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2019 (12) TMI 78 - AT - Income TaxTP Adjustment - Comparable selection - HELD THAT:- Assessee is in the business of rendering Software Development Services (SWD services) and Information Technology Enabled Services (ITES) to its Associated Enterprise(AE) which is non-resident at cost plus 10% mark up. It is not in dispute that the transaction of rendering of SWD services and ITES to its AE were international transactions and in view of the provisions of sec. 92 of the Income Tax Act, 1961 (Act), income arising from such international transactions has to be determined having regard to Arms Length Price (ALP), thus companies functionally dissimilar with that of assessee need to be deselected from final list. Deduction under section 10A - CIT(A) appeal however held that whatever is excluded from export turnover should also be reduced from the total turnover while allowing deduction u/s.10A - HELD THAT:- The revenue is in appeal against the aforesaid direction of the CIT(A). It is not in dispute before us in the case of CIT Vs. Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] has held that whatever is excluded from the export turnover should also be excluded from the total turnover while computing deduction under section 10A of the Act. This view of the Hon’ble Karnataka High Court has been upheld by the Hon’ble Supreme Court in the case of CIT Vs. HCL Technologies Ltd. [2018 (5) TMI 357 - SUPREME COURT] . We hold that telecommunication charges should be excluded both from the export turnover as well as from the total turnover and deduction under section 10A computed accordingly.
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