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2017 (1) TMI 1570 - AT - Income TaxDetermination of Adjustment Determining the TP adjustment on transactions with non-AE's - Held that:- This issue has to be considered in favour of assessee and AO/TPO is directed to make adjustments only to the extent of transactions with AE and exclude the adjustment on the transactions with non-AEs. This issue is already decided in favour of assessee in assessee's own cases in earlier years and later years. AO/TPO is directed accordingly. Ground is considered allowed. Margin computation of the Appellant under TNMM - Non consideration of Work-In-Progress (WIP) movement for the computation of the operating margin of the Appellant - Held that:- This ground pertains to computation of margin under TNMM. It was submitted that the WIP movement for the computation of operating margin of assessee was not considered by the TPO. Since this issue is required to be examined by the TPO, we direct the AO/TPO to examine this issue and work out the correct margin. Ground is allowed for statistical purposes. Incorrect computation of working capital adjustment - Held that:- As relying on Adaptec (India) P. Ltd. Versus The ACIT, Circle 1 (1) Hyderabad [2015 (6) TMI 288 - ITAT HYDERABAD] we direct the AO/TPO not to make negative working capital adjustment. Comparable selection criteria - Held that:- Assessee is engaged in rendering market research and related back office services for domestic and international clients thus companies functionally dissimilar with that of assessee need to be deselected from final list. Deduction u/s. 10A - denying deduction to the Offshore Research Service Centre (ORSC) unit by concluding that the ORSC unit has been formed by reconstruction of the existing business - Held that:- AO/TPO is directed to examine the issue in the light of the facts and if any un-availed portion was available for STPI unit, the deduction will be allowed. Accordingly, this issue is restored to the file of the AO to re-examine Disallowance of license fees - revenue or capital expenditure - Held that:- As relying on TNS India (P.) Ltd., v. Dy. CIT [2015 (5) TMI 45 - ITAT HYDERABAD] we uphold the direction of the DRP to treat the amount as 'capital in nature' to allow the depreciation. However, the rate of depreciation is to be determined at 60%. With the above directions, the ground is considered partly allowed.
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