examining whether the factual matrix of the present case is identical. There is no specific discussion on whether the companies satisfy the relevant filters for the year under consideration, including the revenue filter, functional comparability, availability of segmental data, and other quantitative criteria. Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 21 of 22 . 18.2 Though the assessee has contended that the said comparable companies satisfy the revenue filter and are functionally comparable to the assessee, such aspects require proper factual verification. Inclusion of a comparable cannot be directed solely on the basis of reliance on another decision, without examining the contemporaneous financials and functional profile for the relevant assessment year. 18.3 In these circumstances, the issue of inclusion of I2T2 India Limited and Cigniti Technologies Limited is restored to the file of the Assessing Officer / TPO for fresh examination. The AO/TPO shall verify whether the said companies satisfy the applicable filters and are functionally comparable to the assessee for the year under consideration, and thereafter decide the issue in accordance with law, after providing due opportunity of being heard to the assessee. Hence, the ground of appeals of the Revenue are partly allowed for statistical purposes. 19. In the result, the appeal of the Revenue is partly allowed for statistical purposes. Coming to CO 10/Bang/2025 for the AY 2015-16 20. At the time of hearing, the ld. counsel for the assessee submitted that he has been instructed by the assessee not to press the grounds raised in the cross objection. Accordingly, we dismiss the same as not pressed. 21. In the result, the CO filed by the assessee is dismissed as not pressed. Printed from counselvise.com IT(TP)A No.2487 & 2512/Bang/2024 CO No.9 & 10/Bang/2025 Page 22 of 22 . 22. In the combined results, the Revenue appeal bearing No. 2512/Bang/2024 is dismissed and Revenue appeal bearing No. 2487/Bang/2025 is partly allowed for statistical purposes whereas both the CO of the assessee are hereby dismissed. Order pronounced in court on 24th day of February, 2026 Sd/- Sd/- (KESHAV DUBEY) (WASEEM AHMED) Judicial Member Accountant Member Bangalore Dated, 24th February, 2026 / vms / Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR, ITAT, Bangalore. 6. Guard file By order Asst. Registrar, ITAT, Bangalore Printed from counselvise.com "