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2021 (3) TMI 989 - AT - Income TaxTP Adjustment - comparable selection - Functional dissimilarity - HELD THAT:- Assessee is a company engaged in the business of software development , IT enabled services, technical marketing and support services - It is a captive service provider rendering services only to its AE as per the directions and requirement of AE. As relying on M/s.Indicom Global Services (India) Pvt. [2019 (8) TMI 1664 - ITAT BANGALORE ] we direct Ld.AO/TPO to exclude Infosys BPO Ltd., TCS e-Serve Ltd., Excel Infoways Ltd., from the final list of comparables. And remand the Universal Print Systems Ltd. and BNR Udyog Ltd. to the Ld.TPO for considering it afresh. Inclusion of comparable being Crystal Voxx Ltd. - Admittedly, this comparable has been filed by assessee before the Transfer Pricing officer for consideration. However the same was ignored by the Ld.TPO. It has been submitted that this comparable is functionally similar with that of assessee however as the same has not been verified and looked into by the Ld.TPO be deem it fit and proper to remand this comparable to the Ld.TPO to consider it in the light of the functions performed, assets owned and risk assumed by it vis-a-vis that of assessee. In the event the FAR analysis is found to be similar with that of assessee the same may be included in the final list of comparables. This ground raised by assessee stands allowed for statistical purposes. Inclusion of Accentia Technologies Ltd., and Informed Technologies Ltd. - DRP rejected these comparables suo moto for the reason that, M/s Accentia Technologies were functionally different and the data of M/s.Informed Technologies India Ltd., was not reliable in view of the fact that segmental data was not available - From the transfer pricing order, we note that, the Ld.TPO has not raised any objection regarding the functional profile of these comparables. However since the DRP raised certain objections which needs to be verified, the same is remanded to the Ld.TPO for due verification. We are therefore of the opinion that the comparables needs to be verified by the Ld.TPO afresh. Needless to say that assessee shall furnish all relevant details in respect of these comparables available with it in support of its inclusion. The Ld.TPO shall verify these details/documents filed by assssee and consider these comparables for inclusion, if found functionally similar with that of assessee. Working capital adjustment - HELD THAT:- We note from the directions of the DRP that the Ld.TPO was asked to verify the correctness of the figures adopted by him. The DRP had directed the Ld.TPO to verify the calculations of working capital adjustment and rectify the mistakes if any. It has been submitted that assessee was granted negative working capital adjustment, which is not in accordance with procedure laid down in the statute. In fact, there is no need for making any negative working capital adjustment, when assessee does not carry on with any working capital risk. All the Ld.TPO was supposed to do was to carry out necessary working capital adjustment to the profits of the selected comparables so as to make them comparable to assessee, rather than making negative working capital adjustment. We accordingly, remand this issue back to the Ld.AO/TPO to recompute the working capital adjustment necessary to bring the comparables on par with that of assessee. Considering the income reported in revised return filed by assessee which has not been followed by the Ld. AO as directed by DRP - HELD THAT:- DRP had directed the Ld.AO to consider the income reported in the revised return of income however the same has not been followed. We thus direct the Ld.AO AO to follow the directions of the DRP, which is in accordance with law for computing income in the hands of assessee.Accordingly this ground raised by assessee stands allowed for statistical purposes.
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