MOTOROLA SOLUTIONS KODIAK NETWORKS INDIA PRIVATE LIMITED,BENGALURU V. ACIT, CIRCLE-4(1)(1), BENGALURU

CO 11/BANG/2025

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The case involves the Assistant Commissioner of Income Tax, Circle \\u2013 4(1)(1), Bangalore as the appellant and M/s. Motorola Solutions Kodiak Networks India Pvt. Ltd. as the respondent. The dispute centered around the Transfer Pricing adjustments made by the TPO and the subsequent assessment order. The TPO had rejected the assessee's Transfer Pricing Study Report and selected different comparables, leading to a higher arm's length price determination. The CIT(A) partly allowed the assessee's appeal, leading to the current appeals by both the Revenue and the assessee. The main issues revolved around the selection of comparables, the treatment of provisions for bad and doubtful debts, and the adjustment for negative working capital.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 716684 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 03-04-2025
• Other Referred Cases: M/s Societe Generale Global Solution Centre Pvt Ltd. in IT (TP) A No. 1188/BANG/2011, M/s Vmoksha Technologies Pvt. Ltd. in IT (TP) A No. 595/BANG/2013, Dell International Services Pvt. Ltd. Vs. Add. CIT, E4E Business Solutions India Pvt. Ltd., DCIT Vs. Software AG Bangalore Technologies Pvt. Ltd., Tecnotree Convergence Pvt. Ltd. Vs. DCIT, Software AG Bangalore Technologies Ltd., Adaptec India Pvt. Ltd.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NARENDRA JAIN
• Keywords: Transfer pricing; International transaction; Bad and doubtful debts; Depreciation; Related party transaction; Working capital adjustments
• Section: 133(6)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI KESHAV DUBEY, JUDICIAL MEMBER IT(TP)A No.2433/Bang/2024 Assessment Year: 2013-14 The Assistant Commissioner of Income Tax, Circle – 4(1)(1), Bangalore. Vs. M/s. Motorola Solutions Kodiak Networks India Pvt. Ltd., 9th Floor, MFar Manyata Tech Park, Greenheart Phase IV, Nagawara, Bangalore – 560 045. PAN: AACCK 0978 J APPELLANT RESPONDENT C.O. No.11/Bang/2025 (In IT(TP)A No.2433/Bang/2024) M/s. Motorola Solutions Kodiak Networks India Pvt. Ltd., Bangalore – 560 045. PAN: AACCK 0978 J Vs. The Assistant Commissioner of Income Tax, Circle – 4(1)(1), Bangalore. APPELLANT RESPONDENT Appellant by : Shri. Narendra Jain, AR Respondent by : Dr. Divya K. J, CIT(DR)(ITAT), Bangalore. Date of hearing : 17.07.2025 Date of Pronouncement : 19.08.2025 O R D E R Per Prashant Maharishi, Vice President: 1. Appeal for Assessment Year 2013 – 14 in IT(TP)A No. 2433/Bangalore/2024 is filed by The ACIT, Circle – 4(1)(1), Bangalore (the learned Assessing Officer) and cross objection by The Motorola solutions Kodiak network Limited [ the Assessee] against appellate Order passed by the CIT(A)-12 [ the ld CIT (A) ] dated 26.07.2024 wherein the Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 2 of 16 appeal filed by assessee against Assessment Order dated 15.02.2017 passed by the ACIT, Circle – 4(1)(1), Bangalore was partly allowed. 2. The learned AO is aggrieved and has raised the following grounds of appeal: 1. Whether the Id. CIT (A) erred in law as well as on facts in seeking exact comparability under TNMM and whether the objection to the selection of comparable is legally sustainable? 2. Whether the ld. CIT (A) erred in law as well as on facts in ignoring the parameters of analysis prescribed under Rule 10B, which are exhaustive and if so, whether it is legally permissible to bypass the same partially or by implication? 3. Whether the ld. CIT (A) erred in law as well as on facts in holding that M/s ICRA Techno Analytics Limited, M/s Larsen Toubro lnfotech Limited, M/s Persistent Systems Limited, & M/s Tech Mahindra Limited cannot be taken as comparable? 4. Whether the ld. CIT(A) was right in fact and in law in removing M/s. Mindtree Ltd. as a comparable on by imposing turnover filter? 5. Whether the ld. CIT(A), Bangalore, was right in not following the decision of Hon'ble ITAT in the case of M/s Societe Generale Global Solution Centre Pvt Ltd. in IT (TP) A No. 1188/BANG/2011 and M/s. Vmoksha Technologies Pvt. Ltd. in IT (TP) A No. 595/BANG/2013 dated 26.08.2016 for AY 2005-06 where the Tribunal has held that turnover is not a relevant criterion for deciding the comparability. 6. Whether the id. CIT(A) was right in holding that there exists a co-relation between turnover and operating margin of an entity? 7. Whether the Id. CIT(A) was right in fact and in law in directing treat the provision of bad and doubtful debts as part of Operating cost? 8. Whether the Id. CIT(A) was right in fact and in law in directing not to make Negative Working Capital Adjustment? 