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2022 (8) TMI 521 - AT - Income TaxTP Adjustment - inclusion/exclusion of certain comparables in/from the list of comparables - HELD THAT:- Insync Analytics India Pvt. Ltd - RPTs of this company are more than 50% in the current year and about 100% in the preceding two years. The company is albeit functionally comparable but has controlled transactions. The TPO has set out certain filters to be applied on page 4 of his order. One of the filters is that the companies with RPTs of less than 25% are selected. Since this company is failing the RPT filter applied by the TPO himself, which is otherwise also well recognized and approved by various Hon'ble High Courts, we hold that this company cannot be included in the list of comparables because of breaching the filter. We, therefore, direct to exclude it. CES limited - It is rendering both BPO and KPO services, discussing this issue at page 19 of the order. In view of the fact that the assessee is engaged in rendering only BPO services, CES Limited providing both BPO and KPO services, cannot therefore be held as comparable. We, therefore, direct to delete this company from the list of comparables. Domex e-data Pvt. Ltd - From the portion of the Directors' report, it is graphically clear that, apart from rendering IT enabled services, this company is also engaged in providing software development services. Though its revenue has been shown in a combined manner under one head of IT enabled services, but the above description of the activities makes it clear that it is also engaged in software development. As the assessee is engaged only in IT enabled services and not in software development, we order to exclude it from the list of comparables. Treatment of Foreign Exchange Fluctuation (forex) loss as non-operating - HELD THAT:- It is undisputed even from the DRP directions that the forex gain pertains to business revenue of the assessee company. It has been held in several decisions rendered by the various courts of the country including in Pr. CIT Vs. BC Management Services Pvt. Ltd. [2017 (12) TMI 255 - DELHI HIGH COURT] that foreign exchange gain or loss should be considered as operating in determining the operating margin. In view of the above precedent, we hold that the forex gain should be treated as an item of operating revenue. This ground, is therefore, allowed.
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