Nagravision India Private Limited , Bangalore V. Assistant Commissioner of Income Tax Circle-5(1)(1), Bangalore

ITA 1536/BANG/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9596 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 10-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEERA MALHOTRA I
• Assessee Lawyers: PRADHAN DASS
• Keywords: Related party transaction; Transfer pricing; International transaction; Working capital adjustments; Bad and doubtful debts; Set aside
• Section: 143(3); 234B; 10B; 192; 13; 22; 92CA; 15; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B R BASKARAN , ACCOUNTANT MEMBER IT (TP) A NO. 1536/BANG/2017 ASSESSMENT YEAR: 2013 - 14 NAGRAVISION INDIA PVT. LTD., NO.301 & 302, 3 RD FLOOR, CAMPUS C, RMZ CENTENNIAL, EPIP, ITPL ROAD, MAHADEVAPURA POST, BENGALURU 560 0048. PAN: AABCE 9614Q VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 5(1)(1), BANGALORE. APPELLANT RESPONDENT APPELLANT BY : SHRI P RADHAN DASS, C A RESPONDENT BY : MS. NEERA MALHOTRA, CIT(DR - I )(ITAT), BENGALURU. DATE OF HEARING : 02.07 .2020 DATE OF PRONOUNCEMENT : 03 .0 7 .2020 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE FI NAL ORDER OF ASSESSMENT DATED 31.05.2017 OF THE ASSISTANT COMMIS SIONER OF INCOME- TAX, CIRCLE 5(1)(1), BENGALURU PASSED U/S. 143(3) R .W.S. 144C(13) OF THE INCOME-TAX ACT, 1961 [THE ACT] RELATING TO AY 2013- 14. 2. THE AR HAS FILED REVISED GROUNDS OF APPEAL AND T HOSE GROUNDS ARE TAKEN UP FOR CONSIDERATION IN LIEU OF THE ORIGINAL GROUNDS OF APPEAL FILED ALONG WITH MEMORANDUM OF APPEAL. THE REVISED GROUN DS RAISED BY THE ASSESSEE READ THUS:- IT(TP)A NO.1536/BANG/2017 PAGE 2 OF 17 1.0 THAT THE ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE 5(1)(1), BANGALORE ('AO') / DEPUTY COMMISSIONER OF INCOME TAX, TRANSFER PRICING -2(2)(1) ('TPO') / DISPUTE RE SOLUTION PANEL-2, BANGALORE ('DRP') ERRED ON FACTS AND IN LA W IN MAKING VARIOUS ADDITIONS AND DISALLOWANCES TO THE INCOME O F THE APPELLANT IN THE ASSESSMENT ORDER DATED 31.05.2017 PASSED U/S 143(3) READ WITH SECTION 144C(13) OF THE INCOME TAX ACT, 1961 ('ACT') BY DENYING DIFFERENT CLAIMS AND/OR RELIEF, QUANTIFICATION OF TAXABLE INCOME AND TAX LIABILITY AND CONSEQUENTL Y RAISING A DEMAND OF RS. 63,12,140/-, WHICH ACTION HAS BEEN GR OSSLY UNJUSTIFIED, ERRONEOUS AND UNSUSTAINABLE AND NECESS ARY DIRECTION BE GIVEN TO THE AO TO GIVE APPROPRIATE RELIEF IN AC CORDANCE WITH LAW 2.0 THAT THE AO ERRED ON FACTS AND IN LAW IN MAKING AN ADDITION TO THE INCOME OF THE APPELLANT AMOUNTING T O RS. 820,022/-, BEING THE AMOUNT OF EMPLOYEES CONTRIBUTI ON TOWARD EPF U/S 36(1)(VA) OF THE ACT ON THE GROUND THAT THE SAME WAS PAID TO THE CREDIT OF THE GOVERNMENT AFTER DUE DATE MENTIONED THEREIN, EVEN THOUGH THE SAME WAS PAID AND ACCORDIN GLY CLAIMED BEFORE RETURN FILING DATE AS PROVIDED IN THE SECTIO N 43B, BEING A NON-OBSTANTE PROVISION. 3.0 THAT THE AO/ TPO/ DRP ERRED IN MAKING AND CONFI RMING THE ADDITION OF RS 74,69,142 ON ACCOUNT OF TRANSFER PRICING ADJUSTMENTS, ON THE GROUND THAT THERE WERE SEVERAL DEFECTS IN THE TRANSFER PRICING BENCHMARKING UNDERTAKEN BY THE APP ELLANT. 4.0 THAT DRP ERRED IN LAW BY CONFIRMING THE ARMS' L ENGTH PRICE DETERMINED BY AO/ TPO ON ACCOUNT OF FOLLOWING COMPARABLES INCLUSION/ EXCLUSION: 4.1 THAT DRP ERRED IN LAW BY CONFIRMING AO/TPO REJ ECTING THE COMPARABLE COMPANIES WITHOUT CONSIDERING THE FUNCTI ONS, FILTERS APPLIED BY THE APPELLANT. 4.2 THAT DRP/TPO ERRED IN SELECTING 'PERSISTENT SY STEMS LIMITED' AS COMPARABLE TO THE APPELLANT WITHOUT APPRECIATING THE FACT THAT (I) IT IS FUNCTIONALLY D IFFERENT AND (II) THE TURNOVER OF THE SAID COMPANY IS SIGNIFICAN TLY HIGH AS COMPARED TO THE APPELLANT. IT(TP)A NO.1536/BANG/2017 PAGE 3 OF 17 4.3 THAT DRP/TPO ERRED IN SELECTING 'TECH MAHINDRA LIMITED' AS COMPARABLE TO THE APPELLANT WITHOUT APPRECIATING THE FACT THAT THE TURNOVER OF THE SAID COMPANY IS SIGNIFICAN TLY HIGH AS COMPARED TO THE APPELLANT AND HENCE, NOT COMPARABLE TO THE APPELLANT. 