Shri S.V. Mehrotra And Shri H.S. Sidhu JJ

ORDER

The order of the Bench was delivered by

S.V. Mehrotra, A.M:-This appeal, preferred by the assessee, is directed against the assessment order dated 30-11-2012, framed by the AO pursuant to DRP directions u/s 144C, pertaining to assessment year 2008-09.

2. At the outset ld. counsel for the assessee did not press ground nos. 1,2,3, 4, 6 & 7. Accordingly, the same stand dismissed being not pressed.

3. The assessee company had filed its return of income declaring Nil income and book profit of Rs. 1,32,14,390/-. The assessee had declared business income of Rs. 1,53,39,519/- and the same had been claimed exempt u/s 10B. During the year under consideration the assessee company was engaged in the business of processing information and data through means of electronic and information technology enabled infrastructure.

3.1. The assessee had reported following international transactions in form 3CEB:

3.2. The AO had made a reference to TPO for determination of ALP u/s 92CA(3) in respect of above transactions. The TPO noticed that assessee was engaged in the services of online financial services, which included strategic advisory services, industry and operation expertise, compliance focus services, web marketing services, electronic commerce knowledge services, and intelligence and best practice services. He noted that IT enabled back office processing services were provided to New River US, which was involved in full fledged marketing, encompassing a wide range of other allied activities. The assessee had shown PLI of OP/OC at 10.33%, which had been benchmarked with the arithmetic mean of 8.45% in respect of 17 comparables selected by the assessee and, therefore, the assessee’s contention was that the assessee’s net margins were within the range of + 5%.

3.3. The TPO show caused the assessee and observing as under:

 “The assessee contention as stated above was considered. However the comparables selected by the assessee are rejected for the following any or all inapt filters:
a. Companies whose support service income < Rs. 1 crore need to be excluded.
b. Companies whose support service receipts are less than 75% of the total operating revenues need to be excluded.

c. Companies having more than 25% related party transactions (sales as well as expenses combined) need to be excluded.
d. Companies having diminishing revenues/ persistent losses for the last 3 years upto and including FY 2007-08 need to be excluded.

e. Companies those are expansively functionally different from the taxpayer need to be excluded”
3.4. Ld. TPO proposed 24 comparables for benchmarking the international transactions relating to provision of market support/ information services, the average PLI of which was computed at 28.05% as noted at pages 3 & 4 of TPO’s order.

3.5. The assessee filed its reply, which is contained at page 5 of ld. TPO’s order. Ld. TPO proposed following comparables to be selected for benchmarking purposes in the case of assessee:

3.6. Ld. TPO also considered the issue raised by assessee regarding, inter alia, denial of working capital adjustment and rejected the same observing that assessee had not demonstrated that there was difference in the levels of working capital employed vis-a-vis the comparables. He further observed that the audited accounts of the assessee did not show that it had received any advance from its AEs. He observed that in the absence of reliable data no adjustment could be allowed.

3.7. Ld. TPO after considering the assessee’s objection in detail used the comparables as tabulated earlier. He, accordingly, made an adjustment of Rs. 1,98,93,462/- as under:

4. Before ld. DRP, the assessee had, inter alia, taken a ground that ld. AO/TPO erred on facts and in law by cherry picking companies which had shown very high margins vis-a-vis the industry benchmark, without considering the functional and operational comparability.

4.1. The assessee’s contention was that it was a low risk captive unit, as it was remunerated on cost plus basis by its AEs for software development services to them and, therefore, it should not have been compared with companies with very high margins due to difference in functional and risk profile.

4.2. Ld. DRP rejected the assessee‘s contention, inter alia, observing that the profit margins of any company is not an indicator of its functional profile. It was further pointed out that in a set of functionally comparable companies, there could be companies with low margin as well as high margins. What is material is the functional comparability. Moreover, while taking arithmetic mean, such difference will ultimately average out.

4.3. Ld. DRP had relied on the decision of ITAT Mumbai in the case of Exxon Mobil Co. India Pvt. Ltd. (2011-TII-68-ITAT-MUMTP). The assessee had also object4ed to the inclusion of eClerx Services Ltd. as a comparable company to the assessee on following grounds:

(a) Functionally non comparable services as it was a KPO and carried on diversified operations.
(b) Company was engaged in financial services in the nature of account reconciliation, trade order management services etc.

