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2016 (3) TMI 1384 - ITAT BANGALOREDeduction u/s 10A - exclusion of telecommunication expenses incurred in foreign currency from the export turnover as well as from total turnover - HELD THAT:- Issue decided in ACIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT]uniformity in the ingredients of both the numerator and the denominator of the formula, Section 10-A is a beneficial section. It is intended to provide incentives to promote exports. If the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. The reason being the total turnover includes export turnover - substantial question of law framed is answered in favour of the assessee and against the revenue. Negative working capital adjustment - HELD THAT:- No need for making any negative working capital adjustment when assessee does not carry any working capital risk. In fact, TPO should have done necessary working capital adjustment to the profits of the selected comparables so as to make them comparable to the assessee. In view of this, we direct the TPO not to make negative working capital adjustment. It is undisputed that the Assessee is also a captive service provider such as the Assessee in the case decided by the Adaptec (India) P. Ltd. [2015 (6) TMI 288 - ITAT HYDERABAD] and therefore making a negative working capital adjustment without appreciating the fact that the company does not bear any working capital risks, was not correct. There is no allegation in the case of the assessee that the assessee has used any borrowed fund for working capital or there is any risk of money lost in credit time provided to the customers. - Decided in favour of assessee.
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