3. Assessee has also filed CO in the same appeal raising the following grounds: 1. The Order of the learned CIT(A)-12. Bangalore to the extent prejudicial to the Respondent is bad in law. TP GROUNDS 2. The learned CIT(A) has erred in not adjudicating the contention of the Respondent that: Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 3 of 16 a. Following companies selected by the Respondent in the TP study have been rejected on unjustifiable grounds: i) Akshay Software Technologies Ltd. ii) Cignit Technologies Ltd iii) Evoke Technologies Pvt Ltd b. Additional companies proposed by the Respondent during the TP proceedings have been rejected on unjustifiable grounds: i) Celstream Technologies Pvt Ltd. ii) CTIL Ltd. iii) E-zest Solutions Ltd. iv) Harbinger Systems Pvt Ltd. v) Sankhya Infotech Ltd. 3. The learned CIT(A) has erred in not adjudicating the contention of the Respondent that it is insulated from risks, as against comparables, which assume these risks and therefore have to be credited with a risk premium on this account. CORPORATE TAX GROUND 4. The learned CIT(A) has erred in not appreciating that disallowance of Rs. 2,18,56,257/- (which comprises of Provision for Income Tax and MAT Credit reversal) u/s 40(a) is bad in law as the same is already disallowed by the Respondent in the tax computation. The addition made by the AO has resulted in double addition and should be deleted. 4. Brief facts of the case show that assessee is a company engaged in the business of providing software development and customer support services, filed its return of income on 28.11.2013 declaring taxable income of Rs.6,02,01,270/-. Its return of income was picked up for scrutiny and the necessary notices were issued under section 143(2) of the Act on 02.09.2014. 5. Assessee has entered international transactions. Reference was made for determination of ALP of such international transactions to the Transfer Pricing Officer, DCIT – Circle – 2(1)(1), Bangalore (learned TPO). Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 4 of 16 6. The learned TPO verified the functional analysis of the assessee. He recorded that that assessee company is a 100% export-oriented unit at Bangalore since 12.05.2003 and rendering software development related services and customer support services to Kodiak, US, in terms of service agreement. Assessee carried out software development services and completes the work as required including user and technical documentation and delivers the same through internet to US. It also provides customer support services which are IT enabled services such as preparation of brochures, pamphlets and presentations, making presentations to prospective clients, handling customer calls, customer logs, remote installation and resolving customer queries. 7. Assessee’s international transactions were of nature of software development services and related services amounting to Rs.38.55 Crores and customer service was Rs.2.99 Crores. Assessee has also submitted the segmental information for both these above activities. The operating profit ratio over operating cost (OP/OC) in case of software and related services was determined at Rs.14.39% and in case of customer support services at 29.53%. The learned TPO however computed such margin at 12.58% and 22.80% for respective segments. With respect to the software development activity, assessee selected 6 companies by adopting Transactional Net Margin Method (TNMM) as Most Appropriate Method (MAM). 8. The learned TPO rejected the Transfer Pricing Study Report (TPSR) prepared by the assessee due to several infirmities in filters adopted by assessee. He carried out independent search process and applied different filters, selected 7 comparable companies and computed unadjusted average margin of 21.63%. After considering the objections of the assessee, the learned TPO selected 7 comparables whose margin was derived at 20.90% taking profit level indicator of OP/OC determined the arm’s length price of the international Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 5 of 16 transaction at Rs.44,22,41,983/- and shortfall adjustment was made of Rs.3,68,00,537/-. The transfer pricing order under section 92CA (3) of the Act was passed on 21.10.2016. 9. A draft Assessment Order was passed on 22.12.2016 wherein the total income of the assessee was computed at Rs.11,92,97,192/-. Over and above, the transfer pricing adjustments, depreciation was disallowed of Rs.4,38,00,728/- and disallowance under section 40(a) of the Act was also made of Rs.2,18,56,257/-. 10. Based on the same, assessee was served draft Assessment Order on 22.12.2016 wherein the assessee responded by letter dated 18.01.2017 that assessee would not like to opt for filing objection before the Dispute Resolution Panel and final Order may be passed. Based on the same, the final Assessment Order was passed determining total income at Rs.11,92,97,192/-. 