Veveo (India) Pvt Ltd, Bangalore V. Deputy Commissioner of Income Tax, Circle-7(1)(2), Bangalore

ITA 1619/BANG/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 0741 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 31-07-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMAR BENGALURU
• Keywords: Transfer pricing; International transaction; Working capital adjustments
• Section: 92C; 143(3); 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B R BASKARAN , ACCOUNTANT MEMBER IT (TP) A NO. 1619/BANG/2017 ASSESSMENT YEAR: 2013 - 14 M/S. TIVO TECH PRIVATE LIMITED [FORMERLY VEVEO (INDIA) PVT. LTD.], 10 TH FLOOR, PRIMROSE 7B, EMBASSY TECH VILLAGE, OUTER RING ROAD, DEVARABISANAHALLI VILLAGE, BANGALORE 560 103. PAN: AABCV 9504G VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 7(1)(2), BANGALORE. APPELLANT RESP ONDEN T APPELLANT BY : SMT. TANMAYEE RAJKUMAR, ADVOCATE RESPONDENT BY : SHRI PRADEEP KUMAR, CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 10.06.2020 DATE OF PRONOUNCEMENT : 12 .06.2020 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE FIN AL ASSESSMENT ORDER DATED 07.06.2017 PASSED BY THE ASSESSING OFFI CER U/S. 143(3) IT(TP)A NO.1619/BANG/2017 PAGE 2 OF 11 R.W.S. 144C(13) OF THE INCOME-TAX ACT, 1961 [THE AC T] RELATING TO ASSESSMENT YEAR 2013-14. 2. THE ONLY ISSUE THAT ARISES FOR CONSIDERATION IN THIS APPEAL IS AS TO WHETHER THE TRANSFER PRICING ADJUSTMENT ('TP ADJUST MENT') OF RS. 56,84,277/- MADE BY TRANSFER PRICING OFFICER ('TPO' ) TOWARDS THE INTERNATIONAL TRANSACTION OF PROVISION OF SOFTWARE DEVELOPMENT SERVICES('SWD') TO THE ASSESSEE'S ASSOCIATE ENTERPR ISE ('AE') WHICH WAS SUBSEQUENTLY ENHANCED TO RS. 78,69,258/- BY THE AO ON GIVING EFFECT TO THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL ('DRP') IS VALID AND SUSTAINABLE. 3. THE ASSESSEE IS A COMPANY INCORPORATED UNDER TH E PROVISIONS OF THE COMPANIES ACT, 1956 AND IS A WHOLLY OWNED SUBSI DIARY OF VEVEO INC., USA AND PROVIDES SOFTWARE DEVELOPMENT SERVICE S TO VEVEO INC. 4. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2013- 14, THE ASSESSEE PROVIDED SWD SERVICES TO VEVEO INC ., ITS ASSOCIATED ENTERPRISE ('AE') FOR WHICH IT RECEIVED A CONSIDERA TION OF RS. 14,61,26,880/-. SINCE THE TRANSACTION BETWEEN THE ASSESSEE AND ITS AE WAS AN INTERNATIONAL TRANSACTION, THE INCOME FROM T HE SAID INTERNATIONAL TRANSACTION HAS TO BE DETERMINED HAVING REGARD TO A RMS LENGTH PRICE (ALP) AS LAID DOWN IN SEC.92 OF THE ACT. 5. IN SUPPORT OF ITS CLAIM THAT THE PRICE RECEIVED IN THE INTERNATIONAL TRANSACTION WAS AT ARMS LENGTH, THE ASSESSEE FILED A TRANSFER PRICING ANALYSIS. THE DETAILS OF THE ASSESSEE'S INTERNATIO NAL TRANSACTION