(c) Rated as leading KPO Nelso Hall.
4.4. Ld. DRP rejected this contention for the following reasons:
(i) The functions performed by the impugned comparables was data analysis and data process solutions which are very much in the nature of ITeS.

(ii) As per assessee’s own description in its TP report, it was stated that in addition to core categories of CIS, F&A, HRM, Knowledge services and procurement ITeS-BPO services were also performed.

4.5. Ld. DRP pointed out the following examples of other horizontal ITES BPO services:
- Content Development and publishing
- Medical Transcription services.
- Econometrics, Data analysis, modeling and forecasting
- Animation and designing.

4.6. Before ld. DRP the assessee had also raised additional ground that in the show cause notice the TPO proposed a set of 24 companies out of which 15 companies were accepted by assessee as comparable companies and 9 were objected. However, the TPO selected only 5 companies in his order as comparables for the computation of ALP. Ld. DRP after considering the assessee’s contention directed that following 12 comparables be used to determine the ALP:

5. Before us the assessee has primarily objected the inclusion of following four comparables:
(i) Coral Hub (Vishal Information Technologies Ltd.);
(ii) Eclerx Services Ltd.
(iii) Infosys BPO Ltd.
(iv) Wipro Ltd. (segmental)

5.1. Coral Hub (Vishal Information Technologies Ltd.) : Ld. counsel for the assessee submitted that this company is functionally different, inter alia, because it’s business model is based on outsourcing. In this regard he pointed out that data entry charges incurred by this company are 84.52% of total expenditure and there is negligible personnel cost incurred by it. Ld. counsel relied on following decisions in support of its contention for exclusion of this company from list of comparables:

- Maersk Global Centers (India) Pvt. Ltd. (ITA no. 3774/Mum/2011 & CO 111/Mum/2011- order dated 9-11-2011);

- United Health Group Information Services Pvt. Ltd. [2014] 50 Taxmann.com 177 (Del-Trib.);
- BNY Mellon International Operations (India) Pvt. Ltd. [2014] 52 Taxmann.com 306 (Pune-Trib.)
- Techbooks International Pvt. Ltd. [2014] 45 Taxmann.com 528 (Delhi-Trib.).
5.2. Ld. counsel submitted that in assessee’s case salary cost is 54.67% whereas in the case of Coral Hub salary cost is 4.4% and, therefore, it cannot be compared with assessee.

5.3. Eclerx Services Ltd.: As regards Eclerx Services Ltd., ld. counsel submitted that it is not functionally comparable because this company is carrying on KPO activities. Further, he submitted that as per the annual report, this company was engaged in providing high end services like data analytics and customized process solutions. He submitted that since the company’s activities were specialized and complex, therefore, it is not comparable to BPO or an IT outsourcing company in which assessee is engaged. He pointed out that this company delivered data solutions to companies business needs through cost effect combination of delivery process and technology.

5.4. Further, ld. counsel submitted that extra ordinary events of acquisition have taken place. The assessee relied on following case laws for exclusion of this company from list of comparables:

- Maersk Global Centers (India) Pvt. Ltd.
- United Health Group Information Services Pvt. Ltd.
- M/s Calibrated Healthcare Systems India Pvt. Ltd. [ITA 5271/Del/2012 - AY 2007-08).

5.5. Infosys BPO Limited: As regards Infosys BPO Limited, ld. counsel submitted that this is not comparable to assessee for the following reasons:

(i) the turnover of Infosys BPO Limited is 69 times of the assessee company.
(ii) It is giant and has brand value.
(iii) Brand building & advertisement expense
(iv) Selling and marketing expenditure 6.17% of operating revenue.
(v) Huge assets base of Rs. 130.89 crores
(vi) Extraordinary events - acquisitions.
5.6. Wipro BPO:As regards Wipro BPO, ld. counsel submitted that this is also not comparable to assessee for the following reasons:

(i) Turnover is 97 times of the assessee
(ii) Presence of intangibles
(iii) Filed 17 patents in AY 2008-09.

6. Ld. Standing counsel Shri Judy James submitted that there is no dispute as regards adoption of TNMM method for computation of ALP and by taking PLI as OP/OC. Ld. Standing counsel submitted that assessee is rendering knowledge processing outsourcing (“KPO”) service and not business processing outsourcing (“BPO”) service. He submitted that KPO is high end knowledge service for carrying out processing, whereas BPO is low end service as compared to KPO. He referred to page 2 of TPO’s order to point out that assessee in the relevant year was engaged in the services of online financial services, which included strategic advisory services, industry and operation expertise, compliance focus services, web marketing services, electronic commerce knowledge services, and intelligence and best practice services, IT enabled back office processing services to New River US, which is full fledged marketing, encompassing a wide range of other allied activities, which are comparable to a KPO and not to BPO.

