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of <h1>Tribunal remits comparable cases issue, excludes foreign currency expenditures, emphasizes statutory compliance.</h1> The Tribunal remitted the issue of selecting comparable cases back to the Assessing Officer for reconsideration, emphasizing compliance with statutory ... TPA - comparable selection - Held that:- It is not in dispute that the assessee itself selected M/s Acropetal Technologies Ltd. as one of the comparables. When the assessee came to know that some adverse information about M/s Acropetal Technologies Ltd., nothing wrong in bringing it to the notice of the Transfer Pricing Officer and DRP and request for removal of that comparable from consideration. Therefore, this Tribunal is of the considered opinion that the TPO as well as DRP are bound to consider the information which was brought to their notice subsequent to the filing of transfer pricing documentation. Hence, this Tribunal is of the considered opinion that the matter needs to be reconsidered by the Transfer Pricing Officer. Accordingly, the orders of the authorities below are set aside and the issue is remitted back to the file of the Assessing Officer. AO shall follow the statutory provisions and pass the necessary orders as provided under Section 144C Exclusion of expenditure incurred in foreign currency towards communication and insurance from the total turnover - Held that:- Assessing Officer is directed to exclude the expenditure incurred by the assessee from both the export turnover and total turnover. The orders of the DRP as well as the Assessing Officer are modified accordingly. Consideration is exclusion of foreign exchange gain from profits of the undertaking - Held that:- Gain due to foreign exchange fluctuation on the export is a profit from export, therefore, this Tribunal is of the considered opinion that the same cannot be excluded. In fact, this Tribunal in the assessee's own case for assessment year 2009-10 had taken a similar view by placing reliance on the judgment of Madras High Court in CIT v. Pentasoft Technologies Ltd.[2010 (7) TMI 75 - MADRAS HIGH COURT] - the orders of the lower authorities are set aside and the Assessing Officer is directed to treat the gain due to foreign exchange fluctuation as part of the export profit. Issues:1. Selection of comparable cases for transfer pricing adjustment.2. Exclusion of expenditure in foreign currency from turnover.3. Treatment of foreign exchange gain in profits.Selection of Comparable Cases:The appellant contested the inclusion of M/s Acropetal Technologies Ltd. as a comparable case due to irregularities and pending proceedings. The Transfer Pricing Officer (TPO) and Dispute Resolution Panel (DRP) refused to exclude it. The Tribunal acknowledged the appellant's request and remitted the issue back to the Assessing Officer for reconsideration by the TPO. The Tribunal emphasized the need for a fresh decision based on the information provided post-filing, ensuring compliance with statutory provisions.Exclusion of Expenditure from Turnover:The Dispute Resolution Panel excluded foreign currency expenditure for communication and insurance from export turnover but not total turnover. The Tribunal noted the absence of appeal provision for the Department against DRP's direction post-Finance Act, 2016. Referring to precedent and statutory provisions, the Tribunal directed the Assessing Officer to exclude the mentioned expenditure from both export and total turnover, modifying the orders of the DRP and Assessing Officer accordingly.Treatment of Foreign Exchange Gain:The issue revolved around excluding foreign exchange gain from export profits. The Tribunal deemed such gains as part of export profit, citing precedent and the Madras High Court judgment. Consequently, the Tribunal set aside the lower authorities' orders and directed the Assessing Officer to consider foreign exchange fluctuation gains as part of export profit. The appeal by the assessee was allowed for statistical purposes.In conclusion, the judgment addressed concerns related to the selection of comparable cases, exclusion of specific expenditures from turnover, and the treatment of foreign exchange gains. The Tribunal emphasized compliance with statutory provisions, precedent, and the need for fresh considerations based on post-filing information, ensuring a fair and just decision-making process in line with tax laws and judicial interpretations.
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