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2016 (10) TMI 1286 - ITAT BANGALOREDeduction u/s 10A - direction of Hon’ble DRP to TPO/AO to reduce the telecommunication expenditure and the travelling expenditure incurred in connection with delivery of the software from both export turnover as well as total turnover - HELD THAT:- As decided in the case of Tata Elxsi [2011 (8) TMI 782 - KARNATAKA HIGH COURT] once item is included in the export turnover, it should also be included in the total turnover. Exclude the travelling expenditure and telephone expenses incurred in connection with the software products from both export turnover as well as total turnover. This direction is in consonance with the law laid down by the Hon’ble Jurisdictional High Court in the case of CIT Vs. Tata Elxsi Ltd. [Supra] and therefore we do not find any reason to interfere with the findings of the learned CIT. Accordingly, we dismiss the grounds of appeal filed by the revenue. Advances received from AEs as a part of payables for the purpose of computing the working capital adjustment - HELD THAT:- There is no dispute that the adjustment for working capital be granted. But the only issue is whether the advance received from AE should be considered as trade payable and be considered for working capital adjustment. The advance received from AE par takes the character of trade payables which is to be adjusted against the future invoice. As a result of receipt of this advance money the necessity for borrowings from outside is reduced to that extent thereby reducing the cost of the borrowings. Thus it has a direct bearing on the profitability of the concern. Therefore the trade payable should be considered while computing the working capital adjustment. Thus the grounds of appeal filed by the revenue are dismissed. TP Adjustment - comparable selection - HELD THAT:- The assessee-company is engaged in providing software development services only to its AEs. Being a captive service centre providing contact services to its AEs, assumes less than normal risks and all the significant business and entrepreneurial risks are borne by the overseas affiliates , thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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