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2021 (11) TMI 1144 - AT - Income TaxTP Adjustment - selection of comparables - exclusion of two companies Larsen & Toubro Infotech Limited, and Persistent Systems Limited on account of application of upper turnover filter - HELD THAT:- As decided in Pentair Water Private Limited [2016 (5) TMI 137 - BOMBAY HIGH COURT] as directed the AO / TPO to exclude from the list of comparables, the companies having turnover of more than Rs.200 crore We direct the AO / TPO to exclude L&T Infotech Limited and Persistent Systems Limited from the list of comparables for having high turnover as compared to assessee providing Software Development (SWD) services to its Associate Enterprises (AEs). Tech Mahindra Limited is functionally dissimilar to that of the assessee. Tech Mahindra Limited has got multiple segments and on perusal of the segmental details in the consolidated report, it can be seen that the said company is strictly not into software development services, ITES etc. Moreover Tech Mahindra Limited is having turnover far exceeding Rs.200 crore. Therefore, this company gets excluded by application of upper turnover limit also. ICRA Techno Analytics is excluded from the final list of comparables on account of functional dissimilarity. The said company is engaged in multifarious activities such as web development and engineering services etc. and the segmental details of the company is not available. Therefore, we hold that the CIT(A) is justified in excluding the above company. Negative Working Capital - HELD THAT:- Since the assessee in this case does not have working capital loans / borrowings and entails no working capital risks, the ratio decidendi in the case of e4e Business Solutions India Private Limited [2020 (12) TMI 1255 - ITAT BANGALORE] directly applies to the assessee and no working capital adjustment should be made. Therefore, the CIT(A)’s conclusion that no negative working capital adjustment is to be made is correct and no interference is called for.
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