2022 (3) TMI 1461

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ru and it relates to the assessment year 2013-14. All the grounds urged by the assessee relate to the transfer pricing adjustment made in respect of both "Software development Segment" and "ITES Segment". 2. The assessee is engaged in the business of providing computer aided engineering analysis services, which is categorised under "software development services". Besides the above, it also provides business support services which is categorised as "ITES services". The TPO proposed adjustment of Rs.8,06,21,022/- in Software Development segment and Rs.1,38,98,658/- in ITES segment. The assessee did not object to the same and hence the above said addition was made by the AO. Before Ld CIT(A), the assessee did not get any relief and hence t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ordinate bench in the case of Fulcrum Fund Services (India) Private Limited (IT(TP)A No.2521/Bang/2017 dated 12.04.2019), wherein the exclusion of comparable companies on the basis of turnover filter was accepted. The relevant observations made by the Tribunal in the above said case are extracted below:- "7.3. We have given a careful consideration to the rival submissions. The Bangalore Bench of the ITAT had an occasion to deal with an identical issue in the case of DCIT Vs. M/s. Northern Operating Services (supra), wherein the Tribunal came to the conclusion that - turnover was relevant criteria in choosing comparable companies and that a company, whose turnover is more than Rs. 200 Crores, cannot be compared with the company, who....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ations in AY 2012-13 (referred supra). The relevant observations made by the Tribunal are extracted below:- "46. Ground No.15 has been raised by assessee for computing negative working capital adjustment. At the outset is reliance has been placed on coordinate bench of this Tribunal in case of e4e-business solutions India Pvt. Ltd. in ITA No.2900/B/2018 by order dated 8.12.2020. Consistently this Tribunal has been taking a view that negative working capital cannot be granted to assessee. 47. The grievance of the assessee is with regard to negative working capital adjustment carried out by the Ld. TPO which was confirmed by the DRP. It is the plea of the assessee that though the Ld. TPO has observed that the Assess....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....de in case of a captive service provider as there is no risk and it is compensated on a total cost plus basis. We therefore direct Ld. TPO to compute the ALP in accordance with the directions contained in this order after affording assessee opportunity of being heard." Following the same, we direct the AO/TPO not to make negative working capital adjustment in the hands of the assessee. 5. We shall now take up the ITES segment. In this segment, the assessee reported turnover of Rs.27.92 crores. The TPO had selected 9 comparable companies and they were upheld by Ld. CIT(A). In this appeal, the assessee seeks exclusion of 3 companies and deletion of negative working capital adjustment. 6. The Ld. A.R. has sought exclusion of following....