TaxTMI 
TaxTMI 
2015 (11) TMI 635
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....5. 02. Appeal of the Revenue is taken up first for disposal. Revenue has altogether taken seven grounds of which grounds 1, 6 and 7 are general needing no specific adjudication. 03. Vide its grounds 2 and 3, Revenue is aggrieved with the direction of CIT (A) for exclusion of M/s. Synergy Log-in Systems Ltd and M/s. Transworld Infotech Ltd from the list of comparables selected by TPO for bench marking the value of international transactions of assessee with its AE. 04. Facts apropos are that assessee engaged in software development, messaging and marketing support activities, was rendering such services to its principal Electronics for Imaging Inc., USA. For justifying the revenue of Rs. 10,02,75,735/- it received on account of inte....
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....y TPO. Reason stated by CIT (A) was that the financial year of the said company did not coincide with that of the assessee. As per CIT (A), the published accounts of these two companies were for year ending 30.06.2004 and hence could not be considered as proper comparables since assessee's financial year was ending on 31.03.2004. 07. Now before us, Ld. DR submitted that the two companies, namely, M/s. Synergy Log-in Systems Ltd and M/s. Transworld Infotech Ltd, had appeared in assessee's own list in its TP study. Hence according to him, CIT (A) fell in error in directing exclusion of these companies. 08. Per contra, Ld. AR supported the order of CIT (A). 09. We have perused the orders and heard the rival contentions. There is no di....
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....tems Ltd and M/s. Transworld Infotech Ltd, since their accounting year ended on a different date, when compared to that of the assessee. We do not find any reason to interfere. Grounds 2 and 3 of the Revenue stand dismissed. 11. Vide its ground 4, grievance raised by the Revenue is that CIT (A) held foreign exchange loss / gain as operating in nature. 12. Ld. DR in support of the above ground submitted that CIT (A) had not established the nexus between the foreign exchange loss / gain with the export activity of the assessee. 13. Per contra, Ld. AR supported the order of CIT (A). 14. We have perused the orders and heard the rival contentions. Assessee's submission with regard to foreign exchange gain of Rs. 29,96,409/- which it ....
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....se two segments on the basis of man-hours, in its TP study. TPO had rejected this basis of allocation and on the other hand adopted the turnover ratio as basis for allocation. Contention of the assessee was that its main assets were its employees and accounts were maintained on ERP, enabling it track all costs based on cost centres linked to each segment. Assessee submitted that man power was its most critical resource and therefore allocation on the basis of man-month was scientific and appropriate. Though the TPO was not appreciative of the above contentions, CIT (A) accepted it, considering the judgment of Hon'ble Delhi High Court in the case of CIT v. EHPT India P. Ltd [(2011) 16 taxmann.com 305]. 17. Now before us, Ld. DR submitted ....
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....brought out by Hon'ble Delhi High Court judgment in the case of EHPT India P. Ltd (supra). Relevant para 8 of the judgment read as under : 8. We have examined the matter in the light of the submissions made before us. The fate of the appeals must depend upon the answer to the question whether the method adopted by the assessee, namely, that of apportioning the indirect expenses between the STP unit and the non-STP domestic unit on the basis of the "head-count" is an unreasonable method and if it has been followed consistently by the assessee in the past and has also been accepted by the department, should the revenue authorities be permitted to disturb the same in the years under appeal. It seems to us that the settled position in such m....
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....over basis, the deduction available to the appellant company comes to Rs. 6,53,49,442 instead of Rs. 6,51,50,217 claimed by the appellant. The working given by the appellant counsel has been found to be correct. In view of the above facts, as the assessee had shown more income though the right course of allocation for indirect expenses is turnover basis but as the appellant company had shown more income, the same is to be accepted and cannot be disturbed. In view of the above, no disturbance is required to be made in respect of indirect expenses allocated by the appellant company. In view of the above facts, the addition made by the Assessing Officer is deleted." It was only as a matter of principle that the CIT(A) upheld the method adop....