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2021 (6) TMI 1136 - AT - Income TaxTP Adjustment - comparable selection - Functional dissimilarity - HELD THAT:- Companies need to be rejected as comparable as functionally not comparable with captive service provider like assessee - we direct Infosys BPO to be excluded from the list of comparables and remand Universal Paint to Ld.AO/TPO for fresh consideration. TCS e-Serve Ltd - company is into high-end KPO services and an assessee rendering low end BPO services cannot be compared with it. Further, this company has been excluded due to absence of segmental information - we direct Ld.TPO to exclude this company from the list of comparables. BNR Udyog Ltd. (segmental) - As observed from annual report placed this company has segmental information of medical transcription and revenue earned under this segment is Rs.147.40 Lacs. It is also been observed that various other decisions by co-ordinate Benches of this Tribunal has remanded this comparable back to Ld.TPO, for proper analysis and fresh consideration. See Indegene (P) Ltd vs ACIT [2017 (8) TMI 1576 - ITAT BANGALORE] Thus we set aside this comparable back to Ld.TPO for considering it afresh. Excel Infoways Ltd. (segmental) - Objection raised by Ld.CIT DR stands clarified, as this company for year under consideration made a statement under 133 (6) regarding allocating entire employee cost to IT-BPO segment, with no allocation to other segment, which amounts to almost 49% of its total revenue during the year under consideration - We therefore agree with contention raised by assessee regarding this comparable not satisfying employee cost filter. Acropetal Technologies Ltd - We direct the Ld.AO/TPO to correct the margins in respect of Acropetal Technologies Ltd. Consider Accentia Technologies Ltd., Informed Technologies Ltd., and Jindal Intellicon Ltd., these comparables in the final list of comparables in accordance with law. Computing negative working capital adjustment - We find that in the case of Lam Research India (P.) Ltd. [2021 (2) TMI 183 - ITAT BANGALORE] and Software AG Bangalore Technologies (P.) Ltd. [2016 (3) TMI 1384 - ITAT BANGALORE] passed by this Tribunal, it has been held that negative working capital adjustment shall not be made in case of a captive service provider as there is no risk and it is compensated on a total cost plus basis. We therefore direct Ld.TPO to compute the ALP in accordance with the directions contained in this order
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