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2017 (2) TMI 1383 - ITAT BANGALOREComputing the deduction u/s 10A - Held that:- This issue is covered in favour of the assessee by the judgment of Hon’ble Karnataka High Court rendered in the case of Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] wherein it was held that Total Turnover is sum total of Export Turnover and Domestic Turnover and therefore, if an amount is reduced from export turnover then total turnover also goes down by the same amount automatically. Not considering foreign exchange gain / loss as operating income / operating expense while calculating the net cost-plus margins of the Appellant and comparable companies, as per directions issued by the Ld. Panel - Held that:- It cannot be considered if it arises in respect of the turnover of an earlier year because we are concerned with the operating profit of the current year for working out assessee’s margin of profit to compare with the margin of profit of the comparables and since the related turnover is not included in the turnover taken in the denominator, if the Exchange Fluctuation Gain is not excluded from the numerator, it will result in absurd result. We therefore restore this matter to AO/TPO for a fresh decision with the direction that if the related turnover from which the Exchange Fluctuation Gain has arisen is the turnover of the current year then the Exchange Fluctuation Gain should be considered as operating profit of the current year for working out the percentage of profit of the assessee for current year to compare it with rate of profit of the comparables but if it is in respect of the turnover of an earlier year, then such Exchange Fluctuation Gain should be excluded from operating profit of the current year for working out the percentage of profit of the assessee for current year. Comparable selection - Held that:- Companies functionally dissimilar with that of assessee need to be deselected from final list. Exclusion on account of RPT filter confirmed.
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