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2021 (11) TMI 1056 - AT - Income TaxTP Adjustment - Exclusion of Infosys BPO Limited & TCS E-Serve Limited - HELD THAT:- In the instant case, the profile of the assessee and that of the profile of assessee in the case of M/s.Indecomm Global Services (India) Private Limited are similar. The assessment year concerned this case and in in the case of M/s.Indecomm Global Services (India) Private Limited is 2012-2013. Therefore, respectfully following the Co-ordinate Bench order of the Bangalore Tribunal in the case of M/s.Indecomm Global Services (India) Private Limited [2019 (8) TMI 1664 - ITAT BANGALORE ] we direct the AO / TPO to exclude Infosys BPO Limited and TCS e-Serve Limited from the list of comparables. Depreciation Adjustment - HELD THAT:- It is clear if there is difference in depreciation in the case of assessee and the comparable cases, reasonable depreciation adjustment is to be made to determine the arm’s length of the international transaction. On perusal of the TPO’s order and the DRP’s order, confirming the same, it is clear that the directions of the Tribunal in its earlier order has not been given effect to. TPO has admitted that depreciation cost of the comparable companies is lesser than the assessee (since deprecation policy followed by comparable companies is as per Companies Act, whereas the assessee was showing higher rate of depreciation based on some agreement. Hence, suitable depreciation adjustment ought to have been made by AO / TPO. Therefore, this issue is restored to the files of the AO / TPO. AO / TPO is directed to allow depreciation adjustment if they notice the rate of depreciation are different in the case of the assessee and the comparable cases. Therefore, ground 4 is allowed for statistical purposes. Negative Working Capital Adjustment - HELD THAT:- Admittedly in this case, the assessee is a captive service provider and it is operating on cost plus basis. Therefore, following the order of the Tribunal in the case of ACIT v. e4e Business Solutions India Private Limited [2020 (12) TMI 1255 - ITAT BANGALORE], we hold that there should not be any negative working capital adjustment. It is ordered accordingly. Therefore, ground 7 is allowed. Deduction of Educational Cess - HELD THAT:- On identical facts, the Bangalore Bench of the Tribunal in the case of DCIT v. GE BE Private Limited [2020 (11) TMI 1057 - ITAT BANGALORE] had held that educational cess is to be allowed as a deduction.We direct the AO / TPO to allow the educational cess as a deduction.
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