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TMI Blog2020 (2) TMI 1473X X X X Extracts X X X X X X X X Extracts X X X X ..... GALORE] . Accordingly, by following the decision rendered by the coordinate Bench in the case of Autodesk India (P) Ltd. (supra), we direct the AO / TPO to exclude companies having turnover exceeding ₹ 200 crore. BNR Udyog Limited - In the case of Mobily Indotech India (P.) Ltd. [ 2018 (8) TMI 1890 - ITAT BANGALORE] as well as FNF India (P.) Ltd [ 2019 (7) TMI 1760 - ITAT BANGALORE] the above said company has been restored to the file of the AO / TPO for examining it afresh. Following the above said decisions, we also restore FNF India (P.) Ltd., to the file of AO / TPO with similar directions. Adjustment of negative working capital - HELD THAT:- We noticed that the co-ordinate Bench in the case of FNF India (P.) Ltd. (supra) has followed the decision rendered by the Hyderabad Bench of the Tribunal in the case of Autodesk India (P) Ltd. (supra), in order to hold that working capital adjustment in respect of negative working capital is not called for. Following the same, we direct the A.O. to delete the adjustment made towards negative working capital. - IT(TP)A No.215/Bang/2017 - - - Dated:- 17-2-2020 - Shri B.R.Baskaran, AM And Shri Pavan Kumar Gadale, JM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l software and manufacture of packaging unit. It is wholly owned subsidiary of Digital Juice Inc USA. It is a contract service provider rendering ITES services and packaging services to its AE. The assessee adopted TNMM method as the most appropriate method for benchmarking its ITES services. It adopted Operating profit by operating cost (OP/OC) as profit level indicator (PLI). The assessee declared a margin of 22.57%. The TPO rejected the transfer pricing study conducted by the assessee and selected following 10 comparables:- Sl. No. Name of the case Operating income Operating cost OP/OC 1. Accentia Technologies Ltd. 126,38,02,000 112,89,16,000 11.75 2. Universal Print Systems Ltd. (seg)/ (BPO) 6,17,67,000 3,87,49,000 52.46 3. Informed Technologies India Ltd. 1,96,36,431 1,82,45,770 6.08 4. Infosys BPO Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partmental Representative and perused the record. Admittedly, the assessee-company falls in the bracket of companies having turnover exceeding 1 crore but not exceeding 200 crores. It has been held in the case of Autodesk India (P) Ltd. v. DCIT [(2018) 96 taxmann.com 263 (Bang. Trib.)] that the companies having turnover exceeding ₹ 200 crores cannot be considered as comparable companies in respect of those companies having turnover of less than ₹ 200 crores. The above said decision was followed in the case of Micro Focus Software India (P) Ltd. (supra). Accordingly, by following the decision rendered by the coordinate Bench in the case of Autodesk India (P) Ltd. (supra), we direct the AO / TPO to exclude companies having turnover exceeding ₹ 200 crore. 6. Ground No.8.4 relates to a comparable company, viz., BNR Udyog Limited. The learned AR submitted that the above said company was considered by the co-ordinate Bench in the case of FNF India (P.) Ltd. [IT(TP)A No.195/Bang/2016 and 459/Bang/2017 dated 03.07.2019 and the Tribunal has restored the issue to the file of the Assessing Officer. 7. We heard the learned DR on this issue and perused the record. We n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n restored to the file of the AO / TPO for examining it afresh. Following the above said decisions, we also restore FNF India (P.) Ltd., to the file of AO / TPO with similar directions. 8. Ground No.9 relates to adjustment made by the learned TPO in respect of negative working capital. The learned AR submitted that the co-ordinate Bench in the case of FNF India (P.) Ltd. (supra) has held that there is no necessity to make working capital adjustments, since the company does not bear any working capital risk. The relevant discussions made by the co-ordinate Bench on this issue are extracted below:- 14. In Gr.No.11 the Assessee has contended that the TPO and the DRP erred in adding to the average arithmetic profit margin of the comparable companies chosen by the TPO, negative working capital adjustment. On the above ground, it is undisputed that the Hyderabad Bench of the for Assessment Year 2009-2010 in the case of Adaptec (India) P. Ltd. Vs. The ACIT, Circle 1(1), order dated 25.3.2015 held that no such addition can be made for the following reasons:- Ground No.8 pertains to the issue of negative working capital. As briefly stated above, after arriving at the arithmet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al adjustment is to be made to this situation, only a positive adjustment has to be made to the comparables so that they are brought on par with the applicant. In view of the same, the Panel directs that negative working capital adjustment to the arithmetic mean margin of the comparables shall not be made. In view of the above, the Panel directs that negative working capital adjustment to the arithmetic mean margin of the comparables shall not be made. 15. In view of the above, we are of the opinion that assessee's case being similar, there is no need for making any negative working capital adjustment when assessee does not carry any working capital risk. In fact, TPO should have done necessary working capital adjustment to the profits of the selected comparables so as to make them comparable to the assessee. In view of this, we direct the TPO not to make negative working capital adjustment. 9. The learned AR submitted that the assessee herein is a captive service provider and it does not have any borrowing. Since it deals with its AEs and not outsiders, there is no working capital risk as presumed by the TPO. 10. We have heard the learned DR on this issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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