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2014 (6) TMI 669 - AT - Income TaxTransfer pricing adjustments - determination of ALP - exclusion of interest income from the operating revenue - Held that:- since the international transaction under consideration is not that of financing, naturally, interest income and interest expenditure cannot be construed as the items of operating nature. - First the interest in the present circumstances is not in the nature of ‘Business income’ - The second reason for not approving this contention is that the question as to whether interest is ‘Business income’ or not is irrelevant when the point for determination is the amount of operating profit margin. Operating profit margin is obviously a part of the overall profit margin which is deduced by reducing non-operating expenses and non-operating incomes from the net profit. As the assessee is not in the financing activity with its AEs, but, rendering only mediatory and support services, we hold that interest earned from investing working capital service cannot first qualify as income from such international transactions and then at any rate it is not a operating income. This contention raised on behalf of the assessee is therefore, repelled. Deduction of administrative and other costs incurred in making these FDRs yielding interest income - Held that:- it would be just and fair to apply this logic in working out the amount of administrative and other costs incurred by the assessee in making FDRs on which the interest income was earned. That being the position, there would result the deductible amount of Rs.13.19 lac against the impugned order granting deduction of Rs. 5 lac. We, therefore, hold that operating expenses be reduced by this extent. Inclusion of the case of Samrat Clearing in the list of comparables - The only thing available was its Profit & Loss Account with sales/operating income at Rs. 9 lac. The ld. AR contended that the TPO himself excluded this case in the immediately succeeding year on the ground of low turnover. It was, therefore, prayed that this case be expelled from the list of comparables. - Held that:- there is no discussion in the order of the TPO about the comparability or otherwise of this case with the assessee. - matter remanded back to TPO/AO - decided partly in favor of assessee.
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