WERE AS FOLLOWS:- IT(TP)A NO.1619/BANG/2017 PAGE 3 OF 11 P ARTICULARS AMOUNT IN RS. TP ADJUSTMENT PURSUANT TO THE DRP DIRECTIONS SOFTWARE DEVELOPMENT SERVICES 14,61,26,880 ADJUSTMENT OF RS. 78,69,259/- 6. THERE IS NO DISPUTE THAT IN TERMS OF RULE 10B O F THE INCOME TAX RULES, 1962 (RULES), THE TRANSACTION NET MARGIN MET HOD (TNMM) WAS THE MOST APPROPRIATE METHOD (MAM) FOR THE PURPOSE O F DETERMINING THE ALP. THE PROFIT LEVEL INDICATOR CHOSEN FOR THE PUR POSE OF COMPARING ASSESSEES PROFIT MARGIN WITH THAT OF THE COMPARABL E COMPANIES WAS OPERATING PROFIT/OPERATING COST (OP/OC). THE OP/OC OF THE ASSESSEE WAS AS FOLLOWS:- OPERATING INCOME RS. 15,07,95,023/- OPERATING COST RS.12,50,30,954/- OPERATING PROFIT (OP. INCOME OP. COST) RS. 25,764 ,069/- OPERATING/NCP MARK-UP (OP/TC) 20.61% 7. THE ASSESSEE IN ITS TP STUDY CHOSE THE FOLLOWIN G 11 COMPARABLE COMPANIES AND THE ARITHMETIC MEAN PROFIT MARGIN OF THOSE COMPANIES WAS 12.45%. SINCE THE PROFIT MARGIN OF THE ASSESSE E WAS MUCH MORE THAN THE COMPARABLE COMPANIES, THE ASSESSEE CLAIMED THAT THE TRANSACTION WAS AT ARMS LENGTH:- SI. NO. NAME OF THE COMPANY AVERAGE NPI (IN %) 1 AKSHAY SOFTWARE TECHNOLOGIES LTD. 5.66 2 RS SOFTWARE (INDIA) LTD. 16.45 3 SPRY RESOURCES INDIA PVT. LTD. 21.01 4 CIGNITI TECHNOLOGIES LTD 8.35 5 PERSISTENT SYS TEMS AND S OLUTIONS LTD 16.55 6 KALS INFORMATION SYSTEMS LIMITED 9.95 7 HELIOS & MATHESON INFORMATION TECHNOLOGY LTD. 15.16 8 EVOKE TECHNOLOGIES PVT LTD 10.45 9 ACROPETAL TECHNOLOGIES LTD 11.03 10 SASKEN COMMUNICATIONS TECHNOLOGIES LTD 5.56 IT(TP)A NO.1619/BANG/2017 PAGE 4 OF 11 11 MINDTRE E LTD 16.7 9 ARITHMETICAL MEAN 12.45 8. OUT OF THE 11 COMPARABLES SELECTED BY THE ASSES SEE, THE TRANSFER PRICING OFFICER (TPO) TO WHOM THE AO MADE A REFERENCE FOR DETERMINATION OF ALP U/S.92CA OF THE ACT, ACCEPTED 2 COMPARABLES VIZ., RS SOFTWARE (INDIA) LTD. AND MINDTREE LTD. THE TPO CHOSE 5 MORE COMPARABLE COMPANIES AND ARRIVED AT AVERAGE ARITHME TIC MEAN MARGIN OF 25.15%. COMPARABLES SELECTED BY THE TPO AND THEIR ARITHMETI C MEAN SI. NO. NAME OF THE COMPANY MARK-UP ON TOTAL COSTS (WC UNADJ) (IN %) MARK-UP ON TOTAL COSTS (WCADJ) (IN %) 1 CG - VAK SOFTWARE EXPORTS LTD. 20.54 25.26 2 ICRA TECHNO ANALYTICS LTD. 17.10 18.20 3 LARSEN AND TOUBRO INFOTECH LTD. 26.06 30.85 4 MINDTREE LTD. (SEG.) 18.19 22.60 5 PERSISTENT SYSTEMS LTD. 28.27 32.20 6 RS SOFTW ARE (INDIA ) PVT. LTD. 17.41 23.61 7 TECH MAHINDRA LTD. (SEG.) 18.72 23.33 AVERAGE MARK-UP 20.90 25.15 9. THE TPO ACCORDINGLY COMPUTED ARM'S LENGTH PRICE AND ADJUSTMENT/ADDITION TO BE MADE TO TOTAL INCOME AS F OLLOWS:- ARM'S LENGTH MEAN MARK-UP 20.90% LES S: WORK ING CAPITAL ADJUSTMENT - 4.25% ADJUSTED MEAN