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TMI Blog2023 (4) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... o, the price of goods should equate to the price for immediate payment plus 60 days of interest on immediate payment price. For making working capital adjustment is an attempt to adjust for the differences in time value of money between the tested party and potential comparable for which is the work out the adjustment on account of working capital adjustment. As the issue is first time agitated before the ITAT, we remit back the issue to the AO/TPO for further adjudication and to grant actual working capital adjustment after duly examining it. Accordingly, this ground is remitted back to the file of AO/TPO for reconsideration. Selection of comparables - Exclusion of companies as functionally dissimilar with that of assessee characterised as the contract service provider . - IT(TP)A No. 212/Bang/2022 - - - Dated:- 2-2-2023 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI ANIKESH BANERJEE, JUDICIAL MEMBER For the Assessee : Shri Ankur Pai, Advocate For the Revenue : Shri Sunil Kumar Singh, CIT-2 ORDER PER ANIKESH BANERJEE, JUDICIAL MEMBER The instant appeal of the assessee was filed against the order of the Ld.DCIT, Circle 6 (1)(1), Bangalor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gencies. Accordingly, no borrowed funds are used to pass on any presumed benefit to AE. The appellant also does not pay any interest to its customers or suppliers on delayed payments. Since, it is debt free company; no adjustment can be made towards notional interest on receivables. The AR invited our attention in the order of the DRP in page no. 28 para no. 13.14 which is extracted as below. 13.14 It was similarly held in BT e-Sery (India) Pvt. Ltd. v. ITO, Ward- 5(2) 2017(60) ITR(Trib)618(Delhi) as follows: - 22...The argument that assessee is an interest free entity and does not pay any interest and therefore no interest shall be imputed in the outstanding invoices is also devoid of merit because it is not a case of allowance of interest expenditure in the hands of the assessee but an 'international transaction' to be benchmarked at arm's length. It is a case of determination of arm's length price of a transaction. Undoubtedly the receivable or any other debt arising during the course of the business is included in the definition of 'capital financing' as an 'international transaction' as per explanation 2 to section 92B of the Act w.e.f. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t enterprises. He submitted that the cost of funds blocked in the credit period was inbuilt in the sale price. 14.3. The ld.AR relies on the judgment of Indo American Jewellery in ITA no. 5872/M/2009, wherein it has been held that the transaction of sale and lending are distinctly set out as per section 92 of the Act. The Tribunal further held that interest income is associated more with lending or borrowing of money and not with sale. The Tribunal further held while determining the ALP of sale transaction, all relevant aspects, including credit period allowed, are taken into consideration and that interest aspect is embedded in the sale price. The Tribunal held that there can be no separate international transaction of interest, on outstanding receivables and that early of late realization of the sale proceeds is incidental to transaction of sale. The ld.AR also places his reliance on the Delhi Tribunal decision in the case of Kusum Healthcare Pvt.Ltd., reported in TS-129-ITAT-2015(Del)-TP. 14.4. The ld. DR relied on the orders of the authorities below. 15. From the submissions of both the parties we observe as under; 15.1. It is brought to our notice that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k the issue to the AO/TPO for further adjudication and to grant actual working capital adjustment after duly examining it. Accordingly, this ground is remitted back to the file of AO/TPO for reconsideration. 5.2. Regarding adjudication of Ground no. 1.19 with regard to exclusion of comparables , the assessee has filed a chart containing the argument of comparables sought to be excluded. The assessee is seeking exclusion of the following comparables from the final set. a) Larsen Toubro Infotech Ltd. In argument the AR placed that the comparable company functionally dissimilar, no segmental details is submitted. Also there is presence of extra ordinary events, presence of intangibles item, presence of brand R D activities which are quite dissimilar with the assessee. The reliance is placed in the order of the Coordinate Bench of ITAT-Bangalore in case of LG Soft India Pvt Ltd. AY 2015-16, IT(TP)A No. 2412/Bang/2019. Accordingly, the Comparable company is excluded from TP study. b) Persistent Systems Ltd. In this comparable company is functionally dissimilar, fails RPT filter. Also, the comparable has R D activity, presence of intangibles incurs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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