4.4 THAT DRP/TPO ERRED IN ACCEPTING 'LARSEN & TOUB RO INFOTECH LIMITED' AS COMPARABLE TO THE APPELLANT WI THOUT APPRECIATING THE FACT THAT THE TURNOVER OF THE SAID COMPANY IS SIGNIFICANTLY HIGH AS COMPARED TO THE APPELLANT, TH EREBY NOT BEING COMPARABLE TO THE APPELLANT. 4.5 THAT DRP ERRED IN REJECTING 'ICRA TECHNO ANALY TICS LIMITED' AS COMPARABLE TO THE APPELLANT WITHOUT APPRECIATING THE FACT THAT IT IS FUNCTIONALLY COMPA RABLE TO THE APPELLANT, DESPITE THE TPO NOT DISTURBING THIS COMP ARABLE. 4.6 THAT TPO ERRED IN REJECTING 'MINDTECK (INDIA) LIMITED' FROM THE COMPARABLES LIST SELECTED BY THE APPELLANT WITH OUT APPRECIATING THE FACT THAT THE SAME IS FUNCTIONALLY SIMILAR TO APPELLANT AND ALSO PASSED THE RELATED PARTY FILTER ADOPTED BY THE TPO SINCE CONSOLIDATED RELATED PARTY TRANSACTIO N ('RPT') OF THE COMPANY IS LESS THAN 25%. 5.0 THAT THE AO/TPO/DRP ERRED IN NOT ACCEPTING THE CONTENTION OF THE APPELLANT TO EXCLUDE FOREIGN EXCH ANGE FLUCTUATION FROM OPERATING INCOME/ LOSS IN COMPUTIN G THE PROFIT LEVEL INDICATOR OF TESTED PARTY AND THAT OF COMPARA BLES AND NOT APPRECIATING THAT THE SAME WAS EXCLUDED BY THE APPE LLANT FROM THE COMPUTATION OF ARM'S LENGTH PRICE IN CASE OF CO MPARABLE COMPANIES AS WELL. 6.0 THAT DRP ERRED IN TREATING PROVISION FOR BAD & DOUBTFUL DEBTS AS NON-OPERATING ITEMS IN COMPUTING THE PROFI T LEVEL INDICATOR OF TESTED PARTY AS WELL AS THE COMPARABLE S CONSIDERED. 7.0 THAT DRP ERRED IN MAKING ENHANCEMENT OF RS 1,24 ,10,539 TO THE INCOME OF THE APPELLANT BY DISALLOWING WORKI NG CAPITAL ADJUSTMENT MADE BY THE APPELLANT TO THE MARGINS OF THE COMPARABLE COMPANIES, DESPITE TPO NOT RAISING ANY O BJECTIONS ON THE SAME AND THEREBY NOT APPRECIATING THAT AS PE R OECD IT(TP)A NO.1536/BANG/2017 PAGE 4 OF 17 GUIDELINES AS WELL, THE APPELLANT'S WAS A FIT CASE FOR MAKING WORKING CAPITAL ADJUSTMENTS. 8.0 ACTION OF THE DRP IN DIRECTING THE AO TO DISALL OW THE WORKING CAPITAL ADJUSTMENT MENTIONED IN GROUND 7 AB OVE AND REJECTING 'ICRA TECHNO ANALYTICS LIMITED' AS A COMP ARABLE WAS BEYOND THE POWER OF DRP SINCE THESE WERE NOT PART O F ANY VARIATION PROPOSED BY THE AO/TPO WHICH WAS PREJUDIC IAL TO THE APPELLANT, AND TO WHICH THE PROVISIONS OF SECTION 1 44C(1) OF THE ACT COULD APPLY. 9.0 THAT THE AO ERRED ON FACTS AND IN LAW IN CHARGI NG INTEREST U/S 234B OF THE ACT IN CASE OF THE APPELLANT. 10.0 THAT THE AO ERRED ON FACTS AND IN LAW IN CHARG ING INTEREST U/S 234C OF THE ACT IN CASE OF THE APPELLANT. THE APPELLANT CRAVES LEAVE, TO ADD, TO AMEND, MODIF Y, RESCIND, SUPPLEMENT, OR ALTER ANY OF THE GROUNDS STATED HERE -IN-ABOVE. 3. THE FIRST ISSUE PROJECTED BY THE ASSESSEE IN GRO UND NO.2 IS WHETHER PAYMENTS OF EMPLOYEES CONTRIBUTION BY THE ASSESSEE TOWARDS PROVIDENT FUND AND EMPLOYEES STATE INSURANCE WHICH ARE NOT DE POSITED ON OR BEFORE THE DUE DATE TO THE RESPECTIVE ORGANIZATIONS BUT WH ICH ARE DEPOSITED BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT, CANNOT BE DISALLOWED U/S.36(1)(VA) OF THE ACT. THE HONBLE K ARNATAKA HIGH COURT IN THE CASE OF CIT VS. SABARI ENTERPRISES (213 CTR 269) HAS TAKEN THE VIEW THAT CONTRIBUTIONS MADE BY THE ASSESSEE TO PF AND E SI ARE ALLOWABLE DEDUCTIONS EVEN THOUGH MADE BEYOND STIPULATED PERIO D AS CONTEMPLATED UNDER THE MANDATORY PROVISIONS OFF SEC.36(1)(VA) RE AD WITH SECTION 2(24)(X) OF THE ACT PROVIDED SUCH CONTRIBUTIONS ARE PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF INCOME AS PER SEC.139(1) OF THE ACT. IN VIEW OF THE AFORESAID DECISION, THE RE IS MERIT IN GROUND NO.2 RAISED BY THE ASSESSEE AND THE SAME IS ALLOWED. TH OUGH THIS ISSUE WAS NOT RAISED BEFORE THE DISPUTE RESOLUTION PANEL (DRP ) BY THE ASSESSEE, YET THE SAME IS NOT A BAR TO RAISE THE ISSUE IN SECOND APPEAL AS HELD BY THE IT(TP)A NO.1536/BANG/2017 PAGE 5 OF 17 HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF AVERY CYCLE INDUSTRIES LTD VS. CIT 292 ITR 493(P & H) . THE ISSUE IS PURELY A LEGAL ISSUE AND CAN BE DECIDED ON FACTS ALREADY AVAILABLE ON RECORD. G ROUND NO.2 IS ACCORDINGLY ALLOWED. 