6.1. Ld. Standing Counsel submitted that this company has now merged with Broadridge Financial solutions (India) Pvt. Ltd. w.e.f. 1-7-2011, but not in asstt. year under consideration. He submitted that in case of BPO normally following activities would be there :
(a) Call facility
(b) Selling products; marketing demands; no high end service.

6.2. Employees are trained to take up calls and give informations to specified customers. In BPO No mastery is required e.g. insurance companies and manual is laid down for procedure.
6.3. Whereas in case of KPO, training is important, where the trained person has to use knowledge and accordingly specialists are required in case of KPO who deal with high end services. He submitted that KPO is the latest outsourcing process which involves application of training, expertise to research data analysis, other information based activities.

6.4. Ld. standing counsel advanced his submissions with reference to various impugned comparables selected by TPO.

6.5. Coral Hub. As regards this company, ld. Standing counsel submitted that nothing is there on record to substantiate functional profile of this company.
6.6. In this regard ld. Standing counsel referred to the annual report contained at page 476 of the PB. However, he referred to para 12.2 at page 10 of the decision in the case of United Health Group Information Services Pvt. Ltd. (supra), wherein the Tribunal has noticed from annual report that it was mainly engaged in e-publishing business and had more than, 10,000 classic books to its credit which were also converted into large font titles for visually challenged. He, therefore, submitted that functions performed by this company were akin to KPO and comparable to assessee’s functions.

6.7. Ld. Standing counsel pointed out that the decision in the case of BNY Mellon International Operations (India) Pvt. Ltd. (supra) is not applicable because as per para 9.5 of the said decision, it is noticed that the company was not engaged in e-publishing business and, therefore, it was held that Coral Hubs Ltd. could not be considered as a comparable. This was engaged in the business of IT enabled services/ business, therefore, it is not comparable to the assessee’s high end services.

6.8. As regards assessee’s reliance on Tribunal’s decision in the case of M/s Techbooks International Pvt. Ltd. (supra), ld. Standing Counsel referred to paras 5.3 & 5.4 of the order, as reproduced below:

5.3. However, we find from the Tribunal order for the assessment year 2007-08 that the case of Vishal Information Technologies Ltd. (now called as Coral Hub Ltd.) has been held to be not comparable because of different business model as it was outsourcing execution of contract from external vendors. The Tribunal has noted in para 13 of its order, a copy of which is available on record, that the employee cost in the case of VITL was a mere 3% of the total cost, whereas in the case of the assessee it stood at 60%. The position for the current year is also more or less similar. The employees cost of VITL for the instant year is at 2.71 % of the total cost as against a little more than 60% of the assessee.

5.4. At this juncture, it is paramount to record the contention of the Id. DR that the filter of employees cost to total cost is not relevant as it does not ultimately impact the overall profltability. He fortified this contention on the strength of the order passed by the Hyderabad Bench of the Tribunal in the case of DCIT Vs Deolite Consulting India Pvt. Ltd. (a copy of order placed on record) in which it has been held that such a filter does not impact the overall profitability and the specific case of VITL has been held to be comparable.”

6.9. He submitted that Tribunal did not follow the contrary view taken in the case of Deolite Consulting India Pvt. Ltd. (supra) on the ground of consistency and, therefore, this decision cannot be of any assistance to the assessee.

6.10. As regards reliance of Tribunal in the case of M/s Maersk global Service Center (India) P. Ltd. (supra) is concerned, ld. counsel referred to para 29 and pointed out that this company was captive service provider rendering back office support services to its AEs. The activities undertaken by the assessee were essentially IT enabled services such as data entry, transcription and data of shipping documents such as bill of lading etc. Therefore, this decision is not applicable to assessee which is primarily carrying on strategic advisory services which are high end financial services, whereas M/s Maersk global Service Center (India) P. Ltd. was carrying on low end services.

