Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (2) TMI 809 - AT - Income TaxForeign exchange gain as part of operating revenue - computation of operating margin of the assessee-company - whether such foreign exchange gain is in respect of the turnover of the present year or for turnover of an earlier year because the bench felt that if the said gain is not on account of turnover of the present year then, such gain cannot be part of operating profit of the present year to work out the operating profit margin percentage? - Held that:- This matter should go back to the file of the ld. CIT (A) for a fresh decision after examining this aspect as to whether such foreign exchange gain is in respect of turnover of the present year or of an earlier year because in our considered opinion, the foreign exchange gain is no doubt an operating profit of the assessee-company if the same is on account of collection of sale proceeds of the assessee-company but for the purpose of computing the ALP, such foreign exchange gain cannot be added in operating profit of the assessee-company if such gain is arising on account of turnover of an earlier year because for the purpose of computing the ALP, operating profit margin over the turnover has to be worked out and since the turnover of the present year is not inclusive of turnover of earlier year for which the exchange fluctuation gain is arising, such gain also cannot be taken into account for computing the operating profit percentage of the present year in order to finalise ALP and since these details are not available on record as to whether the foreign exchange fluctuation gain in the present case is in respect of turnover of the present year or of an earlier year, we restore the matter back to the file of the AO/TPO for fresh decision Exclusion of one comparable company i.e. Sat Investeck Ltd - Held that:- This issue should be restored back to the file of TPO for fresh decision after examining the RPT percentage of this company because, as per the annual report of this company available in the paper book, the RPT percentage of this company is much higher than the RPT percentage being accepted by the Tribunal i.e. 15% but there is no finding of any of the authorities below on this aspect. Hence, on his aspect, we set aside the order of ld. CT (A) and restore the matter back to the file of the AO/TPO to decide the issue afresh 5% standard deduction allowed by ld. CIT (A), it was fairly conceded by the ld. AR of the assessee that this issue has to be decided in favour of the revenue and against the assessee in view of subsequent amendment in the provisions of sec. 92C of the IT Act, 1961. Accordingly, we decide this issue in favour of the revenue Computation of deduction 10A - Held that:- The total turnover is sum total of domestic turnover and export turnover and therefore, if an amount is reduced from export turnover then the total turnover also goes down automatically by the same amount.
|