4. AS FAR AS THE OTHER GROUNDS OF APPEAL ARE CONCER NED, THE ISSUE RAISED THEREIN IS WITH REGARD TO DETERMINATION OF A RM'S LENGTH PRICE (ALP) IN RESPECT OF INTERNATIONAL TRANSACTION OF RENDERING S OFTWARE DEVELOPMENT SERVICES BY THE ASSESSEE TO ITS ASSOCIATED ENTERPRI SE (AE) U/S. 92 OF THE ACT. AS FAR AS DETERMINATION OF ALP OF INTERNATIONA L TRANSACTION IS CONCERNED, IT IS NOT IN DISPUTE THAT TNMM IS THE MO ST APPROPRIATE METHOD OF DETERMINATION OF ALP AND THAT THE PROFIT LEVEL INDI CATOR (PLI) CHOSEN FOR THE PURPOSE OF COMPARISON WAS PROFIT MARGINS OF THE ASS ESSEE AND THAT OF THE COMPARABLE COMPANIES WAS OPERATING PROFIT (OP) TO O PERATING COST (OC). THE OP / OC OF ASSESSEE WAS 15.83% AS PER THE ASSES SEE IN ITS TP REPORT, BUT WAS REVISED TO 12.15% BY THE TPO BY RIG HTLY CONSIDERING THE FOREIGN EXCHANGE LOSS AS PART OF THE OPERATING EXPE NDITURE. THE ACTION OF THE TPO WHICH WAS APPROVED BY THE DRP IS CORRECT AN D HENCE REQUIRES NO INTERFERENCE IN THIS APPEAL. 5. THE ASSESSEE IN SUPPORT OF ITS CLAIM REGARDING A LP OF THE INTERNATIONAL TRANSACTION FILED A TRANSFER PRICING STUDY IN WHICH IT HAD CHOSEN 7 COMPARABLE COMPANIES AND ARITHMETIC MEAN OF PROFI T MARGIN OF THOSE COMPARABLE COMPANIES WAS 18.06%. THE ASSESSEE CLAIM ED THAT SINCE ITS MARGIN WAS WITHIN 3% (+) (-) MARGIN OF COMPARABLE C OMPANIES OF 18.06% (THE ASSESSEES PLI WAS 15.83% AS PER ITS TRANSFER PRICING STUDY), THE PRICE RECEIVED IN THE INTERNATIONAL TRANSACTION WAS AT ARM'S LENGTH. 6. THE TPO TO WHOM A REFERENCE WAS MADE BY THE AO F OR DETERMINATION OF ALP U/S. 92CA OF THE ACT, ACCEPTED SOME OF THE COMPARABLE COMPANIES CHOSEN BY THE ASSESSEE AND FIN ALLY CHOSE 7 IT(TP)A NO.1536/BANG/2017 PAGE 6 OF 17 COMPANIES AS COMPARABLES AND BASED ON THE ARITHMETI C MEAN OF THE PROFIT MARGIN OF THOSE COMPANIES AFTER GIVING ALLOWANCE FO R WORKING CAPITAL ADJUSTMENT, DETERMINED THE ALP AND ADDITION TO BE M ADE TO THE TOTAL INCOME AS FOLLOWS:- SL. NO. NAME OF THE COMPANY OP/OC 1 CG - VAK SOFTWARE & EXPORTS 20.54% 2 I C R A TECHNO ANALYTICS LTD. 17.10% 3 LARSEN & TOUBRO INFOTECH LTD. 26.06% 4 MINDTREE LTD. (SEG) 18.19% 5 PERSISTENT SYSTEMS LTD. 28.27% 6 R S SOFTWARE (INDIA ) LTD. 17.41% 7 TECH MAHINDRA LTD. (SEGMENTAL) 18.72% ARITHMETIC MEAN 20.90% 7. COMPUTATION OF ARM'S LENGTH PRICE BY THE AO/TPO AND THE ADJUSTMENT MADE WAS AS FOLLOWS:- ARM'S LENGTH MEAN MARGIN 20.90% LESS: WORKING CAPITAL ADJUSTMENT (AS PER ANNEX.B) 5.23% ADJUSTED MARGIN 15.67% OPERATING COST 21,18,59,794 ARM'S LENGTH PRICE 115.67% OF OPERATING COST 24,50,62,669 PRICE RECEIVED 23,75,93,527 VARIATION IN PRICE 74,69,142 3% OF PRICE REC EI VED 71,27,806 SHORT FALL BEING ADJUSTMENT 74,69,142 8. CONSEQUENTLY, A SUM OF RS.74,69,142 WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF SHORTFALL IN THE PRIC E CHARGES IN THE INTERNATIONAL TRANSACTION IN THE DRAFT ORDER OF ASS ESSMENT PASSED BY THE AO. IT(TP)A NO.1536/BANG/2017 PAGE 7 OF 17 9. THE ASSESSEE FILED OBJECTIONS BEFORE THE DRP AGA INST THE DRAFT ORDER OF ASSESSMENT OF THE AO. THE DRP EXCLUDED ICRA TEC HNO ANALYTICS FROM THE 7 COMPARABLE COMPANIES CHOSEN BY THE TPO AND RE TAINED THE OTHER COMPARABLE COMPANIES CHOSEN BY THE TPO. THE ADJUSTM ENT AND CONSEQUENT ADDITION TO THE TOTAL INCOME ON ACCOUNT OF DETERMINATION OF ALP WAS MADE IN THE FINAL ORDER OF ASSESSMENT PASSED BY THE AO U/S.143(3) READ WITH SEC.144C(13) OF THE ACT. AGAINST THE SAI D FINAL ORDER OF ASSESSMENT, THE ASSESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 10. IN THE APPEAL BEFORE TRIBUNAL, THE LEARNED COUN SEL FOR THE ASSESSEE HAS PRAYED FOR EXCLUSION OF PERSISTENT SYSTEMS LTD. & TECH MAHINDRA LTD AND INCLUSION OF ICRA TECHNO ANALYTICS & MINDTECK ( INDIA) LTD., BESIDES QUESTIONING THE CORRECTNESS OF THE DRP IN DENYING W ORKING CAPITAL ADJUSTMENT WHICH WAS ALLOWED BY THE TPO. 11. