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2018 (7) TMI 2257 - HC - Income TaxDeduction under section 10A - Whether Tribunal is correct in directing the assessing officer to exclude expenses incurred in foreign currency and other expenses that has been excluded from ETO, from the total turnover also and accordingly recomputed the deduction under section 10A? - HELD THAT:- As decided in HCL Technologies Ltd. [2018 (5) TMI 357 - SUPREME COURT] when the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise, any other interpretation makes the formula unworkable and absurd. Hence, we are satisfied that such deduction shall be allowed from the total turnover in same proportion as well” Comparable selection - HELD THAT:- We direct the TPO to include Akshay Software Technologies Ltd., (2) Maars Software International Ltd and (3) VJIL Consulting Ltd., for the reasons by the Assessee Negative working capital adjustment - HELD THAT:- No need for making any negative working capital adjustment when assessee does not carry any capital risk. In fact, TPO should have done necessary working capital adjustment to the profits of the selected comparables so as to make them comparable - See Adaptec (India) P. Ltd. [2015 (6) TMI 288 - ITAT HYDERABAD] Comparability economic adjustments - adjustments to be carried out in situations where there are differences between the tested parties and comparable - HELD THAT:- As upheld by the recent High Court ruling the case of Chryscapital Investment Advisors (India) Pvt. Ltd. [2015 (4) TMI 949 - DELHI HIGH COURT] wherein the Hon’ble Court has held that appropriate adjustments should be carried out in situations where there are differences between the tested parties and comparables and in case such differences perceptible in the comparables cannot be eliminated on account of adjustments or otherwise, then such comparables have to be rejected - thus direct the TPO to work out appropriate risk adjustment.” This Court in a recent judgment in Pr. Commissioner of Income Tax, Bangalore and Another Vs. M/s. Softbrands India P.Ltd. [2018 (6) TMI 1327 - KARNATAKA HIGH COURT] has held that in these type of cases, unless an ex-facie perversity in the findings of the learned Income Tax Appellate Tribunal is established by the appellant, the appeal at the instance of an assessee or the Revenue under Section 260-A of the Act is not maintainable.
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