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2021 (2) TMI 267 - AT - Income TaxTP Adjustment - comparable selection - Selection on the basis of turnover filter - THAT:- Excluding the companies on the basis of turnover is concerned, the issue has been settled in several decisions of the Tribunal and has been elaborately discussed by this Tribunal in the case of Autodesk India Pvt. Ltd. v. DCIT [2018 (7) TMI 1862 - ITAT BANGALORE]. The Tribunal in this decision after review of entire case laws on the subject, considered the question, whether companies having turnover more than 200 crores upto 500 crores has to be regarded as one category and those companies cannot be regarded as comparables with companies having turnover of less than 200 crores. Thus we exclude the two comparable companies Infosys BPO Ltd., and TCS e-Serve Ltd. (having turnover of ₹ 1312.14 Crores and ₹ 1578.44 Crores respectively) by application of the turnover filter. The Assessee's turnover is only ₹ 94 crores (less than 100 crores and less than 1/10th of the turnover of the aforesaid two comparable companies. Therefore the aforesaid two companies are directed to be excluded from the list of comparable companies. Grant of negative working capital adjustment - HELD THAT:- Working capital adjustment itself is computed on the basis of outstanding current assets and liabilities at the year end. It means that other things being equal, an entity having higher working capital will incur more interest cost which will reduce profitability. Hence no importance shall be given to pricing aspect. Since the assessee does not have any working capital risk, the question of negative working capital does not arise TPO is directed to compute the ALP in the light of the directions as given above, after affording Assessee opportunity of being heard.
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