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2019 (2) TMI 1753 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT:- Determination of arm's length price (ALP) in respect of international transaction of rendering software development services by the assessee to its Associated Enterprise (AE) u/s. 92 - determination of ALP of international transaction is concerned, it is not in dispute that TNMM is the most appropriate method of determination of ALP and that the Profit Level Indicator (PLI) chosen for the purpose of comparison was profit margins of the assessee and that of the comparable companies was Operating Profit (OP) to Operating Cost (OC). The OP to OC of assessee was 13.01% , thus companies functionally dissimilar with that of assessee need to be deselected from final list. Exclusion of company by application of RPT filter @ 25% Working capital adjustment - After perusal of the DRP's order, we are of the view that the statement of the DRP in its order that the Tribunals have not examined the issues highlighted in its order is a general sweeping statement bereft of any basis. How to compute the working capital adjustment and the extent of adjustment to be granted to a particular assessee would depend on the facts of each individual case. We, however, observe that the factors mentioned by the DRP in its order could be of relevance only in deciding the quantum of working capital adjustment. We, therefore, set aside the finding of the DRP that the assessee is not to be granted working capital adjustment and in the interest of justice, we direct the TPO to examine, recompute and grant the assessee's working capital adjustment as per law after affording the assessee adequate opportunity of being heard in the matter and to file details / submissions required.
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