11. Aggrieved with the assessment Order, assessee preferred appeal before the learned CIT(A) who passed appellate Order on 26.07.2024. The learned CIT(A) decided the issue of the comparability analysis and directed to exclude ICRA Techno Analytics Ltd. as per paragraph 5.1.2, exclusion of L & T Infotech Ltd. by para no 5.2.2, exclusion of Mindtree Ltd. by paragraph 5.3.2, exclusion of Persistent Systems Ltd. by paragraph 5.4.2, exclusion of Tech Mahindra by paragraph No.5.6.2. He confirmed the inclusion of R S Software India Ltd., by paragraph No.5.5.2. With respect to the margin computation in case of C G vak Software and Exports Ltd., he directed to recompute margin by treating the provision for bad and doubtful debts as part of the operating cost. Before the learned CIT (A), the assessee raised another ground for inclusion of certain comparable. This ground was not adjudicated vide paragraph No.5.8 of the Order. Assessee raised further contention that Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 6 of 16 negative working capital adjustment should not be made to the arm’s length price of international transaction relying on the decision of M/s. Dell International Services Pvt. Ltd., Vs. Add. CIT dated 07.08.2023 for Assessment Year 2013-14 wherein paragraph No.15 this issue was dealt with. Learned CIT(A) held that since the assessee is engaged in the software development services and IT enabled services to its holding company, as assessee company is a captive service provider and accordingly decision of the ITAT is applicable and AO is directed not to make negative working capital adjustment. Accordingly, appeal of the assessee was partly allowed. 12. Against this, the learned AO is in appeal before us. 13. The learned DR submitted that the exclusion of the comparable by the learned CIT(A) was based on judicial precedence in some other cases. For deciding exclusion or inclusion of comparable analysis, the learned CIT(A) should have only looked at the functional comparability. It was further stated that exclusion of ICRA Techno Analytics Ltd., L & T Infotech Ltd., Mindtree Ltd., Persistent Systems Ltd., Tech Mahindra are functionally comparable with the assessee, but the learned CIT(A) has merely considered some decisions and held them to be not comparable with the assessee. With respect to the exclusion of Mindtree Ltd., it was also held to be not correct. With respect to exclusion of some comparable and correcting margin with respect to treating the provision of bad and doubtful debt as part of operating cost is not correct. The last ground challenged by the Revenue is that the learned CIT(A) is not at all correct in directing the learned TPO not to make negative working capital adjustment. She submits that there is no logic in not making a working capital adjustment when there is a difference in the working capital used by the assessee and the comparable companies. He relied upon the Order of the learned TPO. Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 7 of 16 14. The learned AR vehemently supported the Order of the learned CIT(A). Even otherwise, he submitted that Motorola has a turnover of Rs.38.55 Crores whereas the L & T Infotech has turnover of Rs.3,613 Crores, Persistent Ltd. of Rs.996 Crores, Tech Mahindra of Rs.6,001 Crores and Mindtree Ltd., of 1640 Crores. Therefore, even on the issue of the disproportionately high turnover of these companies, those cannot be included as comparables with the company having annual turnover of merely 38.55 Crores. He submits that on this ground itself the 4 comparables challenged by the learned AO should be excluded. He further stated that even otherwise, the learned CIT(A) has excluded the above companies while comparing software development segment only in case of those companies whose issue and judgment is relied upon. With respect to the exclusion of ICRA Ltd, he submitted that company is not a functionally comparable company. The TPO has concluded that company is engaged in rendering software development services, but he referred to page Nos.128 to 131 and page No.289 of the Paper Book which is extract of the annual report of that company which shows that the company is not a pure software development company as it is engaged in engineering, web development and hosting, business analytics and BPO services. He submitted that company also failed the related party turnover filter as it has related party transaction of 25.35%. Accordingly, he submitted that all the exclusions made by the learned CIT(A) are also otherwise correct. 