TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 1733
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.... 3. In this appeal, there is only one effective grievance of the revenue. This grievance is about the direction of CIT (A) to the A. O. to treat the Foreign Exchange Gain as operating income after examining certain aspects. 4. Learned DR of the revenue supported the orders of the AO/TPO. She also submitted that learned CIT (A) should not have set aside the matter to the A.O. as setting aside is no more in his powers. She also submitted that on merit also, this tribunal is taking a consistent view that even after holding that the Foreign Exchange Gain is operating income, it has to be seen that such gain is in respect of the turnover of the present year and then only, it can be considered for computing ALP of the present year. She submitte....
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....esent year has to be taken into account. At the same time, if any such gain is accounted for by any comparable company then the A.O. has to establish by obtaining information from that company that such gain is in respect of the turnover of the present year and if the A.O./TPO does not establish that than such gain should be excluded from the profit of that comparable also to work out ALP. With these modified directions, the A. O./TPO should decide this issue afresh. 6. The appeal of the revenue is allowed for statistical purposes. 7. Now, we take up the appeal of the assessee. 8. Grounds No. 1 to 4 are in respect of the disallowance of Rs. 162,32,153/- made by the A. O. u/s 14A and its confirmation by CIT (A). 9. Learned AR of t....
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....ted that this matter may be restored back to the A.O. for a fresh decision. Learned DR of the revenue supported the orders of the lower authorities. 10. We have considered the rival submissions. We find force in the submissions of the learned AR of the assessee that this issue should go back to the A.O. for a fresh decision because the figure of opening investment has to be taken being the investment on 01.04.2008 and not on 31.03.2008 and since the company M/s Raman Boards Limited got merged with the assessee company w.e.f. 01.04.2008, the investment in that company has become nil on that date and there is no other investment on that date and as a result, for computing disallowance u/s 14A, the average investment amount has to be worked o....
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....him is about working capital adjustment as per Ground No. 17. Hence, we decide only these two aspects and reject the remaining aspects as not pressed. 12. He placed reliance on the tribunal order rendered in the case of Infinera India Pvt. Ltd. vs. ITO as reported in 72 taxman.com 68 copy on pages 406 to 414 of the paper book in respect of the request for exclusion of 1) KALS Information Systems Ltd., Paras 12 to 14, 2) Bodhtree Consulting Ltd., Paras 13 to 16, 3) Tata Elxsi Ltd. Paras 14.3, and 4) Persistent Systems Ltd. In respect of the claim for exclusion of Sasken Communication Tech Ltd. and L & T Infotech Limited, he placed reliance on another tribunal order rendered in the case of VMware Software India Pvt. Ltd. vs. DCIT in IT (TP)A....
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....ed cases. As per page 2 of the order of the TPO, the present assessee is engaged in rendering software development services to AE engaged in Product Development and integration also in addition to three other activities. In our considered opinion, since the assessee is rendering only software development services to its AE, who may be doing Product Development, it has to be accepted that the assessee is engaged in rendering software development services to AE and Product Development by AE is of no relevance because the assessee is not the owner of those products. In Para 13 of the tribunal order rendered in the case of Infinera India Pvt. Ltd. vs. ITO (Supra), it is noted by the tribunal that the assessee is engaged in rendering software de....
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....unal in this case in Para 17 that this company is not a good comparable by following another tribunal order rendered in the case of Novell Software Development India Pvt. Ltd. vs. DCIT vide order dated 31.08.2015 in IT9TP)A No. 1287/Bang/2011 and this finding is given in that order dated 31.08.2015 that this company owns IPR and has branded products also. Regarding L & T Infotech Limited, we restore the matter back to AO/TPO for a fresh decision with the direction that he should verify the correct RPT % of this company and to exclude it if the same is more than 15%. In respect of Working Capital Adjustment claim also, we restore the matter to AO/TPO for a fresh decision by following the tribunal order rendered in the case of VMware Software....