MARK - UP OF THE COMPARABLES 25.15% OPERATING COST RS. 12,50,30,954/ - ARM'S LENGTH PRICE 125.15% OF OPERATING COST RS. 15,64,79,300/ - PRICE RECEIVED RS. 15,07,95,023/ - SHORTFALL BEING ADJUSTMENT U /S. 92C A RS. 56,84,277/ - IT(TP)A NO.1619/BANG/2017 PAGE 5 OF 11 10. THE ADDITION SUGGESTED ABOVE WAS INCORPORATED B Y THE AO IN THE DRAFT ORDER OF ASSESSMENT. THE ASSESSEE PREFERRED OBJECTIONS TO THE DRAFT ORDER OF ASSESSMENT BEFORE THE DISPUTE RESOLU TION PANEL (DRP U/S.144C OF THE ACT. APART FROM CHALLENGING THE CO RRECTNESS OF COMPARABLE COMPANIES CHOSEN BY THE TPO AND CORRECTN ESS OF THE ACTION OF THE TPO IN REJECTING COMPARABLE COMPANIES CHOSEN BY THE ASSESSEE IN ITS TP STUDY, THE ASSESSEE ALSO SUBMITT ED THAT NEGATIVE WORKING CAPITAL ADJUSTMENT (WCA) OUGHT NOT TO HAVE BEEN MADE BY THE TPO AND THEREBY THE AVERAGE ARITHMETIC MEAN MARGIN OF COMPARABLE COMPANIES WERE INCREASED BY 4.25%. IT WAS SUBMITTE D THAT WORKING CAPITAL ADJUSTMENT IS MADE FOR THE TIME VALUE OF MO NEY LOST WHEN CREDIT TIME IS GIVEN TO THE CUSTOMERS. THE ASSESSEE HOWEVE R IS NOT AN ENTREPRENEUR BUT A CAPTIVE SERVICE PROVIDER WHICH I S ENTIRELY FUNDED BY THE AES. THIS BEING SO, THE ASSESSEE DOES NOT STAND TO LOSE ANYTHING AS IT IS COMPENSATED ON A TOTAL COST PLUS BASIS. THE A SSESSEE IS RUNNING THE BUSINESS WITHOUT ANY WORKING CAPITAL RISK AS COMPAR ED TO THE COMPARABLES. THEREFORE, REQUIREMENT FOR ADJUSTMENT OF NEGATIVE WORKING CAPITAL DOES NOT ARISE. IT WAS SUBMITTED THAT IN TH E ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2012-13, THE CIT(A) HAS REVERSE D THE ORDER OF THE TPO MAKING NEGATIVE WORKING CAPITAL ADJUSTMENTS. DE TAILED SUBMISSIONS IN THIS REGARD WERE MADE BEFORE DRP WHICH ARE PLACE D AT PAGES 154- 155 AND 333-337 OF THE PAPERBOOK. 11. THE DRP ISSUED THE FOLLOWING DIRECTIONS:- THE DRP DIRECTED THE EXCLUSION OF TECH MAHINDRA LT D. AND ICRA TECHNO ANALYTICS LTD AS BEING INCOMPARABLE TO THE A SSESSEE. IT(TP)A NO.1619/BANG/2017 PAGE 6 OF 11 THE DRP DID NOT AGREE WITH THE CONTENTION OF THE A SSESSEE THAT NEGATIVE WORKING CAPITAL ADJUSTMENT SHOULD NOT BE M ADE. LIST OF COMPARABLES POST DRP DIRECTIONS SI. NO. NAME OF THE COMPANY 1 CG-VAK SOFTWARE EXPORTS LTD. 2 LARSEN & TOUBRO INFOTECH LIMITED 3 MINDTREE LTD. (SEG.) 4 PERSISTENT SYSTEMS LTD. 5 RS SOFTWARE (INDIA) PVT. LTD. 12. PURSUANT TO THE DRP'S DIRECTIONS, THE RESPONDE NT PASSED THE FINAL ASSESSMENT ORDER WHEREIN THE TP ADJUSTMENT ST OOD ENHANCED. 