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2017 (3) TMI 1933 - ITAT BANGALOREComputation of deduction u/s 10A - HELD THAT:- We find that this issue is covered by the Jurisdictional High Court’s decision in CIT v Tata Elxsi [2011 (8) TMI 782 - KARNATAKA HIGH COURT]. It clearly lays down the principle that while computing deduction u/s 10A, if the export turnover is calculated after excluding certain expenses, such expenses should also be excluded in computing the total turnover. Since the DRP’s decision is in accordance with the ratio of the jurisdictional High Court, supra, we confirm it. Therefore, the Revenue’s appeal grounds fail. TP Adjustment - comparable selection - HELD THAT:- Comparables, ICRA Techno Analytics Ltd, Infosys Techologies Ltd, Kals information Systems Ltd (Seg) and Tata Elxsi Ltd (Seg) are functionally different, thus be excluded. R S Software (India) Ltd be included as company is engaged in the provision of software development services. Onsite development should not be a criteria to judge comparability. Onsite revenue is not one of the filters adopted by the TPO in the order. Persistent Systems & Solutions Ltd be included as per notes to accounts, the company is predominantly engaged in providing software development services to its global customers. As per revenue recognition, the company derives income from software services. Nature of Donation - operating or non operating - assessee submitted that donation is not closely linked to the business operations and should be considered as nonoperating in nature - HELD THAT:- As decided in the case of M/s. Capital One Services India P. Ltd [2015 (4) TMI 1359 - ITAT BANGALORE] wherein it has been held that donation is not in the nature of normal business activity and hence should not be considered as operating. Following the decision, the AO is directed to treat donation as non operating one. Risk adjustment seeked on the basis of additional ground - assessee submitted that suitable adjustment should be provided to account for differences in risk profile of the comparables - HELD THAT:- AR submitted that the TPO is not against granting any risk adjustment but the risk has to be established by the assessee . In the facts and circumstances, this issue is remitted back to the TPO/AO shall re-adjudicate it in accordance with law.
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