TaxTMI 
TaxTMI 
2015 (11) TMI 1895
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....(Appeals) erred in allowing working capital adjustment to the profit level indicator of the comparables when it has not been demonstrated or proved that the pricing of the product and services in case of comparables or even in case of the assessee company was actually determined on the basis of the working capital. 2. The learned Commissioner of Income-tax(Appeals) erred in allowing the above adjustment when the comparables have been identified following vigorous search process following the provision of Rule 10A(a), Rule 10B(2), Rule 10B(3) and Rule 10B(1), comparing functions, assets and risks, where in there was no case for any adjustment; which needed to be made to the financial results of either assessee company or the compara....
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.... CIT(A) in allowing working capital adjustment. 5. Briefly, in the facts of the present case, the assessee was a subsidiary of Software AG, Germany and Software AG GmbH, Germany. The assessee had provided software application development and maintenance, software solutions and services. The assessee had started the business operations in India in October, 2003, which had further reduced during the financial year 2007-08 and had finally discontinued from 19th December, 2007. The Assessing Officer had referred the transfer pricing issue to the Transfer Pricing Officer ('TPO'), who in turn had determined the Profit Level Indicator (PLI) of Operating Profits / Operating Cost of the comparable companies at 31.93% as against PLI of the appella....
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.... in case of companies receiving credit in form of accounts payable, their cost of sales reflects not only the purchase price of goods but also time value for the credit allowed by the suppliers. It was submitted that, hence to bring all the companies to an equal footing, an adjustment is required to be made to account for the underlying interest component in the sales price or cost of sales. 4.7.2 The Appellant has relied on several judicial pronouncements in support of its arguments. These are listed as under: ⦁ Philips Software Centre Private Limited 119 TTJ 721 ⦁ E Gain Communications Private Limited 118 TTJ 354 ⦁ Mentor Graphics (P) Ltd v DCIT 112 TTJ 408 ⦁ Sony In....
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.... the TPO proposing an adjustment of Rs.1,13,50,290/-, which was adopted by the Assessing Officer while passing the order under section 143(3) r.w.s. 144C(4) of the Act. The case of the assessee was that since the assessee was providing services to its associate enterprises, then it was working on lower prices for its services. On the other hand, if services were provided wherein the customers pays on later date, then the working capital adjustment is to be allowed to a company, which is providing the services on cash basis. 9. We find that similar issue of allowing working capital adjustment to the assessee has been held in favour of the assessee by series of decision on various Benches of the Tribunal including Pune Bench of Tribunal in....