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2017 (3) TMI 1787 - AT - Income TaxDeduction u/s 10A - computation of claim - HELD THAT:- Assessee invited our attention that this issue is squarely covered by the judgment of the Jurisdictional High Court in the case of Tata Elxsi [2011 (8) TMI 782 - KARNATAKA HIGH COURT] in which it has been held that once item is included in the export turnover, it should also be included in the total turnover. Following the judgment of the Jurisdictional High Court, we restore the issue to the file of the AO with the direction to readjudicate the deduction under section 10A of the Act in the light of judgment in the case of Tata Elxsi. Nature of expenditure - payment for club membership fee - revenue or capital expenditure - HELD THAT:- We find force in the contention of the assessee that since the assessee has obtained the club membership for commercial expediency; the same is to be allowed as business expenditure. We therefore find no infirmity in the order of the CIT(A). Accordingly, we confirm the same. Foreign exchange fluctuation in operating margin - whether the foreign exchange fluctuation was included as operating margin in the case of comparables ? - HELD THAT:- We are of the view that similar treatment should be given in the case of tested parties and the comparables. If the foreign exchange fluctuation is included in the case of comparables, it should also be included in the case of tested parties. Therefore, we are of the view that these facts should be verified by the AO. Accordingly, we set aside the order of the CIT(A) and restore the matter to the file of the AO to verify whether foreign exchange fluctuation was included in the operating margin of the comparables. If the assessee succeeds in establishing that foreign exchange fluctuation was included in the operating margin of the comparables, the same may be included in the case of tested parties also. TP Adjustment - comparable selection - HELD THAT:- Assessee provides information technology services and IT enabled services to its Associated Enterprises thus companies functionally dissimilar with that of assessee need to be deselected from final list and also who fails RPT filter approved .
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