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFO RE US THAT IN THE CASE OF SOFTWARE DEVELOPMENT SERVICES PROVIDED BY T HE ASSESSEES SUCH AS THE ASSESSEE IN THE PRESENT CASE, THE EXCLUSION OF AFORESAID 2 COMPANIES HAVE BEEN CONSIDERED AND DECIDED BY THIS TRIBUNAL I N SEVERAL DECISIONS FOR THE VERY SAME ASSESSMENT YEAR VIZ., AY 2013-14. 12. AS FAR AS PERSISTENT SYSTEMS LTD. IS CONCERNED, OUR ATTENTION WAS DRAWN TO THE DECISION OF ITAT HYDERABAD BENCH IN TH E CASE OF M/S. EPAM SYSTEMS (I) P. LTD. V. ACIT, ITA NO.2122/HYD/2017 F OR AY 2013-14 , ORDER DATED 20.11.2017. VIDE PARA 12 OF THE DECISION, THE TRIBUNAL TOOK THE VIEW THAT PERSISTENT SYSTEMS LTD. WAS INTO SOFTWARE PROD UCTS AND SOFTWARE SOLUTIONS AND NO SEGMENTAL DETAILS WERE AVAILABLE A ND THEREFORE THE PROFIT MARGIN IN THE SOFTWARE DEVELOPMENT SERVICES SEGMENT COULD NOT BE COMPARED WITH THE ASSESSEE'S PROFIT MARGIN. IN THE LIGHT OF JUDICIAL IT(TP)A NO.1536/BANG/2017 PAGE 8 OF 17 PRECEDENTS WHICH REMAIN UNCONTROVERTED, WE ARE OF T HE VIEW THAT PERSISTENT SYSTEMS LTD. SHOULD BE EXCLUDED FROM THE LIST OF C OMPARABLE COMPANIES. 13. AS FAR AS TECH MAHINDRA LTD. IS CONCERNED, THE LEARNED COUNSEL MADE A PRAYER THAT THE RELATED PARTY TRANSACTION (R PT) OF THIS COMPANY WAS MORE THAN 25%. RELATED PARTY TRANSACTION TRANSACTI ON / NET SALES 25,739,000,000 / 60,019,000,000 (42.88%). HENCE, THE COMPANY FAILS THE RPT FILTER APPLIED BY THE TPO AND HENCE SHOULD BE R EJECTED. 14. WE ARE OF THE VIEW THAT IT WOULD BE JUST AND PR OPER TO SET ASIDE THE ORDER OF DRP ON THIS ISSUE AND REMAND THE ISSUE TO AO/TPO FOR CONSIDERATION OF THE CONTENTION OF THE ASSESSEE WIT H REGARD TO THE EXCLUSION OF THIS COMPANY BY APPLICATION OF RPT FILTER. 15. THE NEXT SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE WAS THAT THE TPO WHILE CONCLUDING HIS ORDER U/S.92CA OF THE ACT, ALLOWED ADJUSTMENT ON ACCOUNT OF WORKING CAPITAL AT 5.23%, BUT THE DRP IN ITS ORDER HELD THAT WORKING CAPITAL ADJUSTMENT NEED NOT BE GI VEN. THE ISSUE RAISED BY THE ASSESSEE IS THAT THE DRP WAS NOT RIGHT IN DENYI NG THE CLAIM FOR ADJUSTMENT ON ACCOUNT OF WORKING CAPITAL ADJUSTMENT AND IN THIS REGARD, THE LEARNED COUNSEL FOR ASSESSEE PLACED RELIANCE ON DEC ISION OF ITAT BANGALORE IN THE CASE OF HUAWEI TECHNOLOGIES (INDIA ) PVT. LTD. VS. DCIT (2019) 101 TAXMANN.COM 313(ITAT BANGALORE), WHEREIN ON IDENTICAL REASONING OF THE DRP IN THE PRESENT CASE, THE TRIBU NAL HELD AS FOLLOWS:- 10. THE NEXT GRIEVANCE PROJECTED BY THE ASSESSEE IN ITS APPEAL IS WITH REGARD TO THE ACTION OF THE CIT(A) IN NOT ALLO WING ANY ADJUSTMENT TOWARDS WORKING CAPITAL DIFFERENCES. ON THIS ISSUE WE HAVE HEARD THE RIVAL SUBMISSIONS. THE RELEVANT PRO VISIONS OF THE ACT IN SO FAR AS COMPARABILITY OF INTERNATIONAL TRA NSACTION WITH A TRANSACTION OF SIMILAR NATURE ENTERED INTO BETWEEN UNRELATED PARTIES, PROVIDES AS FOLLOWS:- IT(TP)A NO.1536/BANG/2017 PAGE 9 OF 17 DETERMINATION OF ARM'S LENGTH PRICE UNDER SECTION 9 2C . 10B . (1) FOR THE PURPOSES OF SUB-SECTION (2) OF SECTION 92C, THE ARM'S LENGTH PRICE IN RELATION TO AN INTERNATIONAL TRANSACTION [ OR A SPECIFIED DOMESTIC TRANSACTION ] SHALL BE DETERMINED BY ANY OF THE FOLLOWING METHODS, BEING THE MOST APPROPRIATE METHO D, IN THE FOLLOWING MANNER, NAMELY : (A) TO (D)...... (E) TRANSACTIONAL NET MARGIN METHOD, BY WHICH, ( I ) THE NET PROFIT MARGIN REALISED BY THE ENTERPRISE FROM AN INTERNATIONAL TRANSACTION [ OR A SPECIFIED DOMESTIC TRANSACTION ] ENTERED INTO WITH AN ASSOCIATED ENTERPRISE IS COMPUTED IN RELATI ON TO COSTS INCURRED OR SALES EFFECTED OR ASSETS EMPLOYED OR TO BE EMPLOYED BY THE ENTERPRISE OR HAVING REGARD TO ANY OTHER RELEVANT BASE; ( II ) THE NET PROFIT MARGIN REALISED BY THE ENTERPRISE OR BY AN UNRELATED ENTERPRISE FROM A COMPARABLE UNCONTROLLED TRANSACTION OR A NUMBER OF SUCH TRANSACTIONS IS COMPUTED HAVING