2024 (1) TMI 57 - ITAT BANGALORE

TP Adjustment - comparable selection - HELD THAT:- Respectfully following the view taken by this Tribunal, in case of Exxonmobil Services and Technology Pvt. Ltd. [2023 (7) TMI 1337 - ITAT BANGALORE] we direct the Ld.AO/TPO to exclude Infosys BPM Ltd., SPI Technologies India Pvt. Ltd., Manipal Digital Systems Pvt. Ltd., CES Ltd. and Datamatics Financial Services Ltd.

Inteq BPO Services Pvt. Ltd. company is involved in business process management services and cannot be considered as a comparable to a company as of assessee. We therefore do not find any reason to interfere with the above observations. Respectfully following the view taken in Mindteck (India) Ltd. [2022 (11) TMI 1367 - ITAT BANGALORE] we direct exclusion of this comparable from the final list.

R Systems International Ltd. (seg) - Admittedly, we agree with the argument advanced by the Ld.DR. However, the reason for it have excluded by the authorities below are not as per the principles of transfer pricing procedure. In the interest of justice, we remit this comparable to the Ld.AO/TPO to consider the FAR of assessee with that of this comparable and to consider the inclusion in accordance with law.

Interglobe Technologies Pvt. Ltd. - AR submitted that this comparable was rejected by the Ld.TPO as it fails employee cost filter. On an objection being raised before the DRP, it was held that this company is not reflecting in the search matrix of the TPO - AR referred to the annual report and submitted that this company has an employee cost ratio of less than 25% and the objection of the TPO is therefore without any basis. In the interest of justice, we remand this comparable back to the Ld.AO/TPO to consider its inclusion in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee.

Working capital adjustment denied - HELD THAT:- We are of the opinion that this issue is no longer resintegra as this issue is covered by the decision of Coordinate Bench of this Tribunal in case of Huawei Technologies India (P.) Ltd. v. Jt. CIT [2018 (10) TMI 1796 - ITAT BANGALORE] in keeping with the OECD guidelines, endeavor should be made to bring in comparable companies for the purpose of broad comparison. Therefore the working capital adjustment as claimed by the assessee should be allowed. We inclined to remit the issue to the file of AO/TPO to determine the correct working capital adjustment.

Disallowance u/s. 14A - Sufficiency of own funds - HELD THAT:- It is noted that admittedly there is no exempt income earned by assessee during the year under consideration. As in case of Cheminvest Ltd. [2015 (9) TMI 238 - DELHI HIGH COURT] has held that in such circumstances, no disallowance u/s. 14A could be made. The disallowance therefore cannot be made in the hands of the assessee based on the above decision and the same is directed to be deleted.