15. With respect to the margin computation of C G Wak Software Exports Ltd., directing the learned TPO to include bad and doubtful debts as part of operating cost is correct, He submits that debts have been arising out of the sale consideration and therefore they are directly related to the operations of the company and hence it is rightly included as part of the operating cost. He further relied upon several judicial precedence stating that bad and doubtful Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 8 of 16 debts provision is always part of the operating cost. He submits that the learned TPO has not given any reason to exclude the provisions for bad and doubtful debts from the operating cost. 16. With respect to the negative working capital adjustment, he submits that the learned TPO has erred in making negative working capital adjustment and thereby enhanced the average margin of the comparable. The respondent is a captive service provider and is entirely funded by the AE and compensated on a total cost-plus basis. Further, it does not have any risk of working capital as compared to the comparables and therefore negative working capital adjustment should not have been made. He relied on the decision of the Co- ordinate Bench in the case of Dell International Service Pvt. Ltd., Vs. Addl. CIT(A) and several other decisions. 17. Coming to the Cross Objection of the assessee, the learned AR submitted that Akshay Software Technology, Cigniti Technologies Ltd., and Evoke Technologies Ltd., are functionally comparables passes all filters and therefore they should not have been excluded by the learned TPO. He submitted that though respondent has contended with respect to inclusion of all these companies before the learned CIT(A) that these companies should be included in the final list of comparables, however the margin of the respondent was at ALP after deciding about exclusion of the comparables challenged in the appeal of the assessee, but the learned CIT(A) did not adjudicate on this issue. He further stated that assessee has also proposed certain comparables during the TP proceedings which were not at all considered by the TPO holding that either financial details of the company are not available in public domain, or it is not functionally comparable. Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 9 of 16 18. With respect to the addition of Rs.2,18,56,257/-, the learned AR submitted that it consists of provision for income tax of Rs.2,23,00,689/- and reversal of minimum alternate tax credit of Rs.18,32,568/-. While filing for return of income, assessee has considered profit before tax as appearing in financial statement which already excluded the current tax. Therefore, since current tax was already excluded on profits earned the same was not added back in the computation of total income. The learned AO while computing the taxable income has considered income as per return and made additional disallowance of the above sum. Therefore, it leads to double disallowance. 19. The learned DR contesting the Cross Objection filed by the assessee submitted that TPO has given a valid reason for exclusion of the comparable selected by the assessee. She submits that with respect to 2 comparables it is held to be functionally different and with respect to Evoke Technologies Pvt. Ltd., the foreign exchange earnings data is inconsistent. Showing the T P Orders, she submitted that there is no reason that above company should be included in the comparability analysis. With respect to the additional companies proposed by the respondent during the transfer pricing proceedings, she referred to the Order of the TPO and submitted that these are functionally dissimilar. On the issue of disallowance of Rs.2,18,00,257/- she submitted that the AO may be directed to verify the same whether it leads to double disallowance or not. 20. We have carefully considered the rival contention and perused the Orders of the lower authorities. In appeal of ld. AO, only dispute is with respect to the comparability analysis of the ALP determination of the software development segment. There is no dispute regarding the MAM and the profit level indicator of OP/OC. The assessee has classified its international transaction into software development services and marketing support services segment. Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 10 of 16 However, the comparability analysis has been done using software development as a primary function. The assessee reached 6 comparable companies for bench marking analysis. The learned TPO rejected certain filters adopted by the assessee and therefore the determination of the ALP as per TPSR was also rejected. He carried out fresh search using current year data, excluding companies having different Financial Year, applying lower turnover filter of Rs.1 Crore and where software development services income is less than 75%. He also applied for a related party transaction filter of 25%. Some other filters were also applied. Based on this analysis, he reached the final comparability consisting of 7 comparable companies whose average margin was 20.90% and the adjustment was determined at Rs.3,68,00,537/-. Before the learned TPO, assessee challenged the inclusion of L & T Infotech Ltd., stating that it is operating in 3 