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2019 (4) TMI 1427 - AT - Income TaxTP Adjustment - working capital adjustment - DRP specifically directed TPO to allow the working capital adjustment, which is not followed by the TPO - HELD THAT:- We, therefore, direct the AO/TPO to allow the working capital adjustment while determining the Arm’s Length Price of the relevant international transactions of the assessee with its AE by following these specific directions given by the DRP. Assesese’s appeal is accordingly allowed. Working capital requirements affect the margins and costs because this is an implication which is recovered /recoverable from the customers. Considering Rule 10B(30 and the facts in this case, working capital adjustment should be made provided reliable data is furnished by the assessee to the TPO. The claim for working capital adjustment has consistently been accepted in several decisions of the ITAT. Considering the facts, the TPO is directed to give working capital adjustment using the methodology given in Annexure to Chapter III of OECD guidelines and apply SBI Prime Lending rate (as on 30th June of the relevant financial year) as the interest rate. TP Adjustment in respect of other grounds - as submitted that if TPO allow the working capital adjustment as per the specific directions given by the DRP - difference between the ALP so computed and the price paid by the assessee would be within the permissible limit requiring no addition to be made to on account of TP Adjustment - HELD THAT:- As we have directed the Assessing Officer/TPO to allow such working capital adjustment as per the specific directions given by the DRP, the other grounds raised by the assessee in this appeal relating to the issue of Transfer Pricing Adjustment have become infructuous and even the ld. Counsel for the assessee has accepted this position.
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