6.11. As regards Eclerx Services Ltd., ld. Standing Counsel submitted that the reliance placed by assessee on the Tribunal’s decision in the case of M/s Calibrated Healthcare Systems India Pvt. Ltd. (ITA no. 5271/Del/2012 - order dated 4-12-2014) is not correct. In this regard he submitted that in regard to Eclerx Services Ltd., as comparable, the Tribunal in para 8 observed as under:
iv) Eclerx Service Ltd.

8. We have heard the rival submissions and perused the relevant material on record. The Annual Report of this company for the Financial year 2006-07 does not throw any light on the nature of business carried on by it. However, the Annual Report for the Financial year 2007-08, a copy of which is available on the paper book, divulges the nature of business carried on by it. It is seen that this company is a Knowledge Process Outsourcing (KPO) company providing data analytics and data processing solution to its clients. It is a recognized expert in Financial services and Retail and Manufacture. It provides consulting services and also process outsourcing. The above details have been pointed out by the Id.AR from the Annual accounts of this company for the Financial year 2007- 08. Nothing has been brought on record by the Id. DR to show that the functions performed by this company in the relevant year were any different. When we consider the nature of assessee's business, which is primarily that of processing insurance claim and data entry, it becomes vivid that Eclerx Service Ltd. cannot be considered as functionally comparable with the assessee company. The same is therefore, directed to be excluded from the list of comparables.

6.12. Ld. Standing counsel submitted that for aforementioned reasons Tribunal held that Eclerx Services Ltd. is not comparable to M/s Calibrated Health Care Systems India Pvt. Ltd. In the present case assessee is dealing in financial services like Eclerx Services Ltd. and, therefore, rightly selected as comparable.

6.13. As regards the assessee’s reliance on Tribunal’s decision in the case of Hyundai Motors India Engineering P. Ltd. (ITA no. 1850/Hyd/2012 - order dated 21-02-2014) is concerned, ld. Standing Counsel submitted that the said company is also functionally different because this company was engaged in the business of providing support services in connection with the Computer Aided Engineering (in short “CAE”). Computer Aided Design (in short CAD”). This company was involved in providing support services in connection of modeling and iterative simulation. It received the basic design from its group company.

6.14. As regards Infosys BPO and Wipro BPO, ld. standing Counsel pointed out that no objection was taken before TPO. Objection was taken before DRP. There is no dispute about functional similarity and only objection is with respect to turn over of the assessee. As regards assessee’s reliance on the decision of the Tribunal in the case of Aginity India Technologies Pvt. Ltd. (ITA no. 3856/Del/2010) and that of Hon’ble Delhi High court in CIT Vs. Agnity India Technologies Pvt. Ltd. (2013) 219 Taxman 26 (Delhi), he submitted that the decision of Hon’ble Delhi High court in the case of Agnity India Technologies Pvt. Ltd. was not dealing with Infosys BPO but dealt only with software development services segment. He pointed out that Agnity Technologies Ltd. carries on following functions: -software service development

- BPO operation through Infosys BPO.
- KPO operation
- LPO operation
6.15. He further referred to Agnity Technologies Ltd. decision and pointed out that Tribunal had not discussed the Infosys BPO.

7. Ld. counsel for the assessee in the rejoinder submitted that broad comparability is to be seen. He pointed out that the Coral Hub was TPO’s comparable and not of assessee. Therefore, it cannot be argued at this stage that the functional profile of the same was not available. He pointed out that business model of coral hub is different and, therefore, in the case M/s Techbooks International Pvt. Ltd., it was rejected as comparable.

7.1. As regards Infysys BPO and Calibrated Healthcare Systems India Pvt. Ltd. are concerned ld. counsel pointed out that the decision of Hon’ble Delhi High court is squarely applicable because assessee is a captive service provider and R&D expenditure had been incurred. It has no intangibles. It is a risk mitigated company and has very small turn over.

7.3. The asessee is providing financial advisory services, so canot be compared with ITE and ITES.
7.4. As regards the Eclerx Service Ltd ld. counsel referred to page 373 of the TP study report of assessee to demonstrate that ld. Standing Counsel is referring to the group structure and not to asessee. He submitted that assessee is not in financial advisory service and is only in IT enabled service and BPO service.

7.8. In this regard he referred to page 376 of the PB to demonstrate that assessee is carrying on following operations:

- Tagging
- Association of Supplements
- Association of Supplements
- Categorization of Supplements
- Level O- Tagging of Average Annual Return Bar Chart
- Level 10- Tagging of $ 10,000 Line Chart
- Tagging the Data related to 529 plans viz. Plan Documents, Plan performance and NASD
- Creation of Envelope for CUSIPs of MF and VA
- Updation of PNet Database
- Processing of MSRB
- Processing of BroadRidge pdf’s CUISP CD update
- NASDAQ ticker Update
- Specific Chem Requests - Canadian Mutual funds
- And various reports from US office.

