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2018 (8) TMI 1133 - ITAT HYDERABADTransfer pricing - working capital adjustment - Rule 10B(1)(e)(iii) - The assessee carried out the working capital adjustment at 5.39% but the TPO did not accept the same by observing that the exact details of the debtors, inventories and the creditors is not available and that according to the OECD guidelines of 2010, working capital benefit cannot be given automatically, but can be given only in a situation, where there is a greater chance of increasing the comparability levels of the assessee - Held that:- The DRP has merely confirmed the order of the TPO without discussing as to why the assessee’s contentions cannot be accepted. Therefore, we deem it fit and proper to set aside the issue to the file of the DRP for reconsideration of the issue in accordance with Rules and precedents on the issue. Selection of comparable - Non-allocation of unallocated research and development expenses while computing the segmental profit of Suven Life Sciences Ltd. - Held that:- assessee is into simple drug testing, whereas Suven Life Science is undertaking not only drug discovery, but is also involved in development of new drugs. Therefore, these activities are clearly functionally distinguishable. - these differences cannot be overlooked nor can there be adjustment made for these differences. Therefore, we direct the AO to exclude this company from the list of comparables. Decided partly in favor of assessee.
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