REGARD TO THE SAME BASE; ( III ) THE NET PROFIT MARGIN REFERRED TO IN SUB- CLAUSE ( II ) ARISING IN COMPARABLE UNCONTROLLED TRANSACTIONS IS ADJUSTED TO TAKE INTO ACCOUNT THE DIFFERENCES, IF ANY, B ETWEEN THE INTERNATIONAL TRANSACTION [ OR THE SPECIFIED DOMESTIC TRANSACTION ] AND THE COMPARABLE UNCONTROLLED TRANSACTIONS, OR BETWEEN THE ENTERPRISES ENTERING INTO SUCH TRANSACTIONS, WHICH COULD MATERIALLY AFFECT THE AMOUNT OF NET PROFIT MARGIN IN TH E OP EN MARKET; ( IV ) THE NET PROFIT MARGIN REALISED BY THE ENTERPRISE AND REFERRED TO IN SUB-CLAUSE ( I ) IS ESTABLISHED TO BE THE SAME AS THE NET PROFIT MARGIN REFERRED TO IN SUB-CLAUSE ( III ); IT(TP)A NO.1536/BANG/2017 PAGE 10 OF 17 ( V ) THE NET PROFIT MARGIN THUS ESTABLISHED IS THEN TAKEN INTO ACCOUN T TO ARRIVE AT AN ARM'S LENGTH PRICE IN RELATION TO THE INTERNATIONAL TRANSACTION [ OR THE SPECIFIED DOMESTIC TRANSACTION ] ; (F)...... (2) FOR THE PURPOSES OF SUB-RULE (1), THE COMPARABI LITY OF AN INTERNATIONAL TRANSACTION [ OR A SPECIFIED DOMESTIC TRANSACTION ] WITH AN UNCONTROLLED TRANSACTION SHALL BE JUDGED WITH RE FERENCE TO THE FOLLOWING, NAMELY: ( A ) THE SPECIFIC CHARACTERISTICS OF THE PROPERTY TRANSF ERRED OR SERVICES PROVIDED IN EITHER TRANSACTION; ( B ) THE FUNCTIONS PERFORMED, TAKI NG INTO AC COUNT ASSETS EMPLOYED OR TO BE EMPLOYED AND THE RISKS ASSUMED, B Y THE RESPECTIVE PARTIES TO THE TRANSACTIONS; ( C ) THE CONTRACTUAL TERMS (WHETHER OR NOT SUCH TERMS AR E FORMAL OR IN WRITING) OF THE TRANSACTIONS WHICH LAY DOWN EXPLICITLY OR IMPLI CITLY HOW TH E RESPONSIBILITIES, RISKS AND BENEFITS ARE TO BE DIVIDED BETWEEN THE RESPECTIVE P ARTIES TO THE TRANSACTIONS; ( D ) CONDITIONS PREVAILING IN THE MARKETS IN WHICH THE RESPECTIVE PARTIES TO THE TRANSACTIONS OPERATE, INC LUDING THE GEOGRAPHICAL LOC ATION AND SIZE OF THE MARKETS, THE LAWS AND GOVERNMENT ORDERS IN FORCE, COSTS OF LABOU R AND CAPITAL IN THE MARKETS, OVERALL ECONOMIC DEVELOPMEN T AND LEVEL OF COMPETITION AND WHETHER THE MARKETS ARE WHOLESALE OR RETAIL. (3) AN UNCONTROLLED TRANSACTION SHALL BE COMPARABLE TO AN INTERNATIONAL TRANSACTION [ OR A SPECIFIED DOMESTIC TRANSACTION ] IF ( I ) NONE OF THE DIFFERENCES, IF ANY, BETWEEN THE TRANSA CTIONS BEING COMPARED, OR BETWEEN THE ENTERPRISES ENTERING INTO SUCH TRANSACTIONS ARE LIKELY TO MATERIALLY AF FECT THE PRICE O R COST CHARGED OR PAID IN, OR THE PROFIT ARISING FROM, SUCH TRANSACTIONS IN THE OPEN MARKET; OR IT(TP)A NO.1536/BANG/2017 PAGE 11 OF 17 (II) REASONABLY ACCURATE ADJUSTMENTS CAN BE MADE TO ELIMINATE THE MATERIAL EFFECTS OF SUCH DIFFERENCES. 11. A READING OF RULE 10B(1)(E)(III) OF THE RULES READ WITH SEC.92CA OF THE ACT, WOULD CLEARLY SHOWS THAT THE N ET PROFIT MARGIN ARISING IN COMPARABLE UNCONTROLLED TRANSACTI ONS HAS TO BE ADJUSTED TO TAKE INTO ACCOUNT THE DIFFERENCES, IF A NY, BETWEEN THE INTERNATIONAL TRANSACTION AND THE COMPARABLE UNCON TROLLED TRANSACTIONS, WHICH COULD MATERIALLY AFFECT THE AMO UNT OF NET PROFIT MARGIN IN THE OPEN MARKET. 12. CHAPTERS I AND III OF THE OECD TRANSFER PRICIN G GUIDELINES FOR MULTINATIONAL ENTERPRISES AND TAX ADMINISTRATIO NS (HEREAFTER THE TPG) CONTAIN EXTENSIVE GUIDANCE ON COMPARABIL ITY ANALYSES FOR TRANSFER PRICING PURPOSES. GUIDANCE ON COMPARAB ILITY ADJUSTMENTS IS FOUND IN PARAGRAPHS 3.47-3.54 AND IN THE ANNEX TO CHAPTER III OF THE TPG. A REVISED VERSION OF THIS G UIDANCE WAS APPROVED BY THE COUNCIL OF THE OECD ON 22 JULY 2010 . IN PARAGRAPH 2 OF THESE GUIDELINES IT HAS BEEN EXPLAIN ED AS TO WHAT IS COMPARABILITY ADJUSTMENT. THE GUIDELINE EXPLAINS T HAT WHEN APPLYING THE ARMS LENGTH PRINCIPLE, THE CONDITIONS OF A CONTROLLED TRANSACTION (I.E. A TRANSACTION BETWEEN A TAXPAYER AND AN ASSOCIATED ENTERPRISE) ARE GENERALLY COMPARED TO TH E CONDITIONS OF COMPARABLE UNCONTROLLED TRANSACTIONS. IN THIS CONTE XT, TO BE COMPARABLE MEANS THAT: NONE OF THE DIFFERENCES (IF ANY) BETWEEN THE SITU ATIONS BEING COMPARED COULD MATERIALLY AFFECT THE CONDITION BEIN G EXAMINED IN THE METHODOLOGY (E.G. PRICE OR MARGIN), OR REASONABLY ACCURATE ADJUSTMENTS CAN BE MADE TO EL IMINATE THE EFFECT OF ANY SUCH DIFFERENCES. THESE ARE CALLE D COMPARABILITY ADJUSTMENTS. 