TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 472
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.... Revenue have suggested five substantial questions of law which are quoted below for ready reference: - "(1) Whether, on the facts and in the circumstances of the case, the Tribunal is justified in directing the assessing officer to exclude the expenditure in foreign currency from the export turnover and the total turnover when there is no provision in section 10A which requires the said expenses to be reduced from the total turnover also? (2) Whether the Tribunal was right in fact and in law in seeking exact comparability, while searching for comparable companies of the assessee under TNMM whereas the requirement of law and international jurisprudence require seeking similar comparables companies? (3) Whether, on the facts and in the....
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....lxsi Ltd., Vs. Asst. Commissioner of Income Tax, decided on 20/10/2015 (2015) 127 DTR 0327 (Kar), which has been affirmed by the Hon'ble Supreme Court in the case of Commissioner of Income-tax, Central - III vs. HCL Technologies Ltd., [2018] 93 Taxmann.com 33(SC). The relevant portion of the judgment of this Court in the case of M/s.Tata Elxsi (supra), is quoted below for ready reference:- "20. From the aforesaid provisions, it is clear that if a assessee wants to claim the benefit of Section 10A, firstly he must export articles or things or computer software. Secondly, the said export may be done directly by him or through other exporter after fulfilling the conditions mentioned therein. Thirdly, such an export should yield foreign e....
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....t mean that the undertaking should personally export goods manufactured / software developed by it outside the country. It may export out of India by itself or export out of India through any other STP Unit. Once the goods manufactured by the assessee is shown to have been exported out of India either by the assessee or by another STP Unit and foreign exchange is directly attributable to such export, then Section 10A of the Act is attracted and such exporter is entitled to benefit of deduction of such profits and gains derived from such export from payment of income tax. Therefore, the finding of the authorities that the assessee has not directly exported the computer software outside country and because it supplied the software to another ....
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.... 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 deductions on freight, telecommunication and insurance attributable to the delivery of computer software under Section 10A of the IT Act are allowed only in Export Turnover but not from the Total Turnover then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to the Respondent which could have never been the intention of the legislature. 20. Even in common parlance, when the obj....
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....list of comparables for determination of ALP and re-examine the comparability of Flextronics Software Ltd. in light of the directions given by the coordinate Bench. 25 to 29 ... ... ... 30. We find from the profit & loss account of this company that there is work-in-progress during the year under consideration as well as in the earlier year, therefore it supports the finding given by the Tribunal that this company is in the software product and in the absence of segmental data, the financial results of software development services as well product cannot be compared with the assessee's transaction of software development services. Accordingly, in view of the decisio....
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....n of law. On the other hand, the appeals of the present tenor as to whether the comparables have been rightly picked up or not, Filters for arriving at the correct list of comparables have been rightly applied or not, do not in our considered opinion, give rise to any substantial question of law. 56. We are therefore of the considered opinion that the present appeals filed by the Revenue do not give rise to any substantial question of law and the suggested substantial questions of law do not meet the requirements of Section 260-A of the Act and thus the appeals filed by the Revenue are found to be devoid of merit and the same are liable to be dismissed. 57. We make it clear that the same yardsticks and parameters will have to be applied....