Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (1) TMI 1431 - ITAT BANGALORETransfer Pricing adjustments - comparability of the companies selected by the Transfer Pricing Officer (TPO) - Related Party Transactions (RPT) - HELD THAT:- If the comparables of international transactions are easily available, then, this tolerance of RPT should be restricted to minimum. There is no specified tolerance range in the Act or Rules under the Transfer Pricing provisions, however, in due course of discussion and adjudication of this issue in a series of decisions of this Tribunal, commonly accepted tolerance range of 5% to 25% of the total revenue from RPT has been considered as reasonable depending upon the facts and circumstances of each case. In the case on hand, the availability of the comparables is abundant in number as the assessee selected 44 comparables whereas the TPO selected 20 comparables by applying the filter of 25% of revenue from related parties. Therefore, in this case, good number of comparables are available and there is no difficulty in searching the comparables. Accordingly, in order to determine the ALP by considering the comparable uncontrolled transactions, it should be kept in mind that the uncontrolled transactions should be least influenced by the RPT. Assessee is purely a software development service provider to its parent company thus companies functionally dissimilar with that of assessee need to be deselected from final list. Deduction under Section 10A - not allowing the deduction of telecommunication and conveyance charges incurred in foreign exchange outside India while computing the total turnover of the company - HELD THAT:- This issue is covered in favour of the assessee by the decision of the Hon'ble jurisdictional High Court of Karnataka in the case of CIT V Tata Elxsi Ltd & Others [2011 (8) TMI 782 - KARNATAKA HIGH COURT] wherein it has been held that while computing the exemption u/s 10A, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded from the total turnover in the denominator. Not allowing deduction under Section 10A of the Act before set off of brought forward business losses - HELD THAT:- By virtue of the amendment and substitution of provisions of sec.10A and 10B, the incentive u/s 10A and 10B was no longer in the nature of exemption but it is in the nature of deduction. Accordingly by following the latest judgment of the Hon'ble jurisdictional High Court based on the substituted/amended provisions of sec.10A/10B which are applicable in the case of the assessee as well as the decision of the Tribunal in case of Biocon [2014 (12) TMI 838 - ITAT BANGALORE] , we decide this issue in favour of the assessee and direct the AO to allow deduction u/s 10A without setting off the domestic losses.
|