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2018 (7) TMI 1757 - AT - Income TaxTPA - comparable selection - functional similarity - Held that:- Assessee is only providing ordinary technical support which is categorized as ITeS BPO services provider in earlier years. We are of the firm opinion that there is no change in assessee’s profile and so it has to be treated as a BPO providing ordinary support services to its AE, whose services may be high end at their end but not by assessee. Accordingly, the analysis of the company’s functional profile and objections on the comparables is considered treating assessee as only BPO. Thus comparing functional profile of comparable company with that of assessee companies dissimlar with that of assessee need to be deselected. Addition on account of the interest on receivables - Held that:- Putting a limit of one month of credit itself by the DRP is arbitrary. Further, as seen from the calculation, AO also calculated the interest wrongly particularly from Sr. No. 34 onwards. Upto Serial No. 1 to 33 in the table given in assessment order, AO has correctly gave thirty days credit period, whereas subsequently, the credit period varied and it has arbitrarily determined, the rationale of which is not forthcoming from the order. Moreover, as relied upon by the Ld. Counsel, the impact of receivables is already been factored in the working capital adjustment by the TPO and as there are no borrowed funds or actual interest liability charging of interest does not arise. We are of the opinion that the six months period granted by assessee is reasonable and so no interest can be levied just because the amounts are shown as outstanding in the balance sheet at the end of the year. The various case law stated above will support assessee contentions. Consequently, we cancel the interest levied and allow assessee’s contentions. Grounds are considered allowed.
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