7.9. Ld. counsel further submitted that the distinction between BPO and KPO has been amplified in the Safe Harbour Rules from which it is evident that assessee was providing only BPO service to the group. He pointed out that assessee is not KPO. The assessee’s profile is completely different from KPO. Ld. Standing counsel submitted that safe harbor rules were not applicable in the assessment year under consideration.

8. We have considered the rival submissions and perused the record of the case. Keeping in view the foregoing discussion, the short controversy before us is now confined to inclusion of following four companies, being included in the list of comparables by TPO, whether justified in the facts and circumstances of the case or not.

(i) Coral Hub (Vishal Information Technologies Ltd.);
(ii) Eclerx Services Ltd.
(iii) Infosys BPO Ltd.
(iv) Wipro Ltd. (segmental)

8.1. Before we embark upon to consider different comparables, it is necessary to first examine the submission of ld. Standing Counsel regarding nature of services rendered by assessee. The main contention of ld. Standing counsel is that assessee was imparting high end knowledge service which come within the ambit of KPO and not mere BPO. He has also elucidated a distinction between BPO and KPO as we have noticed in the detailed arguments advanced by ld. Standing counsel. If we examine the services imparted by assessee on the touch stone of the distinction highlighted by the ld. Standing counsel, we find considerable substance in his submissions. Admittedly assessee was engaged in the service of online financial services, which included strategic advisory services, industry and operation expertise, compliance focus services, web marketing services, electronic commerce knowledge services, and intelligence and best practice services. These services were provide to New River US, AE of assessee. All these services which the assessee was imparting, required special knowledge and could not be imparted in a routine manner. The employee actually undertaking these services was required to analyse various datas by employing his special knowledge and then only it could provide its AE with necessary support. It cannot be denied that these were high end services, requiring strategic decision making before arriving at final conclusion. We, therefore, are not inclined to accept the assessee’s submissions that it was mere a BPO. The various decisions relied upon by ld. counsel for the assessee are primarily with reference to BPO and not KPO. The distinction elucidated in Safer Harbour Rules is also in same lines.

8.2. Now we proceed to examine the impugned companies included as comparables by TPO.

8.3. Coral Hub (Vishal Information Technologies Ltd.) : The annual report of this company is contained at page 476 to 525 of the PB. However, the actual operations carried out by assessee have not been specified. The assessee’s main contention is that this company was outsourcing a considerable portion of their business as is evident from the outsourcing cost to total cost which was 85.58% as noted earlier. Therefore, the business model of this company cannot be compared with the business model of assessee where salary cost was 54.67% of the total cost. When the business operations are out sourced, the profit margins are bound to increase substantially as compared to a business which is carried on through employees. Therefore, this company cannot be included in the list of comparables, though it might be carrying on the similar functions which asesssee was carrying on. The functional profile no doubt is one of the major criteria but not the sole criteria for deciding whether the said company can be included in the list of comparables or not. The assets and risk profile also has to be taken into consideration. This company was selected by TPO and, therefore, the submissions of ld. Standing Counsel on the ground of functional profile cannot be accepted. Moreover, we note that ld. Counsel has pointed out that data entry charges were 84.5% of total expenditure and, therefore, this cannot be compared to assessee, which was primarily imparting high end services. We, accordingly, direct for exclusion of this company from the list of comparables.

8.4. Eclerx Service Ltd.: Ld. counsel for the assessee has, inter alia, relied on the decision of Tribunal in the case of M/s Calibrated Healthcare Systems India Pvt. Ltd. (supra). In this decision we note that the Tribunal has observed that this company was a knowledge process outsourcing KPO company, providing data analytic and data processing solutions to its clients. It is further observed that it is a recognized expertise in financial services and retail manufacturing and provide consultancy services and also process outsourcing. This company was rejected by the Tribunal observing that the nature of asessee’s business viz. M/s Calibrated Healthcare Systems India Pvt. Ltd. (supra) was in processing insurance claim and data entry. Therefore, this decision, in our opinion, is of no help to assessee. In the present case all the functions are carried out by assessee for its AEs and, there is no doubt it was a captive service provider. However, the important aspect which is to be considered is as to what functions were being performed by assessee. If assessee was merely providing data to its AE without any analysis and performing its functions only in a mechanical manner, then no doubt it would be comparable to BPO but when the results provided to AE are after detailed analysis after employing skills of highest standards, then it would come within the ambit of BPO. Therefore, merely on the ground that assessee is a captive service provider, it cannot be said that this company was functionally not comparable. Ld. counsel has pointed out that extraordinary events of acquisition had occurred. However, in this year no such extraordinary events took place. We, therefore, are not inclined to accept the assessee’s contention on this count and uphold the findings of DRP on this count.

