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2015 (7) TMI 125 - ITAT DELHITransfer pricing adjustment - selection of comparable - Held that:- For M/s E-Infochips Bangalore Ltd. profit margin of such entity in the immediately preceding year(s) may also be taken into consideration and the FAR analysis in such cases may be reviewed to ensure that the potential comparable earning higher profit satisfies the comparability condition. Since this exercise has not been done either by the AO/TPO or the DRP in the present case, we are of the view that the matter should go back to the Assessing Officer/TPO for fresh consideration. See M/s Electronics Arts Games vs. ACIT [2015 (5) TMI 754 - ITAT HYDERABAD] INFOSYS LTD a captive unit of a comparable company which assumed only a limited risk, cannot be compared with a giant company in the area of development of software who assumes all types of risks leading to higher profits. The facts of the appellant are akin and therefore, do not warrant any different conclusion. The appellant is also captive service provider to its AE and as such, M/s. Infosys Ltd. is not a valid comparable with the appellant. M/S PERSISTENT SYSTEMS LTD should not be regarded as a comparable as relying on Agnity Technologies case [2010 (11) TMI 852 - ITAT DELHI] Treatment of foreign exchange fluctuation gain/loss as operating item - Held that:- As relying on Westfalia Separator India Pvt. Ltd. vs. ACIT [2015 (3) TMI 140 - ITAT DELHI] the forex gain or loss is the difference between the price at which an import or export transaction was recorded in the books of account on the basis of rate of foreign exchange then prevailing and the amount actually paid or received at the rate of foreign exchange prevailing at the time of actual payment or receipt. Since such forex loss or gain is a direct outcome of the purchase or sale transaction, it partakes of the same character as that of the transaction to which it relates. When we read the ratio of the case of Sutlej Cotton (1978 (9) TMI 1 - SUPREME Court) in juxtaposition to that of the Special Bench in case of Prakash I Shah (2008 (8) TMI 387 - ITAT BOMBAY-K ), there remains no doubt that forex gain or loss from a trading transaction is not only an item of revenue nature, but is, in fact, a part of the price of import or value of export transaction, as the case may be. Thus we direct the AO/TPO to treat the foreign exchange gain/loss as an operating item - Decided in favour of assessee.
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