The Income Tax Appellate Tribunal (ITAT) delivered a ruling dated 10 June 2008 in the case of E-Gain Communication Pvt. Ltd. v. Income Tax Officer (2008-TIOL-282-ITAT-PUNE) on the issue of whether an Indian software company providing services to its US parent at cost-plus 5% was appropriate under the Indian transfer pricing regulations.
(a) Facts. The Taxpayer (i.e. E-Gain Communication Pvt. Ltd.) was engaged in the business of software product development. It…