TMI Blog2022 (3) TMI 1461X X X X Extracts X X X X X X X X Extracts X X X X ..... rores. Accordingly, following the above cited decision of the co-ordinate bench, we direct exclusion of above said three companies. Negative working capital adjustment - We direct the AO/TPO not to make negative working capital adjustment in the hands of the assessee. - IT(TP)A No.978/Bang/2018 - - - Dated:- 23-3-2022 - SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER For the Appellant : Shri K.R. Pradeep/Smt. Girija G.P., A.Rs For the Respondent : Shri Mudavathu Harish Chandra Naik, D.R. ORDER PER B.R. BASKARAN, ACCOUNTANT MEMBER: The assessee has filed this appeal challenging the order dated 27.12.2017 passed by Ld CIT(A)-5, Bengaluru and it relates to the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Turnover - Rs.3609.32 crores) (b) Persistent Systems Ltd - (Turnover Rs.996.75 crores) (c) Tech Mahindra Ltd (seg.) - (Turnover Rs.5595.70 crores) The Ld A.R submitted that the turnover of the assessee for the year under consideration is Rs.107.74 crores and hence falls within the category of less than Rs.200/- crores. She submitted that the above said three companies are having huge turnover and further their functions cannot be compared with that of the assessee. Accordingly, she prayed for exclusion of above said three companies. 3.2 We heard Ld D.R on this issue and perused the record. The Ld A.R placed her reliance on the decision rendered by the co-ordinate bench in the case of Fulcrum Fund Services (India) Private L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of more than Rs.200 crores. Accordingly, following the above cited decision of the co-ordinate bench, we direct exclusion of above said three companies. 4. The next issue urged by the assessee in software development segment relates to negative working capital adjustment made by the TPO. The Ld A.R submitted that the co-ordinate bench in the assessee s own case relating to AY 2012-13 in IT(TP)A No.189/Bang/2017 dated 24.6.2021 has taken the view that no negative working capital adjustment should be made. 4.1 We heard the parties and perused the record. We notice that the co-ordinate bench has directed deletion of negative working capital with the following observations in AY 2012-13 (referred supra). The relevant observations made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase reported in (2020) 120 com 122 and Lam Research India (P) Ltd. v. Dy. CIT in [IT Appeal Nos.1473 1385 (Beng) of 2014, dated 30.4.2015], Tivo Tech (P) Ltd. v. Dy. CIT (2020) 117 taxmann.com 259, and Dy. CIT v. Software AG Bangalore Technologies (P) Ltd. [IT Appeal No.1628 of 2014, dated 31.3.2016], where it has been held that negative working capital adjustment shall not be made. 50. We have considered the rival submissions. We find that in the case of Lam Research India (P) Ltd. (supra) and Software AG Bangalore Technologies (P) Ltd. (supra) passed by this Tribunal, it has been held that negative working capital adjustment shall not be made in case of a captive service provider as there is no risk and it is compensated on a tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Accordingly, we direct exclusion above said 3 companies. 6.2 While examining the issue of negative working capital under software segment above, we directed the A.O/TPO not to make negative working capital adjustment. In this regard, we have followed the decision rendered by coordinate bench in the assessee s own case for A.Y. 2012-13. Following the same, we direct A.O/TPO not to make negative working capital adjustment under ITES segment also. 7. Accordingly, we restore the issue of transfer pricing adjustment to the file of AO/TPO for reworking the adjustment in the light of discussions made supra. 8. In the result, the appeal filed by the assessee is treated as allowed. Order pronounced in the open court on 23rd Mar, 2022. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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