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2014 (2) TMI 83 - ITAT BANGALORE
Adjustment to Arm’s length price u/s 92 of the Act - International transaction with Associated enterprises – Selection of Comparables – Held that:- The arithmetic mean of profit margin to cost of the remaining comparable companies chosen by the TPO after excluding the aforesaid companies is only 7.97% - The profit margin to cost of the Assessee is 14.91% which is much higher than the arithmetic mean of the comparable companies chosen by the TPO (after exclusion of some of the comparable companies chosen by the TPO for reasons set out in the earlier paragraphs) - no adjustment to ALP is called for - the addition sustained by the DRP deserves to be deleted and is accordingly directed to be deleted – the arguments were made on market risk adjustments and also working capital adjustment - the arithmetic mean of the comparables is less than the margin of the assessee.
Deduction u/s 10A of the Act – Expenses incurred in foreign currency for travelling and internet connection charges – Held that:- The decision in CIT v. Tata EIxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] followed - while computing deduction under section 10A of Act, expenditure incurred by the assessee, if excluded from the export turnover should also be excluded from the total turnover – the AO is directed to reduce the expenses incurred for travelling and internet connection charges from the export turnover as well as the total turnover, while computing deduction u/s. 10A of the Act – Decided in favour of Assessee.