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2018 (5) TMI 1941 - AT - Income TaxTP Adjustment - comparable selection - working capital adjustment - HELD THAT:- Hon’ble Bombay High Court in CIT Vs. PTC Software (I) Pvt. Ltd. [ 2016 (9) TMI 1282 - BOMBAY HIGH COURT] has held that the data for the same period is to be applied in order to hold the concerns selected, as comparable. We find that where the assessee is following financial years for compiling its data i.e. 01.04.2010 to 31.03.2011, the two concerns selected i.e. R System International Ltd. and Coral Hub Ltd. do not fulfill the said filter. The accounting periods of said two concerns are at variance to the accounting period followed by the assessee and consequently, the margins of said concerns could not be applied to benchmark the arm's length price of international transactions undertaken by the assessee. Accordingly, we hold so. Thus, we direct the Assessing Officer / TPO to exclude the margins of said two concerns i.e. R System International Ltd. and Coral Hub Ltd. The learned Authorized Representative for the assessee has filed the details of margins of the concerns selected as comparables after working capital adjustment and the mean margins of the concerns finally selected worked out to 15.82%. The assessee’s PLI worked out to 14.46%. Where the margins shown by the assessee and the mean margins of comparables are within +/-5%, then no transfer pricing adjustment is to be made in the hands of assessee. It may be pointed out herein itself that the Assessing Officer had also deleted proposed addition made by the TPO after giving effect to the directions of the DRP. Consequently, we allow the grounds of appeal raised by the Revenue, though tax effect in the said appeal would be nil.
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