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2018 (5) TMI 1776 - AT - Income TaxDetermination of arm’s length price by the TPO/AO in relation to the ‘software development services’ segment - Comparable selection - Held that:- As per the assessee it had entered into agreements with Zafin BVI for the provision of software development services and has rendered software development services to its AE and it is remunerated for the services provided by it on the cost-plus basis thus companies functionally dissimilar with that of assessee need to be deselected from final list. Companies which are having huge turnover cannot be compared with the assessee IT(company which is having only 26.46 crores so as to determine the ALP of the international transactions with its AEs. Hence, in our opinion, it is appropriate to exclude the above three companies as comparables from the list of comparables to determine the ALP of the international transactions with its AEs. Accordingly, this ground of appeal of the assessee is allowed. Working capital adjustment - TPO reduced the average margin of the comparables by 2.34% by allowing Working Capital Adjustment - Held that:- We are inclined to direct the Assessing Officer to consider the working capital adjustment as computed by him while determining the ALP of international transactions of the assessee with its AEs. Hence, this ground of appeal taken by the assessee is partly allowed.
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