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2020 (11) TMI 411 - AT - Income TaxTransfer pricing adjustment - Provision of software development services only - Comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected from final list. We direct the AO/TPO to compute the ALP of the international transaction in accordance with the directions given above, after affording adequate opportunity of being heard to the assessee. We hold that the assessee cannot be precluded from challenging the inclusion of comparable companies, which had been accepted earlier by the assessee. Deduction u/s 10A - whether the expenses incurred in foreign currency are required to be reduced from export turnover while computing deduction u/s 10A? - HELD THAT:- In the case of Tata Elxsi Ltd, [2020 (3) TMI 1082 - KARNATAKA HIGH COURT] exclusion of expenses incurred in foreign currency from both export turnover and total turnover while computing deduction u/s 10A - Also see HCL TECHNOLOGIES LTD. [2018 (5) TMI 357 - SUPREME COURT]. Gain/loss arising on account of fluctuation in foreign exchange is operating income/expenses - HELD THAT:- DRP has directed the AO to consider the foreign exchange fluctuation gain/loss on revenue account in respect of assessee company and also in respect of comparable companies while determining the margin in the case of the assessee company, if in the earlier years, the foreign exchange fluctuation was treated as operating in nature for the purpose of consistency. Since the ld DRP has followed the decision rendered by the Tribunal in this regard, we do not find any infirmity in its decision rendered on this issue.
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