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2021 (3) TMI 1400 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT:- Assessee is engaged in the business of providing software development services in the field of leasing, loan accounting and portfolio management solutions, thus companies functionally dissimilar with that of assessee need to be deselected. As relying on M/S. EMC SOFTWARE AND SERVICES INDIA PRIVATE LIMITED case [2019 (7) TMI 1921 - ITAT CHENNAI] we direct exclusion of Larsen & Toubro Infotech Ltd. and Persistent Systems Ltd. from the list of comparable companies. Negative working capital while making Transfer Pricing adjustment - HELD THAT:- We notice that the issue relating to negative working capital has been examined by the co-ordinate bench of Tribunal in the case of ACIT vs. M/s e4e Business Solutions India P Ltd [2020 (12) TMI 1255 - ITAT BANGALORE] and it was held that negative working capital adjustment is not required in the case of a captive service provider, since it is fully insulated by its AE against working capital risks.Thus we direct the AO/TPO not to make negative working capital adjustment.
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