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2020 (7) TMI 330 - AT - Income TaxAddition 36(1)(va) read with Section 2(24)(x) - delayed PF and ESI payments - payments of employees contribution by the Assessee towards provident fund and Employees State Insurance which are not deposited on or before the due date to the respective organizations but which are deposited before the due date for filing return of income u/s.139(1) - HELD THAT:- The Hon’ble Karnataka High Court in the case of CIT Vs. Sabari Enterprises [2007 (7) TMI 169 - KARNATAKA HIGH COURT]has taken the view that contributions made by the Assessee to PF and ESI are allowable deductions even though made beyond stipulated period as contemplated under the mandatory provisions off Sec.36(1)(va) read with Section 2(24)(x) of the Act provided such contributions are paid by the Assessee on or before the due date for furnishing the return of income as per Sec.139(1) of the Act. Decided in favour of assessee. Determination of arm's length price (ALP) in respect of international transaction of rendering software development services by the assessee to its Associated Enterprise (AE) u/s. 92 - Comparable selection - HELD THAT:- Referring to software development services provided by the assessee we are of the view that Persistent Systems Ltd. should be excluded from the list of comparable companies as into software products and software solutions and no segmental details were available and therefore the profit margin in the software development services segment could not be compared with the assessee's profit margin. RPT filter applied by the TPO - Related Party Transaction - As far as Tech Mahindra Ltd. is concerned, the learned counsel made a prayer that the related party transaction (RPT) of this company was more than 25% - it would be just and proper to set aside the order of DRP on this issue and remand the issue to AO/TPO for consideration of the contention of the assessee with regard to the exclusion of this company by application of RPT filter. Adjustment on account of working capital at 5.23% - In keeping with the OECD guidelines, endeavor should be made to bring in comparable companies for the purpose of broad comparison. Therefore the working capital adjustment as claimed by the Assessee should be allowed. We hold and direct accordingly. Exclusion of Larsen & Toubro Infotech Ltd., is not considered because this company was chosen by the Assessee as a comparable company in its TP study. Though the Assessee is entitled to challenge the inclusion even though it was chosen by the Assessee as comparable company, in the present case we do not wish to go into this question for the reason that by reason of the relief allowed to the Assessee the profit margin of the Assessee after working capital adjustment would be within ALP. Similarly, inclusion of ICRA techno Analytics Ltd., and Mindteck (I) Ltd., is not considered because by reason of the relief allowed to the Assessee the profit margin of the Assessee after working capital adjustment would be within ALP.
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