TaxTMI 
TaxTMI 
2019 (1) TMI 1326
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....change gain to be an "operating income" while calculating the PLI of the assessee 2.1 The learned Assessing Officer erred in law and on the facts and in circumstances of the case in not implementing the directions of Hon'ble DRP while computing the PLI of the Assessee by not considering the write back of earlier years provisions of gratuity and leave entitlement as operating items. 2.2 The learned Assessing Officer and Hon'ble DRP erred in law and on the facts and in circumstances of the case in considering foreign exchange gain as non-operating income while computing the PLI of the Assessee. 3. Erroneous consideration of operating margin of Excel Info ways ltd and Microgenetics Systems ltd 3.1 The learned Assessing Officer pursuant to the direction of learned DRP erred in law and on the facts and in circumstances of the case in considering incorrect PLI of Excel Info ways Ltd and Microgenetics Systems Ltd. 4. Erroneous calculation of working capital adjustment 4.1 The learned Assessing Officer, pursuant to the directions of the Hon'ble DRP has erred on the facts and in circumstances of the case in incorrectly computing of working capital adjustment. 5. Erroneous....
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.... provisions of section 115JB of the Act. Thus, this case was taken for scrutiny and notice u/s. 143(2) and u/s.142 (1) of the Act were issued and served to the assessee. The assessment was completed u/s. 143(3) r.w.s.144 r.w.s.92CA of the Act on which certain additions/disallowances were made as appearing in the assessment order. 3. The first ground of appeal of the assessee is general in nature and hence, no adjudication is required. 4. With regard to the ground No. 2.1, the Assessing Officer did not implement the directions of Dispute Resolution Panel (DRP) while computing the Profit Level Indicator (PLI) of the assessee by not considering the write back of earlier year's provisions of gratuity and leave entitlement as operating items. 5. At the time of hearing, the Ld. AR of the assessee invited our attention to the assessment order wherein reference to DRP's directions was made in Page 19 and it was submitted by the Ld. AR that in principle, the DRP had allowed this ground subject to verification. However, this direction of DRP was not followed by the Transfer Pricing Officer. In the column (b) treatment of write back provisions related to gratuity and leave encashment as n....
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....T, ITA No.475/PN/2017. 10. We have perused the case record and considered the submissions as advanced before us. We have also perused the decisions of the Pune Bench of the Tribunal in the case of Approva Systems Pvt. Ltd. Vs. CIT (supra.) wherein at page 42 in Para 19.2, it is stated that correct calculation of OP/TC by treating foreign gain/loss as operating in nature. The relevant parts of the order read as under: " 22. We have considered the rival arguments made by both the sides. As reproduced above in para 20 in the arguments advanced by the Ld. Counsel for the assessee, we find the Delhi Bench of the Tribunal in the case of Westfalia Separtator India Pvt. Ltd., (Supra) following various decisions has held that foreign exchange loss/gain is a part of the operating revenue/cost. In the following decisions also (filed in the paper book by the assessee), it has been held that foreign exchange fluctuation cannot be excluded from the computation of the operating margin of the assessee company : 1. SAP Labs India P. Ltd. Vs. ACIT - 44 SOT 156 (bang) 2. Prakash I Shah reported in (2008) 115 ITD 167 (Mum) (SB) 3. Smt. Sujata Grover Vs. Dy.CIT (2002) 74 TTJ (Del) 347 4. M/s. S.....
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.... was opined that ITes segment, wherein the assessee was cost plus entity providing services with mark up of 10% on cost. The assessee had benchmarked the transactions using TNMM method. However, the TPO had applied additional filters for selection of comparable companies and accepted only two concerns from assessee's set of comparable selected. The learned Authorized Representative for the assessee pointed out that four new comparables were picked up by the TPO and the issue which is raised vide ground of appeal No.3 was against inclusion of two concerns Excel Infoways Ltd. and Universal Print Systems Ltd. He pointed out that the concern Excel Infoways Ltd. could not be selected as it was showing fluctuating margins in preceding years. It was further pointed out by the assessee that the annual report of the said company shows that ITES and BPO segments were closed in financial year 2011-12 on account of global recession and planned to diversify into real estate business. Another distinguishing feature was the low employee cost filter. The learned Authorized Representative for the assessee pointed out that employee cost over sales ratio of the said concern was less than 25% as again....
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....ssessee is in appeal against the said adjustment made in ITES segment. The plea of assessee during the course of hearing was that in case two concerns i.e. Excel Infoways Ltd. and Universal Print Systems Ltd. were excluded from the final list of comparables, then the margins shown by the assessee and mean margins of comparables were within +/- 5% range and no TP adjustment had to be made in the hands of assessee. 16. Coming to the first concern Excel Infoways Ltd., wherein the assessee points out that the said concern was not to be selected as comparable because of its fluctuating margins. The learned Authorized Representative for the assessee has filed tabulated details in this regard, wherein the margins of said concern being drastically dropped from 267.31% in earlier years to 41.48% during the year under consideration. The year-wise margins of said concern are as under:- Financial Year OP/TC margin 2008-09 247.74% 2009-10 267.31% 2010-11 238.71% 2011-12 41.48% 17. Further, the said concern had closed down its ITES and BPO segment in financial year 2011-12 on account of global recession. We hold that the said concern which is in the process of closing down its ITES ....