13. BEFORE THE TRIBUNAL, THE ASSESSEE HAS RAISED VA RIOUS GROUNDS OF APPEAL. THE GIST OF THE GROUNDS OF APPEAL IS PRAYE R FOR THE FOLLOWING RELIEFS:- THAT PERSISTENT SYSTEMS LIMITED, LARSEN & TOUBRO I NFOTECH LIMITED AND CG-VAK SOFTWARE EXPORTS LIMITED OUGHT T O BE EXCLUDED FROM THE FINAL LIST OF COMPARABLES AS BEIN G FUNCTIONALLY NOT COMPARABLE TO THE SWD SERVICES OF THE ASSESSEE. (GROUND NOS. 2.2 AND 2.3) THAT AKSHAY SOFTWARE TECHNOLOGIES LIMITED AND CIGN ITI TECHNOLOGIES OUGHT TO BE INCLUDED IN THE FINAL LIST OF COMPARABLES. (GROUND NO. 2.5) THAT AN ADJUSTMENT ON ACCOUNT OF NEGATIVE WORKING CAPITAL OUGHT NOT TO HAVE MADE SINCE THE ASSESSEE IS A RISK INSUL ATED CAPTIVE IT(TP)A NO.1619/BANG/2017 PAGE 7 OF 11 SOFTWARE DEVELOPMENT SERVICE PROVIDER AND DOES NOT CARRY ANY WORKING CAPITAL RISK. (GROUND 2.6) 14. WE ARE OF THE VIEW THAT IF GROUND NO.2.6 IS ADJ UDICATED THEN THERE WOULD BE NO NECESSITY TO ADJUDICATE OTHER GROUNDS B ECAUSE THE AVERAGE ARITHMETIC PROFIT MARGIN OF COMPARABLE CHOSEN BY TH E TPO WITHOUT WCA WILL BE WITHIN THE 3% (+) OR (-) RANGE TO THE PROFI T MARGIN OF THE ASSESSEE WHICH IS PERMITTED UNDER PROVISO TO SEC.92CA(2) OF THE ACT AND THEREFORE THERE WOULD BE NO NECESSITY TO MAKE ANY WORKING CAP ITAL ADJUSTMENT. 15. AS FAR AS GR.NO.2.6 IS CONCERNED, THE ASSESSEE HAS CONTENDED THAT THE TPO AND THE DRP ERRED IN ADDING TO THE AVE RAGE ARITHMETIC PROFIT MARGIN OF THE COMPARABLE COMPANIES CHOSEN BY THE TPO, NEGATIVE WORKING CAPITAL ADJUSTMENT. IT WAS SUBMITTED THAT WORKING CAPITAL ADJUSTMENT IS MADE FOR THE TIME VALUE OF MONEY LOST WHEN CREDIT TIME IS GIVEN TO THE CUSTOMERS. THE ASSESSEE HOWEVER IS NOT AN ENTREPRENEUR BUT A CAPTIVE SERVICE PROVIDER WHICH IS ENTIRELY FU NDED BY THE AES. THIS BEING SO, THE ASSESSEE DOES NOT STAND TO LOSE ANYTH ING AS IT IS COMPENSATED ON A TOTAL COST PLUS BASIS. THE ASSESSE E IS RUNNING THE BUSINESS WITHOUT ANY WORKING CAPITAL RISK AS COMPAR ED TO THE COMPARABLES. THEREFORE, REQUIREMENT FOR ADJUSTMENT OF NEGATIVE WORKING CAPITAL DOES NOT ARISE. IT WAS SUBMITTED THAT IN TH E ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2012-13, THE CIT(A) HAS REVERSE D THE ORDER OF THE TPO MAKING NEGATIVE WORKING CAPITAL ADJUSTMENTS. DE TAILED SUBMISSIONS IN THIS REGARD ARE PLACED AT PAGES 154-155 AND 333- 337 OF THE PAPERBOOK. 16. THE ASSESSEE ALSO PLACES RELIANCE ON DIGITAL JUICE ANIMATION PRIVATE LIMITED V. ACIT (ORDER DATED 06.02.2020 IN IT(TP) NO. 215/BANG/2017), LAM RESEARCH INDIA PVT LTD, ITA NO. 1473 & 1385/2014 (ORDER DATED 30.04.2015) AND SOFTWARE AG BANGALORE IT(TP)A NO.1619/BANG/2017 PAGE 8 OF 11 TECHNOLOGIES PVT LTD IN ITA NO. 1628/2014 (ORDER DATED 31.03.2016) PASSED BY THIS HON'BLE TRIBUNAL, WHERE IT HAS BEEN HELD THAT NEGATIVE WORKING CAPITAL ADJUSTMENT SHALL NOT BE MADE IN CAS E OF A CAPTIVE SERVICE PROVIDER AS THERE IS NO RISK AND IT IS COMP ENSATED ON A TOTAL COST PLUS BASIS. THE TRIBUNAL IN THE AFORESAID DECISIONS HAVE FOLLOWED DECISION OF ITAT HYDERABAD BENCH IN THE CASE OF ADAPTEC (INDIA) PVT. LTD. (INFRA) . THE LEARNED DR RELIED ON THE ORDER OF THE TPO/DR P ON THE ISSUE. 