Case Law Details
Lam Research (India) Pvt. Ltd. Vs DCIT (ITAT Bangalore)
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 does not bear any risk and has no working capital contingencies. The Assessee has not incurred any expenses for meeting the working capital requirement. The Assessee is running the business without any working capital risk as compared to the comparables. The Assessee does not bear any market risk as the services are provided only to Tavant US. Therefore, requirement for adjustment of negative working capital does not arise.
We have considered the rival submissions. We find that in the case of Lam Research India (P.) Ltd. (supra) and Software AG Bangalore Technologies (P.) Ltd. (supra) passed by this Tribunal, it has been held that negative working capital adjustment shall not be made in case of a captive service provider as there is no risk and it is compensated on a total cost plus basis. We therefore direct Ld.TPO to compute the ALP in accordance with the directions contained in this order after affording assessee opportunity of being heard.
FULL TEXT OF THE ITAT JUDGEMENT
Present appeal has been filed by assessee against final assessment order dated 22/09/2017 passed by Ld.DCIT Circle 4 (1) (1), Bangalore for assessment year 2013-14 on following grounds of appeal:
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