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2021 (11) TMI 1150 - AT - Income TaxTP Adjustment - comparable selection - application of turnover filter - HELD THAT:- We hold that companies listed in Sl.No.(a) to (g) in paragraph 7 (i) which the assessee seeks exclusion and whose turnover in the current year is more than Rs.200 Crores should be excluded from the list of comparable companies. Exclusion of companies as not functionally similar with that of assessee. Significant presence of intangibles - Merely pointing out that there is a substantial increase in value of intangible assets, the assessee cannot seek to exclude company from the list of comparable companies, unless the assessee is able to show that the presence of intangibles is owing to factors which can affect the functional comparability of this company with the assessee. No adjustment towards working capital given - As in case of Huawei Technologies India Pvt. Ltd. [2018 (10) TMI 1796 - ITAT BANGALORE] Tribunal held that working capital adjustment has to be given - We are therefore of the view that the issue with regard to the grant of working capital adjustment should be directed to be examined by the TPO/AO afresh in the light of the decision of the tribunal referred to above, after affording the Assessee opportunity of being heard. Incorrect computation of margins of 2 companies viz., Kals Information Systems Pvt. Ltd., and CG Vak Software and Exports Ltd - DRP in coming to the above conclusion has rightly followed the decision of Sap Labs India Pvt.Ltd. [2010 (8) TMI 676 - ITAT, BANGALORE] wherein it has been held that foreign exchange fluctuation to the extent it relates to the business of the Assessee which is subject matter of the TP adjustment should be regarded as operating in nature. We find no grounds to take a different view and refuse to interfere with the order of the DRP. Not granting risk adjustment - We find that the DRP has primarily rejected the plea of the Assessee in this regard on the ground that quantification of risk adjustment has not been given and in the absence of such quantification, the plea cannot be accepted. Besides the above, the DRP has also placed reliance on judicial pronouncements holding that risk adjustment cannot be allowed in the absence of proper and reliable computation of risk adjustment. We are in agreement with the conclusions of the DRP in this regard and find no grounds to interfere with its conclusions.
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