17. ON THE ABOVE GROUND, IT IS UNDISPUTED THAT THE HYDERABAD BENCH OF THE ITAT IN ITA. NO. 206/HYD/2014 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 M ADE FOR THE FOLLOWING REASONS:- GROUND NO.8 PERTAINS TO THE ISSUE OF NEGATIVE WORK ING CAPITAL. AS BRIEFLY STATED ABOVE, AFTER ARRIVING AT THE ARIT HMETIC MEAN OF ALL COMPARABLES AT 22.03%, THE A.O. WORKED OUT NEGA TIVE WORKING CAPITAL ADJUSTMENT OF 3.22% THEREBY, MAKING ARMS LENGTH PRICE AT 25.25%. EVEN THOUGH, DRP REFUSED TO INTERFERE WITH THE OBJECTIONS OF THE ASSESSEE IN ITS ORDER, W E WERE INFORMED THAT DRP HAS DIRECTED THE TPO/A.O. NOT TO MAKE ANY NEGATIVE WORKING CAPITAL ADJUSTMENT IN SOME OF THE CASES IN THE NEXT ASSESSMENT YEAR, IN THE CASES OF MARKET TOOLS RESEARCH P. LTD., AND MEGA SYSTEMS WORLDWIDE INDIA P. LTD., ASS ESSEE PLACED ON RECORD COPIES OF ORDERS OF DRP. IN THAT D RP CONSIDERED THE ISSUE AND DIRECTED THE TPO AS UNDER : '14. GROUND NO.11 : NEGATIVE WORKING CAPITAL ADJUSTMENT - MAKING A NEGATIVE WORKING CAPITAL ADJUSTMENT WITHOUT APPRECIATING THE FACT THAT THE COMPANY DOES NOT BEAR ANY WORKING CAPITAL RISKS. ON THIS ISSUE, THE ASSESSEE SUBMITTED AS UNDER : 'THE LEARNED TPO DETERMINED THE ALP FOR THE INTERNATIONAL TRANSACTIONS WITH A.ES BY MAKING A NEGATIVE WORKING CAPITAL ADJUSTMENT FOR THE IT(TP)A NO.1619/BANG/2017 PAGE 9 OF 11 DIFFERENCES IN WORKING CAPITAL BETWEEN THE ASSESSEE AND THE COMPANIES CONSIDERED AS COMPARABLES. THE ASSESSEE DOES NOT AGREE WITH THE LEARNED TPO AS THE COMPANY DOES NOT BEAR ANY WORKING CAPITAL RISK SINCE IT IS BEEN FULLY FUNDED BY IT'S A.E. FROM ITS INCEPTION AND HAS NO WORKING CAPITAL CONTINGENCIES. THE COMPANY HAS NEVER TAKEN ANY LOANS TILL DATE FROM THE DATE OF INCORPORATION NOR HAS INCURRED ANY EXPENSE FOR MEETING THE WORKING CAPITAL REQUIREMENT.' WE HAVE GONE THROUGH THE SUBMISSIONS AND THE ORDER OF THE TPO. THE ASSESSEE PLEADED THAT THE DRP HAS ACCEDED SUCH A PLEA IN SOME OTHER CASE. ON EXAMINATION, WE FIND THAT THE DRP, HYDERABAD IN THE CASE OF CORDYS SOFTWARE INDIA P. LTD., FOR A.Y. 200 8-09 IN ITS DIRECTIONS DATED 03.08.2012 HAS GIVEN A FIND ING AS UNDER : '7.7. 