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2019 (10) TMI 1286 - AT - Income TaxTP Adjustment - comparability - HELD THAT:- Companies functionally comparable with ITES only need to be included in final list of comparability. TCS E Service Ltd., should be excluded from the list of comparable companies. Whether foreign exchange fluctuation gain or loss should be considered as part of the operating profit while computing the profit margin of the assessee as well as the comparable companies? - main reason why the DRP considered foreign exchange gain should not be treated as a part of the operating profit was due to the fact that the assessee in the preceding Assessment year did not consider foreign exchange loss as operating in nature - HELD THAT:- We are of the view that the foreign exchange gain has to be treated as part of the operating profit while computing the profit margin of the assessee as well of the comparable companies. The TPO is directed to compute the ALP in the light of the directions given above, after affording opportunity of being heard to the assessee. All other issues arising on account of TP adjustments were not argued and therefore treated as not pressed for adjudication. Deduction u/s.43B - employees’ contribution under the Employees’ State Insurance Act, 1948, on the ground that the same were paid beyond the due date as per the relevant law relating to employees’ state insurance even though the said contributions were remitted on or before the due date for filing return of income under section 139(1) - HELD THAT:- It is not in dispute before us that it has been held in the case of CIT Vs. Spectrum Consultants India (P) Ltd. [2014 (2) TMI 127 - KARNATAKA HIGH COURT] that employees’ contribution if it is paid on or before the due date prescribed under section 139(1) of the Act should be allowed as a deduction. In view of the above, we direct the AO to allow the claim for deduction. Deduction u/s 10A - whether the Revenue authorities were justified in reducing the telecommunication charges from the export turnover without reducing the same from the total turnover while allowing deduction to the assessee? - HELD THAT:- It is not in dispute before us that the Hon’ble Karnataka High Court in the case of CIT Vs. Tata Elxsi Ltd., [2011 (8) TMI 782 - KARNATAKA HIGH COURT] has held that whatever is excluded from the export turnover should also be excluded from the total turnover while computing deduction under section 10AA of the Act. This view of the Hon’ble Karnataka High Court has been upheld in the case of CIT Vs. HCL Technologies Ltd., . [2018 (5) TMI 357 - SUPREME COURT]. We hold that telecommunication charges should be excluded both from the export turnover as well as from the total turnover and deduction under section 10AA computed. Short-grant of credit of taxes deducted at source - HELD THAT:- DRP has in its direction directed the AO to allow credit as per law. In the order giving effect passed by the AO, after the order of the DRP, the AO did not give credit for taxes deducted at source. We are of the view that it would be just appropriate to direct the AO to consider the grievance in this regard and allow credit to TDS in accordance with law.
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