TMI Blog2022 (12) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered opinion that the foreign exchange loss should not have been treated as operational expense and we direct the learned AO/Ld. TPO to treat the foreign exchange fluctuation loss as non-operating in nature for calculation of margins. Disallowance of interest on unsecured loan taken which is 100% subsidiary of the assessee - addition on the ground as it is not incurred for the purpose of assessee s business though the said borrowings were utilised for investments in subsidiaries which is part of business purpose of the assessee company - HELD THAT:- As in assessee s own case for the assessment year 2011-12 wherein it is clearly held that the interest on unsecured loan taken from M/s. Social Media India Ltd., is an allowable expenditure. Respectfully following the view taken by a coordinate Bench of this Tribunal in assessee s own case, we allow this ground and direct the learned Assessing Officer to delete this addition. - ITA No. 206/Hyd/2015 - - - Dated:- 22-7-2022 - SHRI RAMA KANTA PANDA, ACCOUNTANT MEMBER AND SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER Assessee by: Shri P.V.S.S.Prasad Revenue by: Shri Y.V.S.T.Sai ORDER PER K. NARASIMHA CHARY, JM: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 143(3) read with section 92CA(4) and section 144C(13) of the Act determining the income of the assessee at Rs. 2,93,85,795/- under normal provisions of the Act and at Rs. 4,59,53,890/- under section 115 JB of the Act. 4. Assessee is, therefore, before us in this appeal seeking exclusion of the comparables, namely, M/s Accentia Technologies Limited, TCS e-Serve International Ltd and Acropetal Tech (Seg) on the ground of functional comparability, extraordinary events, super profit and high turnover. By way of additional grounds, assessee sought the exclusion of Cosmic Global Ltd., and Crossdomain Solutions Ltd., also on the ground that the said comparable for failing to meet the filters of comparability. Apart from this the other challenge in the appeal by the assessee is towards the disallowance of interest of Rs. 77,16,500/- on unsecured loans taken from M/s. Social Media India Ltd., which happens to be its hundred percent subsidiary, the addition made on account of treating the foreign exchange loss as operating in the nature for transfer pricing purposes, and also the trade receivables arising in the course of business. 5. We have gone through the record. It could be se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... light as to why the contentions of the assessee was rejected to retain these two companies. The assessee is, therefore, disputing the inclusion of four comparables in all, namely, Accentia Technologies Ltd., TCS e-Serve International Ltd., Cosmic Global Limited and Crossdomain Solutions Ltd. 8. Coming to the Accentia Technologies Limited, it is the submission on behalf of the assessee that this company deserves to be rejected in view of an extraordinary event in the current year, namely, amalgamation of Assent Infoserve Pvt. Ltd with the company having an impact on the profit of the company. Further Accentia Technologies Ltd. is into diversified knowledge process outsourcing activities and the company is involved in healthcare documentation as well as receivables, management services including installation and maintenance of all software, hardware and bandwidth infrastructure required for the same, deployment of manpower and service delivery in all these areas, apart from the earning in the legal process outsourcing. 9. Further, Ld. AR submitted that in assessee s own case for the assessment year 2011-12 in ITA No. 209/Hyd/ 2016 a coordinate Bench of this Tribunal deleted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of business during the year is an exceptional event and renders the comparability of this entity which the assessee, who has no such event. So also the comparability depends upon the segment which forms the predominant activities of the entity and on this score, the Cosmic Global Limited does not pass the test of comparability. Having regard to these we are of the considered opinion that there are sufficient reasons to exclude these companies from the list of comparables and on that premise, we direct the learned Assessing Officer/Ld. TPO to exclude these companies from the final list of comparables. 13. Lastly coming to the Crossdomain Solutions P. Ltd, the objection of the assessee is that this entity is into outsourcing, consulting and IT services, though the company specifies that it is into business processing, upon detailed analysis of services provided, the company is more than just a business processing organisation but into diversified outsourcing services into many industries in assessee s own case for the assessment year 2011-12, a coordinate Bench of this Tribunal considered the issue of comparability of Crossdomain Solutions P. Ltd with the assessee and held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... though the said borrowings were utilised for investments in subsidiaries which is part of business purpose of the assessee company. He further submitted that in assessee s own case for the assessment year 2011-12 in ITA No. 209/Hyd/2016 a coordinate Bench of this Tribunal held that as the assessee has borrowed from the Indian sister concern and invested in foreign sister concern as in share capital and the share application money, the money invested in the sister concern has to be considered to be for the purpose of business as per the ratio laid down by the Hon ble Supreme Court in the case of SA Builders Ltd. vs. CIT (2007) 158 Taxman 74 (SC), because the holding company has a deep interest in the subsidiary company, and hence, borrowed funds invested by the assessee in the sister concern or to be for the purpose of business and allowable on the ground. 17. We have gone through the order dated 31/07/2017 in ITA No. 209/Hyd/2016 in assessee s own case for the assessment year 2011-12 wherein it is clearly held that the interest on unsecured loan taken from M/s. Social Media India Ltd., is an allowable expenditure. Respectfully following the view taken by a coordinate Bench of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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