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2023 (4) TMI 77 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT:- We direct the AO/TPO to exclude the comparables with high turnover of more than Rs.200 crores Infobean Technologies Ltd. should be excluded from the list of comparables as this company is rendering services to non-AE customers also, whereas the assessee before us is a captive service provider only catering to the requirements of its AE. Aptuse Software Labs P. Ltd. - DRP while concluding has stated that the objection of the assessee with regard to exclusion is rejected. Since there seems to be a disconnect between the justification given by the DRP and the final conclusion, we are of the considered view that this issue should be remitted back to the DRP for reconsideration of the conclusion. Akshay Software Technologies Ltd. and Evoke Technologies - As relying on Radisys India Ltd [2023 (3) TMI 598 - ITAT BANGALORE] we remit the issue of inclusion of Akshay Software and Evoke Technologies back to the AO/TPO with similar directions. Insummation Technologies Ltd - Tribunal has allowed the inclusion of the company in the AY 2016-17 based on the fact that the DRP in AY 2017-18 has accepted the inclusion of the company. Accordingly, respectfully following the decision of the coordinate Bench, we hold that the company be included for AY 2017-18 in assessee’s case. Working capital adjustment - As relying on case of Huawei Technologies India Pvt. Ltd [2018 (10) TMI 1796 - ITAT BANGALORE] we direct the AO/TPO to allow working capital adjustment claimed by the assessee. Adjustment made Towards notional interest on loans advanced to AE - TPO treated the loan as a separate international transaction by stating that the assessee has provided benefit to its AE by way of advancement of interest free loan and accordingly proposed a TP adjustment by computing a notional interest of Rs.7,31,76,246 at the rate of 6 months LIBOR + 400 basis points - HELD THAT:- There cannot be an adjustment towards interest on loan when the loan amount itself is NIL during the year under consideration. Accordingly we hold that the notional interest charged on the loan given by the assessee to its AE which is written off and reflected as NIL in financials is to be deleted. Before parting, we would like to make a mention that the provision created towards the loan which is routed through the profit and loss account in the first year of creation i.e. during FY 2010-11 should have been part of the operating cost whereby the same should have been considered for the purpose ALP in that year.
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