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2021 (10) TMI 1408 - HC - Income TaxComputation of operating income/loss - Tribunal directing the assessing authority to include the foreign exchange fluctuation loss or gain as part of the operating income/loss - HELD THAT:- This issue is covered by the decision of this Court in Pr. Commissioner of Income Tax and Another V/s. M/s. NXP Semi Conductors India Pvt. Ltd. [2018 (7) TMI 2311 - KARNATAKA HIGH COURT] where one of us Hon’ble SSJ was the member, considering the identical question, placing reliance on the Principal Commissioner of Income Tax and Another V/s. M/s. Softbrands India Pvt. Ltd. [2018 (6) TMI 1327 - KARNATAKA HIGH COURT] has held that no substantial question of law arises for consideration. Accordingly, appeal filed by the Revenue has been dismissed. TP Adjustment - Comparable selection - exclude both M/s. Bodhtree Consulting Ltd and Infosys Ltd., as comparables by holding that the said companies are functionally different from the assessee – company - HELD THAT:- This issue is covered by the decision of this Court in Principal Commissioner of Income-tax, Bangalore V/s. Softbrands India [P] Ltd. [2018 (6) TMI 1327 - KARNATAKA HIGH COURT] as held this Court cannot be expected to undertake the exercise of comparison of the comparables itself which is essentially a fact finding exercise. Neither the sufficient Data nor factual informations nor any technical expertise is available with this Court to undertake any such fact finding exercise in the said appeals under Section 260-A of the Act. Allowability of market loss - Whether Tribunal erroneously held the market loss is neither speculative nor contingent in nature when the said market loss is not allowable as per CBDT Instruction No.3/2010 dated 20.03.2010 as actual losses are allowable as non-speculative only if the transactions qualify as eligible derivative transactions under clause [d] of proviso to section 43 [5] ? - HELD THAT:- This issue is covered by the Co-ordinate Bench of this Court in the case of M/s. Quest Global Engineering Services Pvt. Ltd. [2021 (3) TMI 434 - KARNATAKA HIGH COURT] as held loss sustained by the assessee due to fluctuation in foreign exchange while implementing export contract is incidental to assessee's course of business, therefore, such a loss is not a speculative loss but a business loss. The aforesaid findings have not been demonstrated to be perverse. substantial questions answered against the revenue and in favour of the assessee. Claim for loss on account of forward contracts in Forex derivatives - HELD THAT:- As substantial question of law No.3 being answered in favour of the assessee, this realized gain/loss requires to be answered in favour of the assessee and against the Revenue. Accordingly, this substantial question of law is answered in favour of the assessee and against the Revenue. Exemption u/s 10A - whether is an exemption section although sections 10A and 10B as substituted by Finance ct, 2000, provide for ‘deduction’ of the profits and gains derived from the export of articles, even though it is placed in Chapter III, section 10A begins with sentence ‘subject to the provisions of this section, the deduction ’?” - HELD THAT:- This question is covered by the decision of Commissioner of Income-tax V/s. Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT] from a reading of the relevant provisions of Section 10A it is more than clear to us that the deductions contemplated therein is qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. The deductions under Section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. The somewhat discordant use of the expression “total income of the assessee” in Section 10A has already been dealt with earlier and in the overall scenario unfolded by the provisions of Section 10A the aforesaid discord can be reconciled by understanding the expression “total income of the assessee” in Section 10A as ‘total income of the undertaking’. Though Section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV of the Act and not at the stage of computation of the total income under Chapter VI. All the appeals shall stand disposed of accordingly. Decided in favour of the assessee.
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