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2015 (7) TMI 251 - AT - Income TaxTransfer pricing adjustment - whether foreign exchange fluctuation should be considered as operating item while computing operating profit? - Held that:- The issue is no longer res-integra and stands decided in the case of M/s. SSP India Pvt. Ltd. 2015 (7) TMI 214 - ITAT DELHI ] wherein held that foreign exchange gain/loss should be treated as as an operating item. Rejection of M/s. B2B Software Technologies Limited and M/s. Cressanda Solutions Ltd. as comparables by adopting the filter of the sales turnover less than 5 crore - Held that:- No justification for the TPO/DRP to adopt ₹ 5 crore as the threshold turnover for the purpose of a selection of comparable when the assessee which has been adopted as a tested party has a turnover of ₹ 12.50 crores. Once, there is no dispute that two companies selected by the company though having turnover less than 5 crores are functionally comparable with the assessee, the basis adopted to reject the same is not tenable. However, from the order of TPO, it is evident that M/s. B2B Software Technologies Ltd. was also excluded on the ground that it had also failed export filter which filter has not been challenged before us and has been accepted by the taxpayer. Thus, having regard to the above, we direct the inclusion of M/s. Cressanda Solutions Ltd. as a comparable for the purpose of determining the arm‟s length price. - Decided partly in favour of assessee. Tata Elxsi Limited erroneously considered in the final set of comparable companies - Held that:- As relying on case of Adaptech India (P) Ltd. vs. ITO [2014 (12) TMI 50 - ITAT HYDERABAD] Tata Elxsi is engaged in development of niche product and development services, which is entirely different from the assessee company. We agree with the contention of the learned AR that the nature of product developed and services provided by this company are different from the assessee.Even the segmental details for revenue sales have not been provided by the TPO so as to consider it as a comparable party for comparing the profit ratio from product and services. Thus, on these facts, we are unable to treat this company fit for comparability analysis for determining the arms length price for the assessee, hence, should be excluded from the list of comparable parties - Decided in favour of assessee. Rejection of M/s. CG VAK Software & Exports Limited from final set of comparables as not passing the filter of employee cost to total cost less than 25%. - Held that:- As relying on case of Kenexa Technologies Pvt. Ltd. vs. DCIT [2014 (11) TMI 587 - ITAT HYDERABAD ] we set aside the said issue of comparables with M/s. CG VAK Software & Exports Limited to the TPO for correct application of employee cost filter. - Decided in favour of assessee for statistical purposes.
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