2018 (7) TMI 467

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....s of law framed by the Revenue in the Memorandum of Appeal are as under: "1. Whether in the facts and circumstances of the case, the Tribunal is right in directing to include forex gain/loss as operating in nature by following its earlier orders in the case of M/s SAP Labs India P.Ltd and M/s Triology E-Business Software India P.Ltd without ascertaining the nexus with the business activity of the taxpayer ? 2. Whether in the facts and circumstances of the case, the Tribunal is correct in upholding the decision of the Commissioner of Income Tax (Appeal regarding exclusion of telecommunication expenditure and other expenses incurred in foreign currency from export turnover as well as total turnover while computing deduction under section ....

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....g relief under Section 10A of the IT Act, the amount of communication expenses should be excluded from the total turnover if the same are reduced from the export turnover? While giving the answer to the issue, the High Court, inter-alia, held that when a particular word is not defined by the legislature and an ordinary meaning is to be attributed to it, the said ordinary meaning is to be in conformity with the context in which it is used. Hence, what is excluded from 'export turnover' must also be excluded from 'total turnover', since one of the components of 'total turnover' is export turnover. Any other interpretation would run counter to the legislative intent and would be impermissible. 18. XXXXXX 19. In the instant case, if the ded....

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.... exchange fluctuations on sales turnover of the comparables should also be considered as part of operating margins. The tribunal in the case of M/s Trilogy E-Business Software Vs DCIT supra has again considered and decided this issue in para (B) as under: "B. As far as foreign exchange gain/loss being considered a not forming part of the operating cost, the reasoning of the revenue is that such loss or gain cannot be said to be one realized from gain/loss of the enterprise and therefore they should be excluded while determining operating cost. On the above issue we find that the Bangalore Bench of ITAT in the case of Sap Labs India (P) Ltd., -vs- ACIT (2011) 44 SOT 56 (Bang) has taken the view that Foreign Exchange fluctuation gains are....

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....  25.06.2018, wherein it has been observed that unless the finding of the Tribunal is found ex facie perverse, the Appeal u/s. 260-A of the Act, is not maintainable. The relevant portion of the Judgment is quoted below for ready reference: Conclusion: 55. A substantial quantum of international trade and transactions depends upon the fair and quick judicial dispensation in such cases. Had it been a case of substantial question of interpretation of provisions of Double Taxation Avoidance Treaties (DTAA), interpretation of provisions of the Income Tax Act or Overriding Effect of the Treaties over the Domestic Legislations or the questions like Treaty Shopping, Base Erosion and Profit Shifting (BEPS), Transfer of Shares in Tax Havens (....