TaxTMI 
TaxTMI 
2015 (8) TMI 1293
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.... declaring income of Rs. 47,88,62,424 under the normal provision of the Act and taxable income of Rs. 16,80,79,423 under MAT provisions. The return was processed under Section 143(1) of the Act and the case was taken up for scrutiny. 2.2 In the period under consideration, the assessee had reported the following international transactions :- Provision of Software Development Services Rs. 258,21,78,120. Provision of Order Gathering Services. Rs. 14,34,45,438 In view of the above international transactions entered into by the assessee, the Assessing Officer made a reference under Section 92CA of the Act to the Transfer Pricing Officer ('TPO') for determining the Arm's Length Price ('ALP') of these international transactions, after obtaining necessary approval from the CIT-III, Bangalore. The TPO vide order under Section 92CA of the Act dt.11.1.2013 proposed a T.P. Adjustment of Rs. 28,11,31,440 to the ALP of international transactions in respect of software development services rendered by the assessee. The Assessing Officer then issued a draft order of assessment under Section 143(3) r.w.s. 144C of the Act dt.14.3.2013 which was sent to the assessee; to which the assessee submitt....
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.... as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored. 7. The appellant craves leave to add, alter, amend and/or delete any of the grounds mentioned above." 4. The Grounds raised at S.Nos.1, 6 & 7 are general in nature and not being specifically urged before us, are dismissed as infructuous. 4.1 In the Grounds raised at S.Nos.2 to 4, Revenue contends that the learned CIT(A) erred in holding that foreign exchange loss / gain to be operating in nature without ascertaining the nexus between the forex gain/loss with the business activity of the assessee and without appreciating that this gain/loss is not derived from the operating activity of the assessee. The learned Departmental Representative was heard in support of the grounds raised. 4.2 Per contra, the learned Authorised Representative supported the impugned order of the learned CIT(A) in holding that foreign exchange gain / loss to be part of the operating revenue for the purpose of computing the assessee's margin for comparison with the margin of the comparable companies. The learned Authorised Representative contended that revenue's appeal on this issue is liable to be d....
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....ating margin. In our view, the analogy drawn by the DRP regarding exclusion of interest expenses while computing operating margins is not proper. In our view, foreign exchange gain on realization of consideration for rendering software development services should be regarding as part of the operating revenue. Following the decision of the ITAT, Bangalore Bench in the case of SAP Labs (supra), we hold that the operating revenue for the assessee be computed by including the foreign exchange gain." Following the decision of the co-ordinate benches of this Tribunal in the case of Sap Labs India (Pvt.) Ltd. (surpa), Triology E Business Software India Pvt. Ltd. (supra) and Mindteck (India) Ltd. (supra), we hold that operating revenue should be computed by including the foreign exchange gain. Consequently, the grounds at S.Nos.2 to 4 raised by revenue are dismissed." Following the decision of the co-ordinate benches of this Tribunal in the case of Sap Labs India (Pvt.) Ltd. (surpa), Triology E Business Software India Pvt. Ltd. (supra), Mindteck (India) Ltd. (supra) and Amba Research India Pvt. Ltd. (supra), we hold that operating revenue should be computed by including the foreign excha....
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....he Tribunal for Assessment Year 2007-08 and at paras 5.3.1 & 5.3.2 thereof the co-ordinate bench has held as under :- " 5.3.1 We have heard both the learned Authorised Representative and the learned Departmental Representative and perused and considered the material on record; including the judicial decision cited. On an appreciation of the material on record, we find that the same issue was before a co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2007-08. In its order in IT(TP)A No.1174/Bang/2011 dt.14.11.2014, at para 11 thereof the co-ordinate bench has held as under :- " 11. We have considered the rival submissions and are of the view that the issue requires a fresh consideration in the light of the submissions made by the Assessee before the DRP. As far as depreciation on Networking equipment is concerned, the AO has not called upon the Assessee to demonstrate as to how Networking equipment on which depreciation was claimed at 60%, satisfied the requirements being classified as "Computers". This specific objection by the Assessee before the DRP has not been controverted. Therefore there was lack of proper opportunity afforded to the As....