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TMI Blog2013 (6) TMI 593X X X X Extracts X X X X X X X X Extracts X X X X ..... with its subsidiaries in the form of share premium have to be treated as loan transactions. Vide order sheet noting dated 28/06/2010 and 14/10/2010, the tax payer was asked to justify the funds given to its AEs in the form of share premium on the above lines. There is no compliance from the taxpayer. Being so, the TPO computed notional interest on that and disallowed the same. CIT(A) considered certain datas furnished by the assessee and allowed the claim of the assessee. Thus it is appropriate to remit the issue back to the file of the AO for deciding the issue afresh & assessee directed to place all the necessary evidences before AO what was placed before the CIT(A) for re consideration. Appeal of revenue allowed for statistical purposes. - ITA No. 672/Hyd/2012, ITA No. 634/Hyd/2012 - - - Dated:- 17-6-2013 - Shri Chandra Poojari And Shri Saktijit Dey,JJ. For the Petitioner : Sri S. Raghunathan For the Respondent : Sri D. Sudhakara Rao ORDER Per Chandra Poojari, AM:- These cross appeals are directed against the order of the CIT(A)-V, Hyderabad, dated 15/02/2012 for assessment year 2007-08. 2. Briefly the facts of the case are that the assessee company e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... technical services outside India. The Assessing Officer excluded the said elements from export turnover. The Special Bench of this Tribunal at Chennai in the case of ITO Vs. Sak Soft Ltd. (2009) 313 ITR(AT ) 353 (Chennai) (SB) held that the above elements are to be reduced both from export turnover as well as from total turnover for the purpose of calculation of exemption u/s 10A of the Act. 10. We have heard the arguments of both the parties and perused the record. The Special Bench in the case of Sak Soft Ltd. (supra) held "that for the purpose of applying the formula under sub-section (4), the freight, telecom charges or insurance attributable to the delivery of articles or things or computer software outside India or the expenses, if any, incurred in foreign exchange in providing the technical services outside India are to the excluded both from the export turnover and from the total turnover, which are the numerator and denominator respectively in the formula.". Therefore, we do not find any infirmity in the order of the CIT(A) and the order of the CIT(A) is hereby confirmed on this issue. Accordingly, the ground raised by the revenue is dismissed. 11. The next ground of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its own publishing web media and other online publishing partners. The company offers products and services that enable marketers to advertise and sell their products through most of the online marketing channels like display advertising, lead generation and marketing. The company also offers technology infrastructure tools and services that enable advertisers and advertising agencies to implement and manage their own online display advertising. This service facilitates the online management of website advertisement inventory by publishers. Snapshot of company's financial performance during AY 2007-08 Table A Particulars Amount in INR Operating income (excluding other income) 805,721,743 Expenditure (excluding exchange loss and finance charges) (TC) 300,844,253 Operating profit (OP) 504,877,490 7.6.4 During the year in question, the appellant paid 8 crores as value for purchase of shares and 131 crores as share premium. I find that the appellant had valued the shares of the subsidiaries on the basis of discounted cash flow method and net asset value method. During the course of appeal proceedings, the Tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be deleted." 14. Against the order of the CIT(A), the revenue is in appeal before us. 15. The learned DR submitted that the funds given to subsidiaries without any interest is not proper, but, at least interest could have been charged @14% per annum and the fund has been given to the subsidiaries in the guise of share premium, which is nothing but interest free loan. 16. On the other hand, the learned counsel submitted that the CIT(A) has analysed the Discounted Cash Flow (DCF) method, based on the comparison of projected Earnings, before Interest and Tax as per the valuation report with the actual EBIT. He mentioned that the valuation report carried out by the valuer represents the revenues and the cash flows which would be additionally generated by the group as a whole through these subsidiaries located at U.S., U.K., and Hong Kong. He drew our attention to page 10 of the valuation report placed at pages 97,115,132 of the paper book wherein the Valuer has computed gross profit (revenue - cost of revenues) and cost of the revenue is defined to include the traffic acquisition cost, bandwidth cost, data center charges, traffic cost and software charges. Of the above, the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of share premium have to be treated as loan transactions. Vide order sheet noting dated 28/06/2010 and 14/10/2010, the tax payer was asked to justify the funds given to its AEs in the form of share premium on the above lines. There is no compliance from the taxpayer. Being so, the TPO/Assessing Officer computed notional interest on that and disallowed the same. However, the CIT(A) considered certain datas furnished by the assessee and allowed the claim of the assessee. In our opinion, it is appropriate to remit the issue back to the file of the Assessing Officer for deciding the issue afresh. The assessee is directed to place all the necessary evidences before the Assessing Officer what was placed before the CIT(A) for considering the same by the Assessing Officer while adjudicating the issue. 18. The assessee's ground is against the action of the CIT(A) in confirming the addition on account of interest on loans given to subsidiaries of Rs. 2,31,66,591/-. 19. At the time of hearing, the learned counsel for the assessee has canvassed that the issue is squarely covered by the decision of the coordinate bench in case of M/s Four Soft Ltd. in ITA No. 1495/Hyd/2010 for AY 2006-07 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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