clusters such as service cluster, industrial cluster and product engineering services and therefore it is not comparable. The learned TPO was also shown that this company has huge brand value and turnover above Rs.200 Crores therefore it should have been excluded. The learned TPO stated that the company does not have any intellectual property rights and even if it has, they are miniscule and insignificant. With respect to the turnover, he referred to paragraph No.10 of his Order and stated that turnover does not impact on the profit margin. Accordingly, he included the above company rejecting the explanation of the assessee. Similarly with respect to Persistent Systems Ltd., assessee submitted that it is functionally different as it has R & D expenditure and has high turnover. Rejecting the explanation of the assessee the learned TPO for similar reasons as were given for L & T Infotech Ltd., referred to paragraph N.10 that high turnover does not impact the profit margin. Same was included in the comparability analysis. With respect to Mindtree Ltd., assessee also challenged it with the high turnover which was similarly rejected. In same manner, Tech Mahindra was also challenged on functionally different, incorrect margin computation, segmental data not available and high Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 11 of 16 turnover. The learned TPO rejected the arguments of the assessee and included the same. 21. We find that assessee has a turnover of Rs. 38.55 Crores which is required to be compared for comparability analysis. Based on the financial statement submitted before us, we find that L & T Infotech Ltd. has a turnover of Rs.3,613 Crores, Persistent Systems Ltd., has a turnover of Rs. 996 Crores, Tech Mahindra has turnover of Rs. 6001 Crores and Mindtree Ltd., has turnover of 1640 Crores. We find that the small segment of the assessee of Rs.38.55 Crores should not have been compared with large turnover segment of comparable companies. The turnover of the company impacts profitability for several reasons. 22. Therefore, we do not find any reason that such a small segment of ALP can be comparable with such giant companies who have the brand also. Accordingly, though CIT(A) has excluded them relying on certain judicial precedence, however we find the Order of the learned CIT(A) sustainable because such high turnover companies could not have been held to be comparable with the assessment segment of Rs. 35.55 Crores. Thus, the exclusion of the above 4 companies by the learned CIT (A) cannot be found fault with and accordingly this ground of appeal is dismissed. 23. The second issue involved is with respect to the ICRA Technologies included by the learned TPO. The assessee has challenged inclusion of the same stating that its related party transactions are more than filter adopted by the learned TPO of 25% and it is functionally dissimilar. The learned TPO rejected this argument and held that the company has related party transaction of only 24.77% which is below the permissible limit of 25%. Whereas the assessee has computed the related party ratio of 25.37%. Ld. TPO claims that Assessee has excluded foreign exchange gains from operational income while calculating RPT. Further, it was held that this company is also functionally comparable as per the information received under section 133(6) of the Act Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 12 of 16 from the comparable company. Assessee also challenged the margin of this comparable company stating that provision for doubtful debts should have been considered as operational cost. This was also rejected stating that provision for doubtful debts are expenses which are dependent upon number of factors in relation to trade or business and therefore same is not to be excluded. On careful consideration of the annual accounts of ICRA Technologies placed at Page No.288 of the Paper Book we find that this company is engaged in software development and engineering services, web development and subsequently diversified into the domain of business analytics and business process outsourcing. It has service income of Rs.1,807.37 lakhs as per schedule 12 of the revenue from operations. The foreign exchange gain is reported in schedule 13 under the head “income”. Based on this, RPT was determined at 25.37%. The argument of the learned TPO that assessee has also considered the foreign exchange while calculating RPT filter is incorrect. As the RPT transactions are 25.37%, they do not meet the filter of learned TPO and on that basis the ICRA Techno Analytics deserves to be excluded. The detailed working is provided by the assessee at Page No.127 of the Paper Book in paragraph No.6.21 which matches the annual accounts of the comparable companies and found correct. Therefore, ICRA Techno Analytics is correctly excluded from the comparability analysis. 