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2014 (1) TMI 1363 - AT - Income TaxArm's length price in respect of interest charged on loan - Held that:- The issue has been restored for fresh adjudication with a direction to the assessing officer to examine and calculate the differential interest to be levied for the relevant period instead of charging differential interest for the entire period of one year. Arm's length price in respect of guarantee to the Bankers of subsidiaries - Held that:- The assessee has rendered a service to its US subsidiary for which it must charge fees at an arm's-length - The issue has been set aside for determining the quantum of corporate guarantee rates following the principle laid down in the aforesaid case. Purchase of software disallowed u/s 40(a)(ia) - Held that:- The licence is purchased everytime by the assessee when it has to sell it to its customer - The amount paid for software is simply purchase cost of trading goods because the licence in respect of software is not obtained by the assessee - The perpetual licence is given directly to the end customer by the vendor company - The payments made by assessee to the Netherlands company will not fall under the ambit of Royalty as per Article 12 of the India-Netherlands DTAA - No withholding tax is liable to be deducted - Decided in favour of assessee. Expenses toward technical consultancy charges - Held that:- The UK and USA subsidiaries did only contractual work parcelled out to it whose results were given to clients directly and no technical knowledge was made available to assessee - The payment would not fall under fee fo technical services even as per DTAA - Decided in favour of assessee. Whether communication expenses are to be exluded from export turnover - Held that:- Decision in Patni Telecom Pvt. Ltd. vs. ITO [2008 (1) TMI 452 - ITAT HYDERABAD-A] followed - The said expenses are not to be deducted from export turnover - The issue has been restored for fresh adjudication. Whether profit on account of foreign exchange fluctuation be reduced from export turnover - Held that:- Decision in Sanyo LSI Technology India Private Limited [2014 (1) TMI 1257 - ITAT BANGALORE] followed - The foreign exchange gain was income derived by export business of the assessee, hence, eligible for deduction u/s 10A of the Act - On account of appreciation or depreciation in the value of foreign currency held by it, on conversion into another currency, such profit or loss would ordinarily be trading profit or loss if the foreign currency is held by the assessee on revenue account or as a trading asset or as part of circulating capital embarked in the business - Decided in favour of assessee.
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