Assessee’s Contentions

Revenue’s Contentions

Tribunal’s Judgment

The assessee contended that Aurigene Discovery Technologies Ltd. should be excluded from the final set of comparables, as the TPO himself had applied a 75% R&D service-income filter. Aurigene’s revenue from research services and discovery & collaboration constituted only 69.43% of its total revenue and therefore failed the filter.

The Revenue relied upon the order of the AO/TPO and supported the inclusion of Aurigene in the final set of comparables. It therefore opposed the assessee’s contention that Aurigene should be excluded for failing to satisfy the 75% R&D service-income filter.

The ITAT held that the 75% filter must be applied uniformly to all comparables. Since Aurigene derived only 69.43% of its total revenue from research services and discovery & collaboration, it failed the filter. The AO/TPO was directed to exclude Aurigene and recompute the ALP.

The assessee submitted that interest on delayed trade receivables should be benchmarked at LIBOR + 200 basis points after a 30-day credit period. It further submitted that interest on ECBs should be benchmarked at LIBOR + 3%, following the Tribunal’s earlier decision in its own case.

It   The Revenue fairly submitted that both issues were covered by the Tribunal’s decision in the assessee’s own case for AY 2018-19. No distinguishing feature was brought to the Tribunal’s notice for the year under consideration.

The ITAT directed the AO/TPO to benchmark interest on delayed trade receivables at LIBOR + 200 basis points after a 30-day credit period and interest on ECBs at LIBOR + 3%. The respective grounds were allowed for statistical purposes.