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2017 (4) TMI 1377 - AT - Income TaxTPA - comparable selection criteria - Held that:- Assessee is engaged in the business of providing software development services to its associated enterprise. It also renders software development services and sales and marketing support services to its associated enterprise. The services are provided on cost plus basis thus companies functionally dissimilar with that of assessee need to be deselected from final list. Uphold the directions of the DRP to allow working capital adjustment on similar principles/ method as it was computed for software development services. Direction for treating the foreign exchange loss as an operating in nature - Held that:- As considered the rival submissions and uphold the directions of the DRP to the extent of foreign exchange loss which arose out of the current year’s transactions alone as an operating in nature . Thus, we direct the AO/TPO to examine and allow foreign exchange loss which arose out of the current year transactions only. To this extent, the Revenue’s appeal is allowed. Deduction under section 10A - AO has reduced ₹ 32,54,872/- being telecommunication charges and ₹ 9,88,27,170/- being expenses incurred in foreign currency from the export turnover. However, he has not reduced them from the total turnover which reduced the deduction claim by ₹ 1,64,75,929/- - Held that:- On assessee’s objections, the DRP following the Jurisdictional High Court order in CIT v Tata Elxsi Ltd and others [2011 (8) TMI 782 - KARNATAKA HIGH COURT] directed the AO to exclude the above expenses from ‘Total Turnover’ also for computing the deduction u/s 10 A on which the Revenue is on appeal. We heard the rival submissions. Since the DRP applied the jurisdictional High Court’s decision which is on operation as on date, we uphold the order of the DRP.
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