2018 (10) TMI 1796 - ITAT BANGALORE

TP Adjustment - Comparable selection - HELD THAT:- Assessee is a company engaged in the business of providing contract Software Development Services (SWD Services) to its holding company Huawei Tech Investment company Ltd., Hong Kong which in turn is a subsidiary of Huawei China. The transaction of rendering software development services to holding company was a transaction with an Associated Enterprise (AE) and was therefore an international transaction, thus companies functionally dissimilar with that of assessee need to be deselected from final list.

Working capital adjustment - There would remain no comparable uncontrolled transactions for the purpose of comparison. The transfer pricing exercise would therefore fail. Therefore in keeping with the OECD guidelines, endeavor should be made to bring in comparable companies for the purpose of broad comparison. Therefore the working capital adjustment as claimed by the Assessee should be allowed. We hold and direct accordingly.