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2024 (7) TMI 948 - AT - Income TaxTP Adjustment - Treatment of forex Gains - TPO has treated forex losses as operating costs but has held that forex gains would be non-operating in nature - HELD THAT - DRP considering safe harbor rules held that forex losses as well as gains would stand excluded while computing operating income. However the forex losses have still been considered as operating cost and no directions have been given by Ld. DRP in this regard. The same could not be held to be justified since both items being of similar nature are to be given same treatment. In earlier years also similar treatment has been given by the assessee and the same has been accepted by revenue. Similar treatment has been given while computing margins of comparable entities. Another fact is that as per inter-company agreement costs include forex losses. No logic in giving separate treatment to forex gains arising out of same set of transactions. Under these circumstances we would hold that forex gains are to be treated as part of operating income only. The corresponding grounds raised by the assessee stand allowed to that extent. Comparable Entities under IT segment - M/s Thirdware Solutions Ltd. seeked to be excluded by assessee on functional difference whereas Ld. CIT-DR submits that this entity is having similar functional profile - To support the submissions assessee relies on published Annual Statements whereas Ld. CIT-DR has brought on record the assessment details and other financial statements of this entity. To ensure fair adjudication of this entity and to bring correct facts on record the bench deems it fit to remit the issue of exclusion / inclusion of this comparable entity to the file of Ld. AO / TPO with a direction to the assessee to substantiate its case - ground raised by the assessee stand allowed for statistical purposes. Akshay Software Technologies Ltd. - We find that the observation made by Ld. TPO as rightly pointed out by Ld. AR are erroneous. The observations have been made in the Annual Report not with respect to the assessee but with respect to another entity. This entity meets filters applied by TPO while carrying out comparable analysis. In the cited decision of Mercedes-Benz Research Development India (P.) Ltd. 2018 (7) TMI 1748 - ITAT BANGALORE this entity has been accepted to be a comparable entity. Therefore we direct Ld. TPO to accept this entity as comparable entity. The corresponding grounds raised by the assessee stand allowed. Comparable entities under ITeS Segment - M/s Infosys BPO Ltd. entity provides services to both horizontal and vertical focus areas. Under both these areas this entity offers a gamut of different and diversified services which cannot be compared with routine back office services provided by the assessee. This entity was also providing business process management services which are different from routine back office services. Further this entity enjoyed significant brand value and own intangible assets which makes it distinguishable. Therefore we accept the argument of Ld. AR and direct Ld. TPO to exclude this entity. M/s BNR Udyog Ltd. (segment) - Entity engaged in providing medical transcription services would fall under KPO services which could not be compared with an entity like assessee who is a routine software service provider. Further the assessee is a low risk entity. On the same reasoning this entity has been excluded. M/s Informed Technologies India Ltd. entity has been held to be a comparable entity under ITeS segment by Bangalore Tribunal in Ocwen Financial Solutions P. Ltd. (supra). As per Directors Report this entity is operating as IT enabled Service provider and is a leading content provider to the securities and financial research industry. Its entire revenue is out of revenue information technology services. These functions are similar to assessee s functions. Therefore we direct for inclusion of this entity. M/s Ace BPO services Ltd. excluded this entity on the ground that current year data was not available - AR submitted that Annual Report of this entity is very much available and the same was furnished before Ld. DRP and this entity is functionally comparable and satisfies all the filters direct Ld. AO / TPO to consider inclusion of this entity after perusal of financial statements. The assessee is directed to provide the requisite details and data. Disallowance u/s 40(a)(i) for want of TDS u/s 195 - As assessee made certain contractual payment to another entity i.e. GTE-Overseas Corporation (GTC-OC) under Personnel Secondment Agreement dated 01.04.2008 which were claimed to be mere reimbursement in nature - HELD THAT - Having considered earlier direction of Tribunal and to enable revenue take consistent stand in the matter this issue stand restored back to the file of Ld. AO on similar lines.
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