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2015 (4) TMI 1359 - AT - Income TaxTP Adjustment - Foreign Exchange Gain as a part of Operating Revenue - contention of the assessee that the TPO erred in not treating the foreign exchange fluctuation as part of the operating profits and adding the same to the income from IT enabled services - HELD THAT:- Foreign exchange fluctuation has arisen as a result of the realization of the consideration for rendering software development services. It, therefore, arises or occurs in the normal course of business and hence there is no reason why it should be excluded from determining the operating revenue while computing the margin - we hold that the operating revenue of the assessee be computed by including the foreign exchange gain. Donation to be excluded from operating revenue while computing the margin of the assessee - As already expressed the view that those expenses incurred / incomes earned in the normal, course of business are to be included for determining the operating revenue while computing the margins. By the same analogy, those expenses which are not part of normal business activities should get excluded for determining the operating revenue while computing the margin. As donation is not in the nature of the normal business activity of the assessee, we hold and direct that donation requires to be excluded from operating revenue, while computing the margin. Comparable selection - Accentia Technologies Ltd. be excluded from the list of comparables in view of the occurrence of extra-ordinary event of the amalgamation which would impact financial results in the period under consideration thereby rendering it not comparable to the assessee in the case on hand. eClerx Services Ltd. is to be excluded from the final list of comparables since it is engaged in providing high end services involving specialized knowledge and domain expertise rendering it functionally different from an IT enabled service company, as in the assessee in the case on hand. Cosmic Global Ltd. was excluded because the only comparable segment, i.e. Accounts BPO segment has low volume of sales as compared to the entity level. Whether this finding of fact is also applicable to the assessee case, requires fresh examination as it has not been examined by the TPO and neither has this issue been agitated by the assessee either before the authorities below or before us in the present appeal. In this view of the matter, we deem it appropriate to remand this issue to the file of the TPO to consider the comparability of this company afresh in the light of the judicial pronouncements cited and the principles and observations laid out therein.
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