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2023 (3) TMI 352 - AT - Income TaxTP Adjustment - TPO adopted the interest @ 12.25% as ALP on the interest free loan and proposed upward adjustment - HELD THAT:- We find before the TPO, the assessee vide its reply dated 26.12.2013 had categorically stated that during the financial year 2009-10, they made equity investment in their wholly owned subsidiary M/s Global Inc, USA and the investment in equity was made for the purpose of development of software products and new technology products. It was categorically stated that against this investment the company M/s. Global I.T. Inc, US has allotted the shares copy of which is placed at page 161 of the Paper Book. Under these circumstances, the allegation of the TPO that the taxpayer did not submit the details of the investment in the AE claimed as equity investment despite numerous opportunities given by the TPO is incorrect. DRP in assessee’s own case for the A.Y 2008-09 has deleted the addition being the ALP of the international transaction pertaining to the Arm’s Length interest on the investment. We find the Hon'ble Bombay High Court in the case of Vodafone India Services (P) Ltd vs. Union of India [2014 (10) TMI 278 - BOMBAY HIGH COURT] has held that the issue of shares at a premium by the assessee to its nonresident holding company does not give right to any income from an admitted international transaction and therefore, there is no occasion to apply Chapter X in such cases. Since admittedly the assessee has furnished the relevant details before the TPO as well as the DRP by submitting that the investment was made towards equity investment for the purpose of business expansion of the assessee company and its subsidiary company and the investments were made out of the internal funds raised by the assessee and since the DRP in the assessee’s own case in the immediately preceding A.Y has deleted such addition made by way of adjustment on ALP being investment in equity and the Revenue has accepted the same by not filing any appeal before the Tribunal, therefore, we are of the considered opinion that the DRP was not justified in directing the TPO to adopt LIBOR+2% as interest receivable by the assessee on loan to its AE especially when the assessee has not given any loan but the same is towards equity, the share certificate of which was already filed before the lower authorities. The grounds raised by the assessee on this issue are accordingly allowed. Computing the eligible deduction u/s 10A - HELD THAT:- In view of the submissions of the assessee and in view of the conditions laid down in section 10A, we direct the A0 to verify export bill invoice wise export realised as claimed by the assessee with reference to the FIRCs and consider the export turnover to the extent the proceeds are released in convertible foreign exchange within the stipulated time limit or within the extended time if any given supported by relevant certificates and accordingly recompute the deduction allowable u/s.10A. Treatment of gain on Foreign Exchange fluctuation as other income - HELD THAT:- Assessee submitted that the assessee has already offered such foreign exchange fluctuation as other income and addition of the same will amount to double taxation and therefore, he has no objection if the same is restored to the file of the Assessing Officer with a direction to verify the same and if it amounts to double addition, then the same has to be deleted. The learned DR has no objection for the above proposition. Therefore, the issue of foreign exchange fluctuation gain is restored to the file of the Assessing Officer with a direction to verify that the assessee has already offered the same to taxation and addition of the same will amount to double addition. AO shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee on this issue are accordingly allowed for statistical purposes. Exclusion of telecommunication charges from the total turnover for the purpose of computing deduction u/s 10B - HELD THAT:- As relying on cases M/S TESCO HINDUSTHAN SERVICE CENTRE PVT LTD [2018 (7) TMI 1234 - SC ORDER],HCL TECHNOLOGIES LTD. [2018 (5) TMI 357 - SUPREME COURT] DRP is fully justified in holding that the communication expenses to be deducted from both total turnover and export turnover. Accordingly, the ground raised by the Revenue on this issue is dismissed.
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