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2020 (6) TMI 708 - AT - Income TaxTP adjustment - Negative Working Capital adjustment - international transaction of provision of Software Development services("SWD") - Whether TPO and the DRP erred in adding to the average arithmetic profit margin of the comparable companies chosen by the TPO, negative working capital adjustment? - HELD THAT:- No need for making any negative working capital adjustment when assessee does not carry any working capital risk. In fact, TPO should have done necessary working capital adjustment to the profits of the selected comparables so as to make them comparable to the assessee. In view of this, we direct the TPO not to make negative working capital adjustment. It is undisputed that the Assessee is also a captive service provider such as the Assessee in the case decided by the Adaptec (India) P. Ltd. [2015 (6) TMI 288 - ITAT HYDERABAD] and therefore making a negative working capital adjustment without appreciating the fact that the company does not bear any working capital risks, was not correct. No other contrary decision was brought to our notice. - Decided in favour of assessee.
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