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2017 (1) TMI 1626 - ITAT DELHITPA - ALP determination - comparable selection - Held that:- Assessee is engaged in providing only engineering design services thus companies functionally dissimilar with that of assessee need to be deselected from final list. Working capital adjustment under rule 10 B(3)(ii) of the Income tax Rules - Held that:- In the entire exercise of Transfer Pricing, the objective is to have better comparability and the purpose of working capital adjustment is to increase the comparability of tested party and its comparables. Working capital adjustment irons out the differences between assessee and comparables. In various decisions including the decision cited by the assessee, it is held that if there are differences with comparables which can be adjusted, then adjustment are required to made including the working capital adjustment. Accordingly, we direct the Assessing Officer/TPO to grant an appropriate working capital adjustment to the assessee. Nature of expenditure - sub-license software package - revenue or capital - Held that:- The Hon’ble High Court after considering the principles laid down in the case of Commissioner of Income Tax Vs. JK Synthetics Ltd. [2008 (12) TMI 21 - DELHI HIGH COURT] and other decisions upheld the finding of the Tribunal that the expenditure in question was revenue in nature. We also find that special leave petition filed by the Department against the said decision of the Hon’ble jurisdictional High Court has also been dismissed by the Hon’ble Supreme Court. Thus amount for use of sublicense software package was revenue expenditure. Since the expenditure in question towards royalty for use of sublicense software package has already been allowed as revenue expenditure, the question of allowing depreciation does not arise
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