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2015 (8) TMI 1448 - AT - Income TaxTPA - selection of comparable - Held that:- The assessee is a resident private limited company as engaged in the business of providing software development services to its AEs thus companies functionally thus companies functionally dissimilar with that of assessee need to be deselected from final list. Foreign exchange gain on realization of consideration for rendering software development services is to be regarded as part of operating revenues. Assessing Officer/TPO are directed to verify this aspect as to whether the foreign exchange gain is on account of realisation of consideration and if that is so, to then consider the same as operating in nature. Working Capital Adjustment - Held that:- We deem it fit to remand the matter back to the file of the TPO to examine and verify the assessee's claim that the amount of receivables and payables have been taken incorrectly in computing the working capital adjustment and to recompute the working capital adjustment accordingly, if so required, after affording the assessee adequate opportunity of being heard and to file details/submissions required in this regard. Risk Adjustment - Held that:- the assessee has raised the issue of grant of market risk adjustment. However, during the proceedings before us, it was admitted that the assessee apart from putting forth this claim has not quantified the adjustment to be granted in this regard. In view of this, this plea of the assessee is hypothetical in nature and not maintainable and is accordingly dismissed. Grant of benefit of deduction of 5% in computing the ALP of the Transactions - Held that:- The new section 92C(2A) of the Act mandates that if the AM price falls beyond +/- 5% from the price charged in the international transactions, then the assessee does not have any option as referred to in Section 92C(2) of the Act. Thus, as per the above amendment, it is clear that +/- 5% variation is allowed to justify the price charged in the international transactions and not for adjustment purposes. The aforesaid amendment has settled the issue and accordingly the 5% benefit is not available to the assessee. Consequently, Ground No.2 raised by the assessee is dismissed. Charging of Interest u/s.234B - Held that:- The charging of interest The charging of interest is consequential and mandatory and the Assessing Officer has no discretion in the matter. This proposition has been upheld in the case of CIT v. Anjum H. Ghaswala [2001 (10) TMI 4 - SUPREME COURT] and we, therefore, uphold the action of the Assessing Officer in charging the said interest. The Assessing Officer is, however, directed to recompute the interest chargeable u/s. 234B and 234C of the Act, if any, while giving effect to this order.
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