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2016 (9) TMI 1283 - AT - Income TaxNon adjustment on account of difference in working capital position vis-à-vis the comparable companies - Held that:- The capital employed on the assessee, including working capital, is one of the relevant factors for the purpose of determining the arm’s length price. Therefore, the capital employed by the assessee, including the working capital, and that of comparable companies needs to be taken into consideration. Without comparing the working capital employed by the comparable companies and that of the assessee, this Tribunal is of the considered opinion that there cannot be any transfer pricing adjustment. On picking up of comparables or selection of comparable companies Transfer Pricing Officer considered the claim of the assessee and excluded M/s Mobil Telecommunications Ltd. and included M/s Aanchal Computers Ltd. The Dispute Resolution Panel simply rejected the objection of the assessee without any further discussion in the order. Thus this Tribunal is of the considered opinion that the DRP, being the fact finding authority with regard to international transaction, is expected to dispose each and every aspect with regard to functional similarity, capital employed by the assessee, etc. for the purpose of determining the arm’s length price. Since the DRP has not discussed anything on material facts, this Tribunal is of the considered opinion that the matter needs to be reconsidered. Accordingly, the orders of the authorities below are set aside and the issue with regard to selection of comparables, working capital adjustment and objections raised by the assessee with regard to comparables selected by the TPO, are remitted back to the file of the Assessing Officer. The Assessing Officer shall refer the matter once again to the Transfer Pricing Officer. - Decided in favour of assessee for statistical purposes.
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