13. IN PARAGRAPH 13 TO 16 OF THE AFORESAID OECD GU IDELINES, NEED FOR WORKING CAPITAL ADJUSTMENT HAS BEEN EXPLAI NED AS FOLLOWS: 13. IN A COMPETITIVE ENVIRONMENT, MONEY HAS A TIME VALUE. IF A COMPANY PROVIDED, SAY, 60 DAYS TRADE TE RMS FOR PAYMENT OF ACCOUNTS, THE PRICE OF THE GOODS SHOULD EQUATE TO THE PRICE FOR IMMEDIATE PAYMENT PLUS 60 DAYS OF IT(TP)A NO.1536/BANG/2017 PAGE 12 OF 17 INTEREST ON THE IMMEDIATE PAYMENT PRICE. BY CARRYIN G HIGH ACCOUNTS RECEIVABLE A COMPANY IS ALLOWING ITS CUSTO MERS A RELATIVELY LONG PERIOD TO PAY THEIR ACCOUNTS. IT WO ULD NEED TO BORROW MONEY TO FUND THE CREDIT TERMS AND/OR SUF FER A REDUCTION IN THE AMOUNT OF CASH SURPLUS WHICH IT WO ULD OTHERWISE HAVE AVAILABLE TO INVEST. IN A COMPETITIV E ENVIRONMENT, THE PRICE SHOULD THEREFORE INCLUDE AN ELEMENT TO REFLECT THESE PAYMENT TERMS AND COMPENSA TE FOR THE TIMING EFFECT. 14. THE OPPOSITE APPLIES TO HIGHER LEVELS OF ACCOUN TS PAYABLE. BY CARRYING HIGH ACCOUNTS PAYABLE, A COMPA NY IS BENEFITTING FROM A RELATIVELY LONG PERIOD TO PAY IT S SUPPLIERS. IT WOULD NEED TO BORROW LESS MONEY TO FU ND ITS PURCHASES AND/OR BENEFIT FROM AN INCREASE IN THE AM OUNT OF CASH SURPLUS AVAILABLE TO INVEST. IN A COMPETITI VE ENVIRONMENT, THE COST OF GOODS SOLD SHOULD INCLUDE AN ELEMENT TO REFLECT THESE PAYMENT TERMS AND COMPENSA TE FOR THE TIMING EFFECT. 15. A COMPANY WITH HIGH LEVELS OF INVENTORY WOULD SIMILARLY NEED TO EITHER BORROW TO FUND THE PURCHAS E, OR REDUCE THE AMOUNT OF CASH SURPLUS WHICH IT IS ABLE TO INVEST. NOTE THAT THE INTEREST RATE JULY 2010 PAGE 6 MIGHT BE AFFECTED BY THE FUNDING STRUCTURE (E.G. WHERE TH E PURCHASE OF INVENTORY IS PARTLY FUNDED BY EQUITY) O R BY THE RISK ASSOCIATED WITH HOLDING SPECIFIC TYPES OF INVE NTORY) 16. MAKING A WORKING CAPITAL ADJUSTMENT IS AN ATTEM PT TO ADJUST FOR THE DIFFERENCES IN TIME VALUE OF MONEY B ETWEEN THE TESTED PARTY AND POTENTIAL COMPARABLES, WITH AN ASSUMPTION THAT THE DIFFERENCE SHOULD BE REFLECTED IN PROFITS. THE UNDERLYING REASONING IS THAT: A COMPANY WILL NEED FUNDING TO COVER THE TIME GAP BETWEEN THE TIME IT INVESTS MONEY (I.E. PAYS MONEY TO SUPPLIER) AND THE TIME IT COLLECTS THE INVESTMENT ( I.E. COLLECTS MONEY FROM CUSTOMERS) THIS TIME GAP IS CALCULATED AS: THE PERIOD NEEDED TO SELL INVENTORIES TO CUSTOMERS + (PLUS) THE PERIOD NEEDED TO COLLECT MONEY FROM CUSTOMERS (LESS) THE PERIOD GRANTED TO PAY DEBTS TO SUPPLIERS. IT(TP)A NO.1536/BANG/2017 PAGE 13 OF 17 14. EXAMPLES OF HOW TO WORK OUT ADJUSTMENT ON ACCO UNT OF WORKING CAPITAL ADJUSTMENT IS ALSO GIVEN IN THE SAI D GUIDELINES. THE GUIDELINE ALSO EXPRESSES THE DIFFICULTY IN MAKI NG WORKING CAPITAL ADJUSTMENT BY CONCLUDING THAT THE FOLLOWING FACTORS HAVE TO BE KEPT IN MIND (I) THE POINT IN TIME AT WHICH T HE RECEIVABLES, INVENTORY AND PAYABLES SHOULD BE COMPARED BETWEEN T HE TESTED PARTY AND THE COMPARABLES, WHETHER IT SHOULD BE THE FIGURES OF RECEIVABLES, INVENTORY AND PAYABLE AT THE YEAR END OR BEGINNING OF THE YEAR OR AVERAGE OF THESE FIGURES. (II) THE SELE CTION OF THE APPROPRIATE INTEREST RATE (OR RATES) TO USE. THE RA TE (OR RATES) SHOULD GENERALLY BE DETERMINED BY REFERENCE TO THE RATE(S) OF INTEREST APPLICABLE TO A COMMERCIAL ENTERPRISE OPER ATING IN THE SAME MARKET AS THE TESTED PARTY. THE GUIDELINES CON CLUDE BY OBSERVING THAT THE PURPOSE OF WORKING CAPITAL ADJUS TMENTS IS TO IMPROVE THE RELIABILITY OF THE COMPARABLES. 