8.5. As far as Infosys BPO and Wipro BPO are concerned, ld. Standing Counsel submitted that the decision of Hon’ble Delhi High Court in the case of Aginity India Technologies Pvt. Ltd. (supra), deals primarily with software development services. Be that as it may, we are in agreement with ld. counsel for the assessee that keeping in view the huge turnover, economies of scale, brand value and other factors pointed out by ld. counsel in his submissions and also keeping in view the decision of Hon’ble Delhi High Court in the case of Aginity India Technologies Pvt. Ltd. (supra) these two companies cannot be included in the list of comparables because the assessee’s turn over was only Rs. 11 crores.

8.6. Ld. Standing Counsel has pointed out that in Aginity India Technologies Pvt. Ltd. (supra), only software development services have been considered, but we find that in the case of Aginity India Technologies Pvt. Ltd. (supra), the Tribunal, vide ITA no. 3856/Del/2010, contained at Annexure ‘H’ in the case law paper book, filed by assessee, had considered only the profile of Infosys Technologies Ltd. In para 3.3 of its order, the Tribunal has observed as under:

For the sake of ready reference, the case of the ld. counsel for excluding the case of Infosys Technologies Lted. Is shown in tabular form as under:-

8.7. We, therefore, are not inclined to accept the submissions advanced by ld. Standing Counsel that Tribunal did not discuss Infosys BPO and was confined only to software service development.
8.8. Accordingly, we direct the AO to exclude following three companies from the list of comparables.

(i) Coral Hub (Vishal Information Technologies Ltd.)
(ii) Infosys BPO
(iii) Wipro BPO

9. The assessee has taken one more ground regarding working capital adjustment, which had been denied to the assessee on the ground that there are no means to ascertain the working capital deployed by the comparables throughout the year. The reasoning given by ld. DRP is that capital working adjustment should be computed on the basis of daily average of working capital deployed by the assessee and each of the comparables respectively. We are not inclined to accept this reasoning of revenue authorities because the opening working capital and closing working capital is deciding factor for determining the working capital deployed by any organization. We find that in case of United Health Care Information Services Pvt. Ltd. (supra), the Tribunal in para 13.2 of its order has observed as under:

13.2. Having heard the rival submissions and perused the relevant material on record, it is manifest that the working capital adjustment is required with reference to stock, trade receivable and trade payables. By carrying the high trade receivables, a company allows its customers a relatively longer period to pay their accounts, which results into higher interest cost and lower profit. By carrying high trade payables, a company benefits from a relatively longer period available to it for paying back its suppliers, which results into its lower interest cost and higher profit. Similarly, high stock. means blockage of funds and the resultant lower profit. These three ingredients directly impact the working •capital and resultant profit of comparables vis-a-vis the assessee. A working capital adjustment is required to be effected for bringing the comparables and the assessee at the same pedestal. The ld. DRP upheld the denial of such adjustment by noticing that there were no means to ascertain the working capital deployed by the comparables throughout the year on daily basis. If the contention of the ld. DRP is taken to a logical conclusion, then there can never be a working capital adjustment, because in no case, the daily figures of comparables would come to the fore. Since, the authorities below have denied working capital adjustment to the assessee on flimsy ground, we vacate their action and hold in principle that the grant of working capital adjustment, if otherwise available, cannot be jeopardized. However, as regards the quantum of working capital adjustment, we direct the AO/TPO to vet the correctness of the amount of working capital adjustment claimed by the assessee and then decide its allowability as per law. We are in respectful agreement with the above observations.

10. In view of above discussion, we direct the ld. TPO to allow working capital adjustment while determining the profit margins of comparables.

11. In the result, assessee’s appeal is partly allowed.

The order pronounced in the open court on 27/03/2015..