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2018 (11) TMI 1743 - AT - Income TaxTP Adjustment - Comparable selection - segment of provision of software development services by the assessee to its associated enterprises - HELD THAT:- Exclusion of companies not functionally comparable to the concern assessee which was providing software development services to its associated enterprises. We direct the Assessing Officer/TPO to exclude five concerns i.e. Bodhtree Consulting Ltd., KALS Information Systems Ltd., FCS Software Solution Ltd., E-Infochip Ltd. and E-Zest Solutions Ltd. Disallowance of foreign travel expenses - HELD THAT:- The assessee has incurred similar expenditure in the preceding year also, wherein the Tribunal had held that beneficiaries of foreign travel were solely the employees of assessee and the visits were meant for business purpose of assessee, who was captive service provider to associated enterprises, hence the expenditure was allowed as business expenditure. The factual aspects of the issue raised are similar and in the nature of business carried on by the assessee, wherein it is providing services to its associated enterprises in all the divisions, then the expenditure incurred on foreign travel expenses on the employees of assessee concerned, are to be allowed as business expenditure. Computation of deduction under section 10B - Assessing Officer had set off all the losses of other units with profits of manufacturing unit prior to computing the deduction under section 10B of the Act - HELD THAT:- In M/S YOKOGAWA INDIA LTD. [2016 (12) TMI 881 - SUPREME COURT] has laid down that losses or unabsorbed depreciation is to be set off against profits of eligible unit after the deduction under section 10A of the Act has been allowed. Similar proposition has been laid down in M/S. VISHAY COMPONENTS INDIA PVT. LTD. VERSUS THE ADDL. COMMISSIONER OF INCOME TAX, RANGE – 7, PUNE AND VICA-VERSA [2015 (11) TMI 118 - ITAT PUNE] Since the issue is settled by the Hon'ble Supreme Court, then the deduction claimed under section 10B of the Act is to be allowed against profits of manufacturing unit before adjusting losses of other units or brought forward losses. We hold so. However, the Assessing Officer shall compute working and for this limited purpose, we remit the issue back to the file of Assessing Officer, after allowing deduction under section 10B of the Act, losses of other units shall be set off against balance profits in the hands of assessee and if available profits are there, then brought forward losses also shall be set off against profits of manufacturing unit. The assessee is directed to file working before the Assessing Officer in this regard, who shall re-compute balance income and balance losses, if any, to be carried forward in the hands of assessee.
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