Concur Technologies (India) Pvt. Ltd. Vs ACIT (ITAT Bangalore)
Big Giants Out, Small Captive Wins – Working-Capital Adjustment Must, Interest on Receivables Only If Denied – Cherry-Picking of Comparables Not Allowed
Assessee, a captive service provider engaged in software development (SWD), IT enabled (ITeS) & marketing support services (MSS) to its AEs, contested a TP adjustment of ₹12.67 crore & interest addition on delayed receivables. The AO/TPO benchmarked each segment separately, using high-turnover companies like Infosys, TCS, Wipro & Cybage Software as comparables, & disallowed working-capital adjustment.
Tribunal held that entities with massive turnover & brand value cannot be compared with a small captive unit having ₹23.9 crore turnover. Citing OECD & ICAI guidelines, the Bench directed exclusion of large companies such as Infosys, TCS, Wipro, Mindtree, L&T Infotech & Tata Elxsi. R Systems International Ltd. was ordered to be included, provided its financials can be reconstructed for FY 2020–21. The issue of Saatchi & Saatchi Pvt. Ltd. was remanded to verify compliance with the 25% RPT filter.
ITAT further ruled that working-capital adjustment is mandatory & , once granted, a separate interest adjustment on receivables cannot be made; if required, such interest must be computed using Euribor as the invoice currency was Euro.
