Sec. 92C of Income Tax Act, 1961—Transfer Pricing—Working capital adjustment claimed by assessee should be analysed keeping in mind OECD guidelines.

Facts: DRP and AO/TPO have erred in not appreciating that assessee, being a captive service provider, Operates at lower risk levels as compared to comparable companies, which carry higher risks (including receivables, market and credit risk) and accordingly erred in not granting appropriate working capital and risk adjustments to the margins of the comparable companies.

Held, that DRP may be correct in denying working adjustment due to unavailablity of required data, however there is no merit in observations of DRP/TPO as supported by Ld.CIR DR, in denying working capital adjustment due to absence of details for working out adjustments in comparable companies chosen. Regarding comparable companies, one has to fall back upon only on information available in public domain. If that information is insufficient, it is beyond the power of Assessee to produce correct information about comparable companies. Revenue on the other hand has sufficient powers u/s.133(6) to compel production of required details from comparable companies. If this power is not exercised to find to get information required, then it is no defense to say that Assessee has not furnished required details to deny any adjustment on account of working capital differences. Therefore this objection of DRP is not sustainable. Therefore. an endeavor should be made to bring in comparable companies for the purpose of broad comparison and working capital adjustment claimed by Assessee should be analysed, keeping in mind, OECD guidelines . Thus, we direct working capital adjustment to be computed and to allow as per actuals, after considering exclusion/inclusion of comparable companies in the final set of comparables. - GOLDMAN SACHS SERVICES (P.) LTD. V/s JT. CIT - [2020] 182 ITD 189 (ITAT-BANGALORE)