15. IN THE PRESENT CASE THE TPO ALLOWED WORKING CA PITAL ADJUSTMENT ACCEPTING THE CALCULATION GIVEN BY THE A SSESSEE. THE CIT(A) IN EXERCISE OF HIS POWERS OF ENHANCEMENT HEL D THAT NO ADJUSTMENT SHOULD BE MADE TO THE PROFIT MARGINS ON ACCOUNT OF WORKING CAPITAL DIFFERENCES BETWEEN THE TESTED PART Y AND THE COMPARABLE COMPANIES FOR THE FOLLOWING REASONS: (I) THE DAILY WORKING CAPITAL LEVELS OF THE TESTED PART Y AND THE COMPARABLES WAS THE ONLY RELIABLE BASIS OF DETERMIN ING ADJUSTMENT TO BE MADE ON ACCOUNT OF WORKING CAPITAL BECAUSE THAT WOULD BE ON THE BASIS OF WORKING CAPIT AL DEPLOYED THROUGHOUT THE YEAR. (II) SEGMENTAL WORKING CAPITAL IS NOT DISCLOSED IN THE ANNUAL REPORTS OF COMPANIES ENGAGED IN DIFFERENT SEGMENTS AND THEREFORE PROPER COMPARISON CANNOT BE MADE. (III) DISCLOSE IN THE BALANCE SHEET DOES NOT CONTA IN BREAK UP OF TRADE AND NON-TRADE DEBTORS AND CREDITORS AND TH EREFORE WORKING CAPITAL ADJUSTMENT DONE WITHOUT SUCH BREAK UP WOULD RESULT IN COMPUTATION BEING SKEWED. (IV) COST OF CAPITAL WOULD BE DIFFERENT FOR DIFFERENT COMPANIES AND THEREFORE WORKING CAPITAL ADJUSTMENT MADE DISREGARDING THIS DIFFERENT BASED ON BROAD IT(TP)A NO.1536/BANG/2017 PAGE 14 OF 17 APPROXIMATIONS, ESTIMATIONS AND ASSUMPTIONS MAY NOT LEAD TO RELIABLE RESULTS. 16. THE CIT(A) ALSO PLACED RELIANCE ON A DECISION O F CHENNAI ITAT IN THE CASE OF MOBIS INDIA ITA NO.2112/MDS/201 1 (2013) 38 TAXMANN.COM. THAT DECISION WAS BASED ON THE FAC TUAL ASPECT THAT THE ASSESSEE WAS NOT ABLE TO DEMONSTRATE HOW W ORKING CAPITAL ADJUSTMENT WAS ARRIVED AT BY THE ASSESSEE. THEREFORE NOTHING TURNS ON THE DECISION RELIED UPON BY THE CI T(A) IN THE IMPUGNED ORDER. IN THE MATTER OF DETERMINATION OF A RMS LENGTH PRICE, IT CANNOT BE SAID THAT THE BURDEN IS ON THE ASSESSEE OR THE DEPARTMENT TO SHOW WHAT IS THE ARMS LENGTH PRICE. THE DATA AVAILABLE WITH THE ASSESSEE AND THE DEPARTMENT WOUL D BE THE STARTING POINT AND DEPENDING ON THE FACTS AND CIRCU MSTANCES OF A CASE FURTHER DETAILS CAN BE CALLED FOR. AS FAR AS THE ASSESSEE IS CONCERNED, THE FACTS AND FIGURES WITH REGARD TO HIS BUSINESS HAS TO BE FURNISHED. REGARDING COMPARABLE COMPANIES, ONE HAS TO FALL BACK UPON ONLY ON THE INFORMATION AVAILABLE IN THE PUBLIC DOMAIN. IF THAT INFORMATION IS INSUFFICIENT, IT IS BEYOND THE POWER OF THE ASSESSEE TO PRODUCE THE CORRECT INFORMATION ABOUT THE COMPARABLE COMPANIES. THE REVENUE HAS ON THE OTHER HAND POWERS TO COMPEL PRODUCTION OF THE REQUIRED DETAILS FROM THE COMPARABLE COMPANIES. IF THAT POWER IS NOT EXERCIS ED TO FIND OUT THE TRUTH THEN IT IS NO DEFENCE TO SAY THAT THE ASS ESSEE HAS NOT FURNISHED THE REQUIRED DETAILS AND ON THAT SCORE DE NY ADJUSTMENT ON ACCOUNT OF WORKING CAPITAL DIFFERENCES. REGARDI NG APPLYING THE DAILY BALANCES OF INVENTORY, RECEIVABLES AND PA YABLES FOR COMPUTING WORKING CAPITAL ADJUSTMENT, THE DELHI BEN CH OF ITAT IN THE CASE OF ITO VS. E VALUE SERVE.COM (2016) 75 TAXMANN.COM 195(DEL-TRIB) HAS HELD THAT INSISTING O N DAILY BALANCES OF WORKING CAPITAL REQUIREMENTS TO COMPUTE WORKING CAPITAL ADJUSTMENT IS NOT PROPER AS IT WILL BE IMPO SSIBLE TO CARRY OUT SUCH EXERCISE AND THAT WORKING CAPITAL ADJUSTME NT HAS TO BE BASED ON THE OPENING AND CLOSING WORKING CAPITAL DE PLOYED. THE BENCH HAS ALSO OBSERVED THAT THAT IN TRANSFER PRICI NG ANALYSIS THERE IS ALWAYS AN ELEMENT OF ESTIMATION BECAUSE IT IS NOT AN EXACT SCIENCE. ONE HAS TO SEE THAT REASONABLE ADJUSTMENT IS BEING MADE IT(TP)A NO.1536/BANG/2017 PAGE 15 OF 17 SO AS TO BRING BOTH COMPARABLE AND TEST PARTY ON SA ME FOOTING. THEREFORE THERE IS LITTLE MERIT IN CIT(A)S OBJECTI ON ON WORKING ADJUSTMENT BASED ON UNAVAILABLE DAILY WORKING CAPIT AL REQUIREMENTS DATA. THERE IS ALSO NO MERIT IN THE O BJECTION OF THE CIT(A) REGARDING ABSENCE OF SEGMENTAL DETAILS AVAIL ABLE OF WORKING CAPITAL REQUIREMENTS OF COMPARABLE COMPANIE S CHOSEN AND ABSENCE OF DETAILS OF TRADE AND NON-TRADE DEBTO RS OF COMPARABLE COMPANIES AS THESE DETAILS ARE BEYOND TH E POWER OF THE ASSESSEE TO OBTAIN, UNLESS THESE DETAILS ARE AV AILABLE IN PUBLIC DOMAIN. REGARDING ABSENCE OF COST OF WORKING CAPI TAL FUNDS, THE OECD GUIDELINES CLEARLY ADVOCATES ADOPTING RATE (S) OF INTEREST APPLICABLE TO A COMMERCIAL ENTERPRISE OPER ATING IN THE SAME MARKET AS THE TESTED PARTY. THEREFORE THIS OB JECTION OF THE CIT(A) IS ALSO NOT SUSTAINABLE. 