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2023 (11) TMI 25 - AT - Income TaxTP Adjustment - working capital adjustment - contention of the Revenue is to restrict the adjustment to the difference in agreed credit period between the AO and the assessee and that of comparables - As submitted assessee had not established the need for working capital adjustment by showing that the credit period agreed between the assessee and its AE are more than the agreed period availed by the comparables - Revenue argued CIT(A) failed to understand the issue that only difference in the days of credit between that of comparable and the agreed credit period as per invoice / agreement with the AE should be taken into account and not the availed credit period - HELD THAT:- Assessee drew our attention to OECD guidelines which provides for considering the availed credit period rather than agreed credit period. OECD guidelines of July, 2010, wherein it is mentioned that making working capital adjustments involves the selection of the appropriate interest rate (or rates) to use. The rate (or rates) should generally be determined by reference to the rate(s) of interest applicable to a commercial enterprise operating in the same market as the tested party. We uphold the order of CIT(A) and this issue of Revenue’s appeal is dismissed. Reduction of economic adjustment on foreign exchange fluctuation loss, non-cenvatable custom duty adjustment - HELD THAT:- The assessee has tried to show the details of higher custom duty incurred but no comparable was cited but ld.counsel for the assessee stated that his mater can go back to the file of AO for verification whether the assessee is paying higher custom duty i.e., non-cenvatable custom duty and the comparables are either procuring indigenous raw material or buying lesser custom duty which could be set-off against cenvat. We noted that the authorities below have not adjudicated this issue by comparing the custom duty paid by the assessee and its comparable. Hence, this issue needs verification at the level of TPO/AO. Needless to say, the assessee will file all the details before the AO/TPO and the matter is restored back to the file of the AO/TPO, who will examine the facts in detail and then decide this issue Also noted that in principle, the foreign exchange fluctuation loss adjustment has to be given being a non-operating expenses and the AO/TPO will recomputed the PLI after considering the details and facts of foreign exchange fluctuation loss claimed by assessee. In term of the above, this issue is also set aside to the file of the AO/TPO and allowed for statistical purposes.
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