2016 (6) TMI 1473

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.... grounds 1 to 8 are on TP issues. Ld. Counsel for the Assessee at the outset submitted that he had filed a petition seeking admission of additional evidence. Ld. AR submitted that assessee by mistake in its TP study, had made a wrong allocation of the revenue from software development services between AE and Non-AE. As per the Ld. AR, services provided by the assessee fell within the software development services stream. Revenues were incorrectly bifurcated between AE and non-AE, due to a mistake, as per the Ld. AR. Further as per the Ld. AR, TPO went by the bifurcation done by the assessee and proceeded with the transfer pricing analysis, relying on the figures of revenue stream worked out by the assessee. Final recommendations made by the....

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.... AE -Aztec Soft Inc Non-AEs Amount Rs. Income         Software Development Services 399,187,679 96,725,461 1,918,471,860 2,414,385,000           Total Operating Income 399,187,679 96,725,461 1,918,471,860 2,414,385,000           Expenses         Software Development Expenses       1,590,437,000 Other Operating and Administration Expenses       330,500,000 Depreciation       111,155,000 Financial Expenses (Bank charges)         &nbsp....

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....0,890 Other income (in thousands)-[B] 39,151 Interest (in thousands)-[C] 48 Prior period Item (in thousands)-[D] (2,628) PBT as computed (in thousands)-[A+B-C-D] 422,621 PBT as per Annual report (in thousands) 422,621   06. Total income from software development service remains more or less the same in both studies. However, the expenditure having been allocated based on turnover, the operating profit to operating cost ratio in the AE segment will under go substantial change if there is a change in the revenues shown in the AE segment. It is therefore fundamentally important that correct revenue is adopted for the AE as well as the non-AE segments for the TP study. TPO had proceeded to make the TP an....

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....xport turnover', given in explanation (iv) to Section 10A of the Act, the contention of the assessee that communication expenditure and telecommunication expenditure have to be included in export turnover cannot be accepted. Nevertheless as mentioned by us whatever is reduced from total turnover should also be deducted from export turnover for working out the deduction u/s.10A of the Act. AO is directed to do so. Ground 9 is partly allowed. 09. Vide ground 10, grievance raised by the assessee is that loss brought forward from the earlier years, were not allowed to be set off. Counsel for the assessee submitted that loss for the earlier years after giving effect to the appellate decisions had to be set off against the current business inc....