17. IN THE LIGHT OF THE ABOVE DISCUSSION WE ARE OF THE VIEW THAT THE CIT(A) WAS NOT JUSTIFIED IN DENYING ADJUSTMENT ON ACCOUNT OF WORKING CAPITAL ADJUSTMENT. SINCE, THE CIT(A) HAS NOT FOUND ANY ERROR IN THE TPOS WORKING OF WORKING CAPITAL ADJUS TMENT, THE WORKING CAPITAL ADJUSTMENT AS WORKED OUT BY THE TPO HAS TO BE ALLOWED. WE MAY ALSO ADD THAT THE COMPLETE WORKING CAPITAL ADJUSTMENT WORKING HAS BEEN GIVEN BY THE ASSESSEE A ND A COPY OF THE SAME IS AT PAGE 173 & 192 OF THE ASSESSEES PAPER BOOK. NO DEFECT WHATSOEVER HAS BEEN POINTED OUT IN THESE WORKING BY THE CIT(A). WE MAY ALSO FURTHER ADD THAT IN TERMS OF RULE 10B(1)( E) (III) OF THE RULES, THE NET PROFIT MARGIN ARISING IN COMPARABLE UNCONTROLLED TRANSACTIONS SHOULD BE ADJU STED TO TAKE INTO ACCOUNT THE DIFFERENCES, IF ANY, BETWEEN THE INTERNATIONAL TRANSACTION AND THE COMPARABLE UNCONT ROLLED TRANSACTIONS WHICH COULD MATERIALLY AFFECT THE AMOU NT OF NET PROFIT MARGIN IN THE OPEN MARKET. I T IS NOT THE CASE OF THE CIT(A) THAT DIFFERENCES IN WORKING CAPITAL REQUIREM ENTS OF THE INTERNATIONAL TRANSACTION AND THE UNCONTROLLED COMP ARABLE TRANSACTIONS IS NOT A DIFFERENCE WHICH WILL MATERIA LLY AFFECT THE AMOUNT OF NET PROFIT MARGIN IN THE OPEN MARKET. IF FOR REASONS GIVEN BY CIT(A) WORKING CAPITAL ADJUSTMENT CANNOT B E ALLOWED TO THE PROFIT MARGINS, THEN THE COMPARABLE UNCONTRO LLED TRANSACTIONS CHOSEN FOR THE PURPOSE OF COMPARISON W ILL HAVE TO BE IT(TP)A NO.1536/BANG/2017 PAGE 16 OF 17 TREATED AS NOT COMPARABLE IN TERMS OF RULE 10B(3) O F THE RULES, WHICH PROVIDES AS FOLLOWS: (3) AN UNCONTROLLED TRANSACTION SHALL BE COMPARABL E TO AN INTERNATIONAL TRANSACTION IF (I) NONE OF THE DIFFERENCES, IF ANY, BETWEEN THE T RANSACTIONS BEING COMPARED, OR BETWEEN THE ENTERPRISES ENTERING INTO SUCH TRANSACTIONS ARE LIKELY TO MATERIALLY AFFECT THE PR ICE OR COST CHARGED TO PAID IN, OR THE PROFIT ARISING FROM, SUC H TRANSACTIONS IN THE OPEN MARKET; OR (II) REASONABLY ACCURATE ADJUSTMENTS CAN BE MADE T O ELIMINATE THE MATERIAL EFFECTS OF SUCH DIFFERENCES. 18. IN SUCH A SCENARIO THERE WOULD REMAIN NO COMPA RABLE UNCONTROLLED TRANSACTIONS FOR THE PURPOSE OF COMPAR ISON. THE TRANSFER PRICING EXERCISE WOULD THEREFORE FAIL. TH EREFORE IN KEEPING WITH THE OECD GUIDELINES, ENDEAVOR SHOULD B E MADE TO BRING IN COMPARABLE COMPANIES FOR THE PURPOSE OF BR OAD COMPARISON. THEREFORE THE WORKING CAPITAL ADJUSTME NT AS CLAIMED BY THE ASSESSEE SHOULD BE ALLOWED. WE HOLD AND DIRECT ACCORDINGLY. 16. IN THE LIGHT OF THE AFORESAID DECISION OF THE T RIBUNAL RENDERED AGAINST A SIMILAR ORDER OF THE DRP, WE ARE OF THE VIEW THAT IT WOULD BE JUST AND PROPER TO DIRECT THE TPO TO ALLOW WORKING CAPITAL A DJUSTMENT. WE HOLD AND DIRECT ACCORDINGLY. 17. THE OTHER GROUND RELATING TO TRANSFER PRICING V IZ., EXCLUSION OF LARSEN & TOUBRO INFOTECH LTD., IS NOT CONSIDERED BECAUSE T HIS COMPANY WAS CHOSEN BY THE ASSESSEE AS A COMPARABLE COMPANY IN I TS TP STUDY. THOUGH THE ASSESSEE IS ENTITLED TO CHALLENGE THE IN CLUSION EVEN THOUGH IT WAS CHOSEN BY THE ASSESSEE AS COMPARABLE COMPANY, I N THE PRESENT CASE WE DO NOT WISH TO GO INTO THIS QUESTION FOR THE REA SON THAT BY REASON OF THE RELIEF ALLOWED TO THE ASSESSEE THE PROFIT MARGIN OF THE ASSESSEE AFTER WORKING CAPITAL ADJUSTMENT WOULD BE WITHIN ALP. SI MILARLY, INCLUSION OF IT(TP)A NO.1536/BANG/2017 PAGE 17 OF 17 ICRA TECHNO ANALYTICS LTD., AND MINDTECK (I) LTD., IS NOT CONSIDERED BECAUSE BY REASON OF THE RELIEF ALLOWED TO THE ASSE SSEE THE PROFIT MARGIN OF THE ASSESSEE AFTER WORKING CAPITAL ADJUSTMENT WOULD BE WITHIN ALP. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF JULY, 2020. SD/- SD/- ( B R BASKARAN ) ( N V VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 03 RD JULY, 2020. / DESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.