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2022 (7) TMI 1372 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT:- As relying on ZYNGA GAME NETWORK INDIA PVT. LTD [2021 (4) TMI 208 - ITAT BANGALORE] we direct Ld. AO/TPO to exclude Tata Elxi Ltd (Seg.), Mindtree Ltd., Larsen and Toubro Infotech Ltd., RS Software (India) Ltd., Persistent Systems Ltd., Nihilent Technologies Ltd., Infosys Ltd., Cybage software Pvt.Ltd. for having high turnover as compared to a captive service provider like assessee. Accordingly, we direct the Ld.AO to exclude the above comparables from the final list. Batchmaster Software Pvt. Ltd. and DCIS DOT COM Solutions India Pvt. Ltd. - As submitted by the Ld.AR that in respect of the above three comparables, the Ld.TPO has not considered the functions performed and has cherry picked the comparables without going through the actual functions and annual reports. We are therefore directing these comparables to be reconsidered by the Ld.AO/TPO based on the annual reports. TPO shall consider these comparables after verifying the FAR of these comparables with that of assessee. Accordingly, Batchmaster Software Pvt. Ltd., DCIS DOT COM Solutions India Pvt. Ltd. and Evoke Technologies Ltd. for denovo consideration to Ld.AO/TPO. Sagarsoft (India) Ltd and Akshay Software Technologies Ltd - We note that above two comparables has not been verified by the Ld.AO/TPO in detail. We are therefore remanding these comparables also to the Ld.AO/TPO for a denovo verification. Working Capital Adjustment - This Bench referred to decision of Special Bench of this Tribunal in case of Instrumentation Corpn. Ltd. [2016 (7) TMI 760 - ITAT KOLKATA] held that outstanding sum of invoices is akin to loan advanced by assessee to foreign AE., hence it is an international transaction as per explanation to section 92 B of the Act. Alternatively, it also argued that in TNMM, working capital adjustment subsumes sundry creditors. In such situation computing interest on outstanding receivables as loans and advances to associated enterprise would amount to double taxation. As relying on ORANGE BUSINESS SERVICES INDIA SOLUTIONS PVT. LTD. [2018 (2) TMI 1151 - ITAT DELHI]e deem it appropriate to set aside this issue to Ld.AO/TPO for deciding it in conformity with the above referred judgment. Needless to say, the assessee will be allowed a reasonable opportunity of being heard in accordance with law. Foreign exchange loss treated by the Ld.TPO as operating in nature both in the hands of the assessee as well as comparables - HELD THAT:- As submitted by the Ld.AR that the foreign exchange losses did not arise out of the revenue transactions and the assessee who were due to the yearend restatement advance received from the AE. As we are remanding the issue of notional interest computed by the Ld.TPO for denovo verification, this ground also deserves to be reverified along with Ground nos. 7 – 9. Both these issues are inter related to each other.
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