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2018 (9) TMI 424 - AT - Income TaxTransfer pricing adjustment - TPO rejected the comparable selected by the assessee in its TP study - Held that:- Functional dissimilarity between assessee-company and Informed Tech India Ltd. alone was the ground taken before the TPO, when he sought to include Informed Tech India Ltd. as a comparable company. We also notice from the objections raised before the DRP that there was only a broad contention raised against the inclusion of Informed Tech India Ltd. as a comparable company. Since Informed Tech India Ltd. prima facie does not satisfy the filter adopted by the TPO himself, in the interest of justice and equity, we are of the view that the matter is to be re-examined by the TPO. The assessee shall raise all the contentions before the TPO and shall place necessary evidence to prove its case that Informed Tech India Ltd. should not be adopted as a comparable company. Hence Ground No. 7.1 of the assessee is allowed for statistical purposes. Deduction u/s 10B - Held that:- If section 10B is denied for the reason that units are not having necessary approval from the appropriate authority, the authorities are duty bound to consider the alternative claim of deduction u/s 10A of the I.T.Act and grant the same, if the conditions are satisfied as prescribed u/s 10A of the I.T.Act. The alternative claim of the assessee that it should be granted deduction u/s 10A was not considered by the Assessing Officer nor the DRP in its directions. Therefore, we deem it appropriate to remit the issue to the Assessing Officer for fresh consideration. The Assessing Officer shall follow the dictum laid down by the above mentioned judicial pronouncements and shall grant deduction u/s 10A provided the conditions are satisfied by the assessee’s unit as prescribed u/s 10A. Operating profit margin of the assessee should also include the premium on forward exchange contract - Held that:- The Tribunal in the case of Ambattur Clothing Ltd. v. JCIT (2016 (1) TMI 133 - ITAT CHENNAI) had held that when premium on forward exchange contract is on account of proximity with the export turnover, the same should be taken as part of the operating profit margin. Since the DRP has not considered the specific plea of the assessee, in the interest of justice and equity, the matter needs to be considered by the TPO. The assessee is directed to place necessary evidence before the TPO to claim that premium on forward exchange contract is earned in the normal course of the business to hedge against fluctuations in foreign currency exchange rate and gains from such contract has to be considered while computing the PLI in the international transaction with the AE.
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