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2018 (12) TMI 679 - AT - Income TaxUpward adjustment u/s 92C - Comparable selection - Held that:- Exclusion of CGAAVK Software & Export Limited is concerned, it has been rejected as consistently loss making concern which is clearly incorrect, because once foreign exchange gains are to be included as operating income – which is what ought to be done, the figures at page 33 of CIT(A)’s order itself show profitability in the financial year 2008- 09, 2010-11 and 2012-13. In our considered view, therefore, CGA-AVK Software & Export Limited was wrongly excluded. We direct the Assessing Officer to include the same in the list of comparables. As regards the question as to whether foreign exchange gains are to be included in operating profits or net, the issue is settled in favour of the assessee by a co-ordinate bench decision in the case of ITO vs. EDAG Engineers & Design India Limited [2015 (3) TMI 235 - ITAT DELHI] - We accept the plea, and remit the matter to the file of the Assessing Officer to verify whether, upon the above directions being implemented, margin will be less than 5%. If so, the entire ALP addition will stand deleted. In any other case, the ALP adjustment will stand modified suitably. Addition u/s.36(1)(va) r.w.s. 2(24(x) towards late payment of employees’ contribution to PF & ESIC - Held that:- while any delayed deposit of PF/ESI is to be disallowed, in terms of case of Gujarat State Road Transport Corporation (2014 (1) TMI 502 - GUJARAT HIGH COURT), the question as to whether there is a delay or not may be decided by the Assessing Officer in the light of above observations by the coordinate bench. The assessee will get relief, if found admissible, on that basis. Disallowance under section 14A - Held that:- Only elementary that for the purpose of computing administrative expenses to be disallowed under rule 14A r.w.r. 8D, only such investments are to be taken into account as yield tax exempt income. The 0.5% of investments is to be treated as inadmissible administrative expenses under rule 8D must therefore be computed with respect to equity funds Mutual Funds only. The plea of the assessee is thus indeed well taken and meets our approval. We remit this issue also to the file of the Assessing Officer for recomputation of disallowance under section 14A r.w.r. 8D in the light of above observations.
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