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TMI Blog2019 (4) TMI 1427X X X X Extracts X X X X X X X X Extracts X X X X ..... 0th June of the relevant financial year) as the interest rate. TP Adjustment in respect of other grounds - as submitted that if TPO allow the working capital adjustment as per the specific directions given by the DRP - difference between the ALP so computed and the price paid by the assessee would be within the permissible limit requiring no addition to be made to on account of TP Adjustment - HELD THAT:- As we have directed the Assessing Officer/TPO to allow such working capital adjustment as per the specific directions given by the DRP, the other grounds raised by the assessee in this appeal relating to the issue of Transfer Pricing Adjustment have become infructuous and even the ld. Counsel for the assessee has accepted this position. - I.T.A. No. 2356/KOL/2017 - - - Dated:- 27-3-2019 - Shri P.M. Jagtap, Vice-President (KZ) And Shri S.S. Viswanethra Ravi , Judicial Member For The Appellant : Shri Nageshwar Rao Advocate Shri Ami t Sharma, CA, For The Respondent : Dr. P.K. Srihari , CIT, D. R. ORDER Per Shri P.M. Jagtap, Vice-President (KZ):- This appeal filed by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the Assessing Officer making addition of ₹ 91,19,471/- to the total income of the assessee on account of Transfer Pricing Adjustment as worked out by the TPO. Against the draft assessment order of the Assessing Officer, the assessee-company filed its objections before the Dispute Resolution Panel (DRP) and as per the directions given by the DRP vide its order dated 25.07.2017 passed under section 144C(5) of the Act, the Transfer Pricing Adjustment to be made in the case of the assessee was recomputed by the TPO at ₹ 80,17,341/- (Technical Service Segment ₹ 5,31,750/- and Trading Segment ₹ 74,85,591/-). Accordingly in the order passed by the Assessing Officer under section 143(3) read with section 144C(5) of the Act on 18.09.2017, addition on account of Transfer Pricing Adjustment of ₹ 80,17,341/- was made to the total income of the assessee. 4. Aggrieved by the order of the Assessing Officer passed under section 143(3) read with section 144C(5) of the Act, the assessee has preferred this appeal before the Tribunal on the following grounds:- 1. That, on the facts and in the circumstances of the case, adjustme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances of the case, the Hon'ble DRP has erred in upholding the action of the Ld. TPO in rejecting the most appropriate method i.e. Resale Price Method ('RPM') adopted by the Appellant for benchmarking the international transaction of import of spares (trading segment). 9(a) That, on the facts and circumstances of the case and in law, the Hon'ble DRP erred in upholding the selection of comparable companies (Acropetal Technologies Ltd and Tata Consulting Engineers Ltd.) as done by the Ld. TPO for technical services and royalty segment. 9(b) That, on the facts and circumstances of the case and in law, the Hon'ble DRP erred in upholding the rejection of comparable companies (Cades Digitech Pvt. Ltd. and Telecommunications Consultants India Ltd.) as selected by the Appellant for technical services and royalty segment. 9(c) That, on the facts and circumstances of the case and in law, the Ld. TPO has erred in not considering the directions of the Hon'ble DRP for the selection of the comparable companies (Accuspeed Engineering Services India Limited and MN Dastur Co. Pvt. Ud) for determination of arm' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital adjustment has consistently been accepted in several decisions of the ITAT. Considering the facts, the TPO is directed to give working capital adjustment using the methodology given in Annexure to Chapter III of OECD guidelines and apply SBI Prime Lending rate (as on 30th June of the relevant financial year) as the interest rate. The assessee is directed to provide the necessary data/details with computation of the working capital of the tested party and the comparables. The TPO is directed to take the following consideration while working out the working capital adjustment: (a) Compute the average of opening and closing balances of inventories, trade debtors/receivables, trade creditors/payables of both the tested party and the comparables on revenue account only. (b) Work out the net working capital ratio (in percentage) after dividing the net working capital by operating cost/sales or such denominations is used in the PLR both for the tested party and the comparables. (c) Determine the difference between the tested party s rate with that of the comparables. (d) Thereafter, multiply the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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