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2020 (6) TMI 268 - ITAT KOLKATATP Adjustment - working capital adjustments - HELD THAT:- Transfer pricing law is to determine the correct arm`s length price of the assessee`s transactions with its associated enterprises(AE). For the sake of argument, let say, if these additional evidences were not admitted by us, then it would have not been possible to determine the correct transfer pricing adjustments (ALP-adjustments) and as a result there will not be correct determination of tax liability of the assessee company. Therefore, we have to admit these additional evidences. As explained above, and in the interest of justice and fair play, we admit these additional evidences (relating to working capital adjustments) filed before us and we remit these additional evidences to the file of ld TPO with the direction to examine these additional evidences and adjudicate the issue in accordance with law. For statistical purposes, the ground raised by the assessee is allowed. Comparable selection - eClerx Services Limited (eClerx) is functionally different from the assessee company, it is not a comparable company so far Segment Reporting is concerned. The eClerx Services limited operates under a single primary segment i.e. data analytics and process outsourcing services therefore different from the assessee company. The eClerx Services limited, is engaged in providing KPO services to global clients. Besides, due to high turnover with significant fluctuations in revenues and profits, the eClerx Services limited should not be selected as comparable company. Therefore, we direct the TPO/AO to exclude the eClerx Services limited, as this company is not a comparable company, as explained above, hence it requires to be excluded. TCS eServe International Limited (TCS eServe) had a high brand value and, therefore, was able to command greater profits, besides, it operated on economic upscale. The TCS eServe International is engaged in the business of software testing, verification and validation and thus not comparable, therefore, we direct the ld TPO/AO to exclude the TCS eServe International, as this company is not a comparable company with the assessee, as explained above, hence it requires to be excluded. Denial of claim of exemption of interest under section 10A - HELD THAT:- Hon`ble High Court of Calcutta in the case of Hindustan Gum & Chemicals Ltd [1989 (8) TMI 45 - CALCUTTA HIGH COURT] held that in order to compute deduction under section 10B of the Act, the profits of the business of the undertaking would include its entire business income including interest income on fixed deposits. We note that judgment of the Hon`ble High Court of Calcutta (supra) is in the context of section 10B of the Act but the ratio of this judgment is squarely applicable to section 10A deduction. Therefore, respectfully following the judgment of the Hon`ble High Court of Calcutta in the case of Hindustan Gum & Chemicals Ltd (supra), we direct the AO/TPO to allow deduction under section 10A in respect of interest income of fixed deposits.
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