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2013 (11) TMI 199 - AT - Income TaxDeduction u/s 10A - Exemption u/s 10A - Setting off of losses – Held that:- Following CIT v. Yokogawa India Ltd. [2011 (8) TMI 845 - Karnataka High Court] - The assessee was entitled to claim deduction u/s 10A of the Act for the STPI Unit - it was clear that the income of the section10A unit had to be excluded before arriving at the gross total income of the assessee - the income eligible for exemption under section 10A would not enter into computation as the same had to be deducted at source level. For the purpose of computation of relief u/s 10A of the Act, the foreign currency expenses have to be excluded not only from the export turnover but also to be reduced from the total turnover of the assessee – Explaining in CIT v. Tata Elxsi Ltd. & Others [2011 (8) TMI 782 - KARNATAKA HIGH COURT] - when the expenses were reduced from the export turnover while computing deduction u/s 10A of the Act, the same should also be reduced from the total turnover in order to maintain parity between the numerator and the denominator - The AO was, therefore, directed to exclude the foreign currency expenses from the export turnover and also reduce the same from the total turnover of the assessee while computing the deduction u/s 10A of the Act. Transfer Pricing Adjustment u/s 92C(3) - Software Research and Development - Transfer Pricing – Computation of Arm's Length Price - International transaction – Arm’s Length Price - Assessee provided software research & development support services to its Associated Enterprise - Remunerated on a 'cost plus' basis - assessee adopted the Transactional Net Margin Method TNMM - Comparable - Comparability of the comparable relied upon by the TPO – Turnover filter is an important criterion in choosing the comparables - Inappropriate computation of operating margins of comparables and that of the Assessee - Following Trilogy E-Business Software India (P.) Ltd. Versus Deputy Commissioner of Income-tax[2013 (1) TMI 672 - ITAT BANGALORE]- Circle 12(4). BangaloreTreating foreign exchange gain or loss and provision for bad debts as non-operating in nature and fringe benefit tax as part of operating cost - AO was directed to work out the ALP of the assessee in accordance with the direction and if found that the difference in the margin of the assessee and the comparables was beyond 5% band-with recognized in proviso to section 92C(2) of the Act, then adjustment was required to be made to the reported value of the assessee's transaction with its AE. PRE-SALES AND MARKETING SERVICES - Following Lenovo (India) (P.) Ltd. v. ACIT [2012 (5) TMI 283 - ITAT BANGALORE ] The similar transaction with the associated enterprises for the subsequent years had been considered by the TPO and had been accepted without any ALP adjustments - There had to be a continuity and uniformity in the approach of the Revenue towards an issue and particularly in the case of the same assessee - the adjustments have been made only for the relevant assessment year, whereas similar transactions have been accepted to be at ALP for the subsequent years even though the same method had been followed by the assessee - When the facts and circumstances are the exactly the same, the Revenue cannot be permitted to take a different approach in two different assessment years.
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