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2014 (7) TMI 127 - ITAT HYDERABADTransfer pricing adjustments - Selection of comparables - Extra ordinary event - Exensys Software Solutions Ltd. – Bodhtree consulting Ltd, Four Soft Ltd, Infosys,., Sankhya Infotech Ltd., Thirdware Solutions Ltd, Tata Elexi (seg) - – Held that:- The decision in Intoto Software India (P.) Ltd. Versus Assistant Commissioner of Income-tax, Circle -2(1), Hyderabad [2013 (10) TMI 599 - ITAT HYDERABAD] followed - there is an extra-ordinary event which resulted in high operating margin of that company – thus, the AO is directed to exclude this company from the list of comparables. Inclusion of cpmparables – Birla Technologies Ltd. - VJIL Consulting Limited - The assessee is requesting for inclusion of the above companies on the reason that TPO erred in not selecting these companies of extraneous reasons stating that Birla Technologies Limited was incurring persistent losses - inclusion or exclusion of these companies would require further examination of contentions by TPO – thus, the matter is to be remitted back to the AO/TPO for consideration as to whether to include or exclude the above two comparables selected by assessee – Decided in favour of Assessee. Working capital adjustment and risk adjustment – Held that:- With reference to quantification of risk adjustment, assessee arrived at the same at 4.63% based on difference in the average prime lending rate and the average bank rate – it cannot be accepted that the difference in prime lending rate and bank rate has to be considered as risk adjustment, TPO should examine the risk profile of the assessee and other comparables and arrive at appropriate risk adjustment if it can be quantified on any reasonable basis - on negative working capital adjustment as well as risk adjustment, the issue is restored to the TPO, as selection of comparables were also restored to the file of the TPO - TPO should examine the aspects and arrive at revised ALP, after giving due opportunity to the assessee – Decided in favour of Assessee.
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