24. The next ground is with respect to the adjustment of margin of comparable companies wherein the learned CIT (A) directed the ld. TPO to treat the provision of bad and doubtful debts as operating cost. This is challenged as per ground No.5 by the learned AO. We find that the bad and doubtful debts are part of operating cost because they are part and parcel of sales already booked by the assessee. Accordingly, we do not find any infirmity in the Order of the learned CIT (A) in directing the learned TPO to correct the Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 13 of 16 margin of comparable companies by treating the provision of bad and doubtful debts as part of operating cost. 25. The last ground of appeal of the learned AO is with respect to the direction of the learned CIT(A) to not to make negative working capital adjustment. The learned TPO dealt with this issue in paragraph No.12 of his Order. He held that working capital adjustment is computed as per formula given in Annexure to OCD guidelines. In this case, the average prime lending rate (PLR) adopted by SBI for short term working loan was considered. The average PLR of 48.15% was adopted and such working capital was shown at Annexure A. 26. In paragraph No.5.9 of the appellate Order, the learned CIT(A) stated that assessee has contended that negative working adjustments should not be made placing reliance on the decision of the Co-ordinate Bench in the case of Dell International Vs. Addl. CIT (supra) wherein ground No.4 in paragraph No.13 was with respect to working capital adjustments. 27. During the course of hearing, learned AR also submitted that the decision of the Co-ordinate Bench in the case of E4E Business Solutions India Pvt. Ltd., and referred to paragraph No.7 wherein another decision of the Co-ordinate Bench in the case of DCIT Vs. Software AG Bangalore Technologies Pvt. Ltd. (Order dated 31.03.2016 passed in ITA No. 1628/Bang/2014) was referred to and ultimately in paragraph No.12, the Co-ordinate Bench held that assessee does not have any working capital risk. The question of negative working capital does not arise. 28. During hearing, we have asked the learned AR to show any paragraph of the OECD commentary which says that the negative working capital adjustment Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 14 of 16 if it is computed why, it should not be adjusted while computing the margin. To this aspect, the learned AR submitted that there is no such guidance in OECD guidelines suggesting that negative working capital adjustments should not be made. 29. We find that there are also decisions of Co-ordinate Bench in the case of Tecnotree Convergence Pvt. Ltd., Vs. DCIT in IT(TP)A No.1616/Bang/2017, Order dated 27.06.2018 wherein it has been held that the negative working capital adjustment must be done to arrive at the comparable margin. We have also been shown the decision of M/s. Software AG Bangalore Technologies Ltd., and M/s. Adaptec India Pvt. Ltd., wherein it has been held that no negative working capital adjustment is called for. 30. However, in case before us we have directed the ld TPO to exclude 6 comparable companies which are resulting into negative working capital adjustments, therefore now this ground of appeal of the ld A O becomes infructous and hence, dismissed for this reason. 31. Then the only issue involved in the Cross Objection is with respect to double disallowance of Rs.2,18,56,257/-. It is stated that it is consisting of provisions for income tax of Rs. 2,00,23,689/- and MAT credit of Rs.18,32,568/-. Assessee while filing the return of income started the computation of total income taking profit before tax. Therefore, the above amount has already been excluded, and no deduction is claimed. While computing the income of the assessee, the learned AO has taken income as per return and further made additional disallowance of the above some citing the provisions of section 40(a)(ii) of the Act. Naturally, there is a double disallowance of the above sum. The AO is directed to take the profit before tax to start with the Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 15 of 16 computation of the total income and the above disallowance will automatically be eliminated. Thus, the above disallowance made by the learned AO is not proper. Hence directed to be deleted. 32. In the result, appeal filed by the Revenue is dismissed and Cross Objection filed by the assessee is partly allowed. Pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- (KESHAV DUBEY) (PRASHANT MAHARISHI) Judicial Member Vice President Bangalore, Dated: .08.2025. /NS/* Printed from counselvise.com IT(TP) A No.2433/Bang/2024 C.O. No.11/Bang/2025 Page 16 of 16 Copy to: 1. Appellants 2. Respondent 3. DRP 4. CIT 5. CIT(A) 6. DR, ITAT, Bangalore. 7. Guard file By order Assistant Registrar, ITAT, Bangalore. Printed from counselvise.com "