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2015 (4) TMI 56 - AT - Income TaxTransfer pricing adjustment - adjustment to the Arms’ Length Price (“ALP”) to an international transaction - Held that:- Turnover filter is an important criteria in choosing the comparables. The assessee’s turnover is ₹ 47,46,66,638. It would therefore fall within the category of companies in the range of turnover between 1 crore and 200 crores. Thus, companies having turnover of more than 200 crores have to be eliminated from the list of comparables. KALS Information Systems Ltd., Accel Transmatic Ltd. be excluded from the list of 26 comparable arrived at by the TPO. Tata Elxsi Limited predominantly engaged in product designing services and not purely software development services should also be excluded for the purpose of comparison while determining the ALP of the international transaction in question. For segmental margins in so far as it relates to providing software services by Megasoft alone should be taken for the purpose of comparison. Assessing Officer should confine the adjustment, qua the transactions by the assessee with its AE alone. To be more specific, the adjustment is to be made only to the transactions with the AE. Exclusion of expenses incurred on travel expenses in foreign currency and expenses incurred towards communication expenses from export turnover while computing deduction under section 10A n the ground that these expenses are incurred in rendering technical services rendered to clients outside India - Held that:- Taking into consideration the decision rendered by the Hon’ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT ] we are of the view that it would be just and appropriate to direct the Assessing Officer to exclude expenses incurred in foreign currency towards travelling and expenses incurred towards communication both from export turnover and total turnover, as has been prayed for by the assessee. - Decided in favour of assessee Non-grant of set-off of brought forward business loss and unabsorbed depreciation against the alleged income - DRP directing the AO to set-off of brought forward business loss and unabsorbed depreciation before computing the deduction under Section 10A - Held that:- The carried forward business loss of Sec.10A unit cannot be set off or carried forward during the tax holiday period against any income.The carried forward business loss to the extent it pertains to non- 10A unit can be set off against income of non-10A unit.Sec.10A is an exemption provision and therefore will not enter the computation of total income and therefore there is no question of any carried forward loss being set off against the profits eligible for deduction u/s.10A of the Act and the profit or loss of Sec.10A unit during the tax holiday period is quarantined and loss if any is carried forward to the assessment years immediately following the last of the assessment years for which the Assessee is entitled to claim exemption u/s.10A, for being set off in accordance with law as if it were any other loss to be dealt with in accordance with Sec.70 to 72 and 32(2) of the Act.D RP’s order/directions on this issue based on a Tribunal decision rendered prior to the decision of the Hon’ble Karnataka High Court in the case of Yokogawa (2011 (8) TMI 845 - Karnataka High Court ) cannot be sustained. We direct the AO to decide the claim of the Assessee in the light of the legal position set out - Decided in favour of assessee for statistical purposes.
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