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2014 (12) TMI 134 - AT - Income TaxTransfer Pricing Adjustment - International transactions with Virtusa, U.K - software development services rendered to its overseas associated enterprises - Held that:- CIT(A) cannot be blamed for having dismissed assessee’s ground on TP adjustment - the MAP resolution, which is under the Indo-US DTAA is in respect of international transactions with Virtusa, USA involving operation cost attributable to US entity of ₹ 78,30,10,895 out of the total operating cost of ₹ 84,32,16,557, which works out to 92.86% - MAP resolution is in respect of 92.86% of the operating cost which relate to transactions with Virtusa, USA, thereby giving credence to the fact that balance 7.14% of the operating cost relates to international transaction with other entities i.e. Virtusa, UK - assessee also filed a petition u/s 154 of the Act before the CIT(A) seeking rectification of the order which is still pending - the matter needs to be examined by CIT(A) on the issue of TP adjustment of ₹ 63,91,764, which as claimed by assessee, relates to transactions with Virtusa, UK – thus, the matter is remitted back to the CIT(A) for fresh consideration – Decided in favour of assessee. Computation of export turnover - Exclusion of communication expenses and insurance charges – Held that:- Following the decision in CIT Vs. Gem Plus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] wherein it was held that communication expenses and insurance charges have to be reduced both from the export turnover as well as total turnover while computing deduction u/s 10A of the Act – thus, the order of the CIT(A) is upheld – Decided against revenue. Treatment of disallowance u/s 40(a)(ia) and 43B – Loss on sale of fixed assets, provision for gratuity – Held that:- As decided in assessee’s own case for the earlier assessment year, wherein it has been held that disallowances made u/s 40(a)(ia) and 43B, since, enhances the profit of the assessee, have to be treated as part of the eligible business profits for computation of deduction u/s 10A – the order of the CIT(A) is upheld – Decided against revenue.
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