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TMI Blog2014 (10) TMI 1010X X X X Extracts X X X X X X X X Extracts X X X X ..... tia software, in respect of which amount of ₹ 8,21,628 was excluded, was not used for the purpose of any work in the relevant previous year and it was only subsequent year that this software was actually used. This finding also remains uncontroverted. Clearly, therefore, this expense cannot be included in the computation of operating profit for the current year. As regards forex gain, the relief granted by the CIT(A) is only a natural corollary to the stand taken by the TPO to the effect that the forex losses are to be included in computation of operating income. When he does so, it cannot be open to him to take a stand that income from forex gain is to be treated as non operational income. In any event, forex gains cannot be consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in holding that depreciation of ₹ 8,21,628 on software was extra ordinary expenditure. This amount has been charged as an allowable cost to the audited profit and loss account and nothing contrary has been inferred by the auditors in the tax audit report. 3. The CIT(A) erred in holding that the amount of forex gain by the assessee is an operating income. This is contrary to the finding of the assessee on page 24 of the TP report where it was held that such item of income to be non operating in nature. Such decision of the CIT(A) was based on calculation of operating margin in case of a comparable namely M/s Federal Technologies which was rejected by the CIT(A) himself for all purposes of comparability. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy, sales commission and translation charges for ₹ 1.81 crore; and (3) Loan for ₹ 1.02 crores (interest of ₹ 4.36 lakhs). To benchmark arm s length price of these transactions, the assessee used the TNMM method with OP/ Sales as the profit level indicator. So far as the dispute before us is concerned, the only relevant aspect is that in the computation of operating profit, the assessee did not take into account superannuation contribution of ₹ 5,88,254 as it pertained to an earlier year, and ₹ 8,21,628 as it pertained to payment for software which was put to use in a later year. While foreign exchange gain was not included by the assessee as its operational income, the TPO, in making comparability adjustments i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profits of the assessee for the current year. Similarly, there is a categorical finding that Catia software, in respect of which amount of ₹ 8,21,628 was excluded, was not used for the purpose of any work in the relevant previous year and it was only subsequent year that this software was actually used. This finding also remains uncontroverted. Clearly, therefore, this expense cannot be included in the computation of operating profit for the current year. As regards forex gain, the relief granted by the CIT(A) is only a natural corollary to the stand taken by the TPO to the effect that the forex losses are to be included in computation of operating income. When he does so, it cannot be open to him to take a stand that income from fore ..... X X X X Extracts X X X X X X X X Extracts X X X X
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