4 THUS, WORKING CAPITAL ADJUSTMENT IS MADE FOR THE TIME VALUE OF MONEY LOST WHEN CREDIT TIME IS PROVIDED TO THE CUSTOMERS. THE APPLICANT IS NOT AN ENTREPRENEUR BUT A CAPTIVE SERVICE PROVIDER. ITS ENTIRE FUNDING NEEDS ARE PROVIDED BY THE A.E. THIS BEING SO, THE APPLICANT DOES NOT STAND TO LOSE ANYTHING AS IT IS COMPENSATED ON A TOTAL COST PLUS BASIS. THE TPO PROBABLY WAS CARRIED AWAY BY THE LARGE AMOUNT OF RECEIVABLES APPEARING IN THE BOOKS OF THE APPLICANT. BUT THE APPLICANT IS RUNNING ITS BUSINESS WITHOUT ANY WORKING CAPITAL RISK WHILE COMPARABLE COMPANIES HAVE SUCH A RISK FOR THEM. IF AT ALL ANY WORKING CAPITAL ADJUSTMENT IS TO BE MADE TO THIS SITUATION, ONLY A POSITIVE ADJUSTMENT HAS T O 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 NEGATI VE WORKING CAPITAL ADJUSTMENT TO THE ARITHMETIC MEAN MARGIN OF THE COMPARABLES SHALL NOT BE MADE.' IT(TP)A NO.1619/BANG/2017 PAGE 10 OF 11 18. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THA T ASSESSEE'S CASE BEING SIMILAR, THERE IS NO NEED FOR MAKING ANY NEGA TIVE WORKING CAPITAL ADJUSTMENT WHEN ASSESSEE DOES NOT CARRY ANY WORKING CAPITAL RISK. IN FACT, TPO SHOULD HAVE DONE NECESSARY WORKING CAPITA L ADJUSTMENT TO THE PROFITS OF THE SELECTED COMPARABLES SO AS TO MAKE T HEM COMPARABLE TO THE ASSESSEE. IN VIEW OF THIS, WE DIRECT THE TPO NO T TO MAKE NEGATIVE WORKING CAPITAL ADJUSTMENT. 19. IT IS UNDISPUTED THAT THE ASSESSEE IS ALSO A CA PTIVE SERVICE PROVIDER SUCH AS THE ASSESSEE IN THE CASE DECIDED B Y THE ITAT HYDERABAD BENCH AND THEREFORE MAKING A NEGATIVE WOR KING CAPITAL ADJUSTMENT WITHOUT APPRECIATING THE FACT THAT THE C OMPANY DOES NOT BEAR ANY WORKING CAPITAL RISKS, WAS NOT CORRECT. NO OTHE R CONTRARY DECISION WAS BROUGHT TO OUR NOTICE. FOLLOWING THE AFORESAID DECISIONS, WE ALLOW GR.NO.2.6 RAISED BY THE ASSESSEE. 20. THE TPO IS DIRECTED TO COMPUTE THE ALP IN ACCO RDANCE WITH THE DECISION ON GR.NO.2.6 AFTER AFFORDING ASSESSEE OPPO RTUNITY OF BEING HEARD. IN VIEW OF THE DECISION ON GR.NO.2.6, WE AR E OF THE VIEW THAT THE GRIEVANCE OF THE ASSESSEE IN OTHER GROUNDS RELATING TO EXCLUSION AND INCLUSION OF COMPARABLE COMPANIES RAISED IN GR.NO.2 .2, 2.3 & 2.5 DOES NOT REQUIRE ANY ADJUDICATION AND THOSE GROUNDS ARE LEFT OPEN WITHOUT ANY ADJUDICATION. 21. THE OTHER GROUNDS RAISED IN ITS APPEAL IN RELA TION TO ITS INTERNATIONAL TRANSACTION OF PROVISION OF SWD SERVI CES WERE NOT PRESSED AT THIS STAGE. HOWEVER, IF NECESSARY, THE ASSESSEE IS ALLOWED LIBERTY TO URGE THE SAID GROUNDS IN ANY FUTURE PROCEEDING, APP ELLATE OR OTHERWISE, AND IN THESE PROCEEDINGS AT A FUTURE POINT IN TIME. IT(TP)A NO.1619/BANG/2017 PAGE 11 OF 11 22. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS PA RTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF JUNE, 2020. SD/- SD/- ( B R BASKARAN ) ( N V VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 12 TH JUNE, 2020. / DESAI S MURTHY / COPY TO: 1. ASSESSEE 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FIL E BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.