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Indian Income Tax Tribunal extrapolates applicability of OECD TPG example on working-capital adjustment to include supplier/customer advancesJul-09-2021

The Indian State Income Tax Appellate Tribunal (ITAT) adjudicates on working-capital adjustment and comparables selection in respect of the manufacturing transactions of the Assessee (GL&V India Private Limited), which is engaged in the manufacture and designing of equipment used in the pulp and paper industry and water treatment for the municipal, power and Industrial sector, for Assessment Year 2013/14 (equivalent to Financial Year 2012/13). The First level Appellate Authority - Commissioner of Income Tax (Appeals) [CIT(A)] had directed the Transfer Pricing Officer (TPO) to adopt the method of working-capital adjustment as provided in the example given in Chapter III of the OECD TP Guidelines by also considering advances to suppliers and advances from customers, in the same way as trade receivables and trade payables.