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2021 (4) TMI 1080 - AT - Income TaxComputing deduction u/s 10A - not considering the plea of the assessee that communication expenses should not be excluded from the export turnover for the purpose of computing deduction - HELD THAT:- we are of the opinion that this issue came up for consideration before the Hon’ble Karnataka High Court in the case of CIT v. Tata Elxsi Limited [2011 (8) TMI 782 - KARNATAKA HIGH COURT] wherein held that for the purpose of computing exemption u/s 10A of the Act, when export turnover in the numerator is to be arrived after excluding telecommunication expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. Methodology adopted by the assessee in allocating the common / indirect costs among its various segments - apportionment adopted by Cisco India a reasonable basis of allocation of common expenses incurred - HELD THAT: - This method of apportionment has also been consistently adopted by Cisco India on a year on year basis. It was further submitted that the Bangalore Bench of the Tribunal in assessee’s own case for A.Y. 2008-09 following the decision of the Hon’ble Delhi High Court in the case of CIT v. EHPT India (P) Ltd. [2011 (12) TMI 49 - DELHI HIGH COURT] and for A.Y. 2009-2010 [2014 (11) TMI 849 - ITAT BANGALORE] has upheld the method of allocation of the common expenses adopted by the assessee and held that where two basis of apportionment of common costs are available, any one of the basis should be consistently followed. Thus, since Cisco India has been following headcount basis for allocation from past 8 years the same basis should be followed for A.Y. 2008-2009 as well. Further, the headcount basis of allocation of common expenses should be followed for A.Y. 2010-2011 as well. Disallowance of deduction claimed in respect of forex fluctuation which is capital in nature - assessee failed to furnish the details with regard to the foreign exchange gain / or loss along with evidences to support the same - HELD THAT:- As decided in own case [2014 (11) TMI 849 - ITAT BANGALORE] the foreign exchange gain from software development services has to be considered as part of the income from software development services while computing the margin of the assessee and accordingly the margin of 12.67% computed by the assessee is directed to be adopted - Being so, we remit the issue to the files of the AO /TPO with a direction to the assessee to furnish the details of foreign exchange gain or loss. We also direct the A.O. to decide the issue in the light of the above order of the Tribunal in assessee’s own case above. TP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected from final list. Not making suitable adjustments to account for differences in the risk profile of the assessee visà- vis the comparables - Taking the consistent view, we direct the AO/TPO to give proper risk adjustment as discussed in own case [2014 (11) TMI 849 - ITAT BANGALORE] Computing the operating margin of Cyber Media Research Limited at 19.52% as against 12.88% computed by the assessee - HELD THAT:- This issue is remitted to the AO/TPO to re-compute the correct margin of operating margin of Cyber Media Research Limited, in accordance with law. Accordingly, this ground of the assessee is partly allowed for statistical purposes.
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