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2020 (12) TMI 235 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT:- Assessee-company is engaged in the business of sale of user license of enterprise application software, software development and rendering software related services to the group companies and external parties thus companies functionally dissimilar with that of assessee need to be deselected. Exclusion of Comparable with turnover huge and uncomparable - TPO has excluded the loss companies and also the companies which are with lowest margins - Companies rejected as persistent loss company. Charging of interest on receivables - A.R argued that credit period of 150 days need to be allowed in assessee’s case, since, the industry average is 150 days as against the average period allowed by the AO for 30 days - HELD THAT:- After the amendment of law inserting Explanation to section 92B of the Act, the interest on trade receivables also became an international transaction and therefore, the ALP adjustment is required to be made in respect of trade receivables also. Accordingly ITAT has decided the issue against the assessee in the earlier years in assessee’s own case for the A.Y.2013-14 and 2014-15 - Accordingly, we direct the TPO (AO) to allow credit period of 90 days or the industry average and only in respect of the deviation, the interest to be considered for ALP adjustment. Interest to be charged as per Libor or SBI interest rate - HELD THAT:- The issue has already been considered by the Tribunal in the earlier year and held that interest to be charged as per SBI short term deposit rates. Since there are no changes in the facts, respectfully following the view taken by this tribunal in assessee’s own case, we hold that interest is to be charged at the rates of short term deposits of SBI as decided by the ITAT in it’s earlier year orders. Accordingly, this issue is remitted back to the file of TPO (AO) to recompute the interest. Appeal of the assessee on this ground is treated as allowed for statistical purposes.
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