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2017 (9) TMI 1799 - AT - Income TaxTDS u/s 195 - payment towards software licenses treated by the AO as royalty for want of TDS - Disallowance u/s 40(a)(ia) - HELD THAT:- There is no dispute that the transaction in question regarding payment of purchase of software was completed in the F.Y. 2008-09 whereas the decision in the case of CIT Vs. Samsung Electronics Co. Ltd. (2011 (10) TMI 195 - KARNATAKA HIGH COURT) was passed on 15.10.2011 much later than the time of transaction carried out by the assessee. It is also not in dispute that this issue of considering the payment for purchase of software as royalty is a highly debatable issue and various High Courts have taken divergent views on this issue. Thus it is clear that the co-ordinate Bench of this Tribunal in M/S. AURIGENE DISCOVERY TECHNOLOGIES LTD. [2016 (11) TMI 1607 - ITAT BANGALORE] while deciding this issue has taken note of various decisions in favour of the assessee on the point that the payment for purchase of software does not fall in the definition of royalty. Respectfully following the decision of co-ordinate Bench of this Tribunal, we delete the disallowance made by the AO. Transfer Pricing Adjustment - allocation of the cost by the assessee between the AE and non-AE transaction - software development services as well as IT Enabled Services transactions - HELD THAT:- Action of the TPO in allocating the direct as well as indirect cost as alleged by the assessee in the ratio of turnover of each segment and transaction is not justified. Further the TPO has accepted the allocation of the cost by the assessee between the AE and non-AE transaction for the Assessment Years 2010-11 to 2012-13. We have gone through the respective orders of the TPO/A.O. and noted that the TPO has not distributed the allocation of cost made by the assessee for the subsequent Assessment Years - so far as the direct cost is concerned the same has to be allocated on actual basis instead of turnover basis. Accordingly, we set aside this issue to the record of the TPO/A.O. for limited purpose of proper verification and allocation of the cost in the light of the above observations as well as in the light of the subsequent orders of the TPO for the Assessment Years 2010-11 to 2012-13. Gain/loss arising due to Forex fluctuation on the receivable from the AE to be treated as operating revenue or cost as the case may be - HELD THAT:- This issue is no longer res integra as the Tribunal has been taking a consistent view that the gain or loss arising due to the foreign exchange fluctuation on the export receivables from AE, then the same is in the nature of operating revenue / operating cost and has to be part of the operating revenue/operating cost as the case may be. Further as a principle of consistency and parity, a similar treatment has to be given in the case of comparables. AR has relied upon the decision of the co-ordinate bench of this Tribunal in the case of M/s. Triology E-Business Software India Pvt. Ltd. Vs. DCIT [2013 (1) TMI 672 - ITAT BANGALORE]
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