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3.2 The assessee was incorporated as a private limited company on 30th July 2001. The Joint-venture was formed for the establishment and operation of an offshore development centre for the provision of both offshore and on-site information technology and other related services.
3.3 The assessee has entered into a software development service agreement with Deloitte to provide the software related services to Deloitte. Deloitte enters into consulting assignments with its US clients. For such assignments, the areas pertaining to software development and information technology services are provided by the assessee in terms of the contract between the assessee and Deloitte only when the assessee possesses the requisite resources to provide such services. The assessee provides both offshore and on-site service under the contract with Deloitte. The offshore services are provided through Mastek and on-site services would be provided through Majesco, a US based company and a subsidiary of Mastek.
DELOITTE CONSULTING INDIA PVT. LTD.
3The entire turnover of the assessee represents earnings received from Deloitte for providing software development and information technology services.
4. International Transactions:
The various international transactions entered into by the assessee during the previous year are as follows:-
(a) The assessee has rendered software development and information technology services to Deloitte, amounting to Rs 9.15 crores. In respect of the services the assessee is liable to receive the payment in 60 days time. The assessee bears all the risks relating to performance, market and foreign exchange. The services are priced mostly on time and material basis.
(b) The assessee's role under its contract with Deloitte has also been explained in Para 5.1. From the same it is clear that the assessee's role is to undertake the execution of the project and render the software development services. The assessee has already explained that it has not entered into any third party transactions during the previous year nor has it explored the possibility at any time. When the assessee is not required to undertake the marketing function in terms of the Master services agreement, there is no reason for any allocation of the marketing costs to the assessee. It is clear that both the parties have clearly demarcated roles to play under the software services agreement and both are compensated for the same accordingly. Just as the assessee is not allocating any part of its costs for software development to Deloitte, similarly there is no reason for Deloitte to allocate any part of the costs incurred by it in order to perform the role agreed by it under the software agreement.
internal Cornparables relevant to the transaction between MDCODC. and (Maiscc/Deloie) would include the following:
• MDCODC providing contract software services to unrelated parties. • Deloitte contracting software services to unrelated parties. • Majesco providing contract software services to unrelated parties Based on our discussions with the management of MDCODC, we have been informed that MDCODC does not render any software services to third parties (either in India or outside India). The management further informed that the software services rendered by Majesco to MDCODC are not similar to the services provided by Majesco to third parties. Also, the management has informed us that the software services obtained by Deloitte from third parties are not similar to the services obtained by Deloitte from MDCODC. This is primarily on account of requirements of different skill-sets, experience, knowledge levels, complexity of the software projects handled, risk bearing capabilities, etc. The Management also informed that MDCODC was the sole entity in India providing offshore software services to Deloitte. In absence of internal comparables a search was carried out for external comparables." (Emphasis own)