TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 1258
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....e case, the tribunal is justified in law in equating business income/sales with operating revenues and thus concluding that foreign exchange gain forms part of operating revenues even when the same is not permissible under law? c. Whether on the facts and circumstances of the case the tribunal is justified in law in concluding that the assessee company is a risk mitigated entity without appreciating the facts of the case that the assessee company is also assuming risks like single customer risk and political country risks, which otherwise are not assumed by the comparable companies selected by the TPO/AO. d. Whether on the facts and circumstances of the case tribunal is justified in law in rejecting Hinduja TMT Ltd., and Aftek Infosys Ltd., as a comparable stating that these companies earned super profits without mentioning the bench marked for profitability above which a company can be considered as earning super profits in the software services industry in which the taxpayer is operating? e. Whether the tribunal is justified in law in rejecting Hinduja TMT Ltd. and Aftek Infosys Pvt. Ltd., as a comparable stating that these companies earned super profits without mentioning ....
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....-5% benefit and whether such interpretation is sustainable having regard to subsequent amendment by the Finance Act, 2009 being of clarificatory in nature? d. Whether the Tribunal is correct in law in directing the Assessing Officer to exclude Telecommunication expenses in the computation of deduction under section 10A of the I.T.Act?" 4. In so far as the substantial question of law (a) to (c) framed by the Co-ordinate Bench of this Court in the connected ITA No.23/2011 are concerned, the learned ITAT in its Order dated 30/08/2010 has given the findings, the relevant portion of which is quoted below for ready reference:- "42. We considered the issue carefully. The foreign exchange fluctuation gains is nothing but an integral part of the sales proceeds of an assessee carrying on export business. This proposition has been time and again considered in cases arising in the context of sec.80HHC. The Courts and Tribunals have held that foreign exchange fluctuation gains form part of the sale proceeds of exporter- assessee. Useful reference may be made to the decisions of Bombay High Court in the case of Shah Brothers Vs. CIT, [259 ITR 741]; that of Gujarat High Court in the case of ....
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....s comparables in the present case. Therefore, we exclude M/s Hinduja TMT Ltd. and M/s Aftek Infosys Ltd. from the list of comparables. 55 to 62 ... ... ... 63. The first limb of the old proviso and the first limb of the present proviso is regarding arriving at the arithmetical mean which is the same. There is no change with regard to that. The change is with reference to the second limb. The old proviso says that at the option of the assessee, the assessee may adopt a price different from the arithmetical mean by an amount not exceeding 5% of such arithmetical mean i.e the assessee has an option to claim the tax payer's marginal relief at 5% with reference to the arithmetical mean irrespective of the range of actual deviation between the margin disclosed by the assessee and the Average Mean Margin. Therefore, in effect, this marginal relief takes the character of a standard deduction of 5%. For eg. in a case, average mean of the ALP determined by TPO/AO is 20% and that one disclosed by the assessee is 10%. The assessee will get a standard deduction of 5% and the assessee's ALP will be increased to 15% and thereafter the difference of 5% between 20% and 15% along shall be adde....
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....nits will be regarded as 'deemed export', besides being eligible for relevant entitlements under paragraph 6.12 of the Policy. They will also be eligible for the additional entitlements mentioned therein. What is of importance is when a supply is made from DTA to STP, it does not satisfy the requirements of export as defined under the Customs Act. However, for the purpose of Exim Policy, it is treated as 'deemed export'. Therefore, when Section 10A of the Act was introduced to give effect to the Exim Policy, the supplies made from one STP to another STP has to be treated as 'deemed export' because Clause 6.19 specifically provides for export through Status Holder. It provides that an EOU/EHTP/STP/BTP unit may export goods manufactured/software developed by it through other exporter or Status holder recognized under this policy or any other EOU/EHTP/STP/BTP unit. What follows from this provision is that to be eligible for exemption from payment of income tax, export should earn foreign exchange. It does not 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 ....
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....e 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 object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise, any other interpretation makes the formula unworkable and absurd. Hence, we are satisfied that such deduction shall be allowed from the total turnover in same proportion as well". 7. However, this Court in a recent judgment in I.T.A.No.536/2015 c/w. I.T.A.No.537/2015 (Pr. Commissioner of Income Tax, Bangalore and Another Vs. M/s. Softbrands India P.Ltd.,) rendered on 25-06-2018, has held that in these type of cases, unless an ex-facie perversity in the findings of the learned Income Tax Appellate Tribunal is established by the appellant, the appeal at the instance of an assessee or the Revenue under Section 260-A of the Act is not maintainable and the relevant portion of the said judgment is quoted below for ready reference: "Conclusion: 55. A substantial q....