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TMI Blog2017 (9) TMI 1863X X X X Extracts X X X X X X X X Extracts X X X X ..... nd no. 4 is allowed. Comparable selection - HELD THAT:- Various objections were raised by the assessee regarding various comparables such as high turnover, over size, brand and high profitability and on none of these objections, any specific finding has been recorded by the DRP and such a cryptic order of DRP cannot be approved. Hence, we feel it proper to restore this matter back to the file of DRP for fresh decision by way of a speaking and reasoned order. Foreign exchange gain considered for computing profit percentage for the purpose of ALP - HELD THAT:- Foreign exchange gain is nothing but an integral part of the sales proceeds of an assessee carrying on export business. To this extent, there is no quarrel but in our considered opinion, even after holding that the Foreign Exchange fluctuation gain is operating profit, it has to be seen as to whether the same can be considered for the purpose of computing ALP if the said gain is not in respect of sale of the present year. This is so because for the purpose of ALP under TNMM, what is determined is the percentage of profit by dividing the profit of the year by turnover of the year and such profit percentage of the assessee is com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case and in law, based on directions of DRP, the learned AO has erred in law by holding that the telecommunication expenses (i.e. leased line charges) attributable to the delivery of computer software outside India should be reduced from export turnover while computing the deduction under section 10A of the Act; [corresponding to ground 2] 3.on the facts and in the circumstances of the case and in law, based on directions of DRP, the learned AO has erred in law and in fact by holding that the foreign currency travel expenses are towards technical services rendered outside India and should be reduced from "export turnover" while computing the profits eligible for deduction under section 10A of the Act; [corresponding to ground 3] 4.on the facts and in the circumstances of the case and in law, the learned AO has erred in law by not considering that, if the telecommunication expenses (i.e. leased line charges) attributable to the delivery of computer software outside India and foreign currency travel expenses are reduced from export turnover, an equal amount should also be reduced from total turnover for computing the deduction under section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... identified by the Appellant where consolidated results had been used for analysis. The Appellant had considered the consolidated results in only those cases where the back office support services related income of the Indian operations constituted more than 75 percent of the consolidated company-wide/ segmental revenues; [corresponding to ground 9(d)] 10.the learned TPO erred in obtaining information which was not available in public domain by exercising powers u/s 133(6) of the Act and relying on the information for comparability analysis; [corresponding to ground 10] 11.the learned AO/TPO erred in including following companies using unreasonable comparability criteria [corresponding to ground 11]: • Vishal Information Technologies Ltd. • Accentia Technologies Ltd. • Bodhtree Consulting Ltd. • Eclerx Services Ltd. • HCL Comnet Systems & Services Ltd. • Informed Technologies India Ltd. • Infosys BPO Ltd. • Iservices India Pvt. Ltd. • Mold-Tek Technologies Ltd. • Wipro Ltd. • Accurate Data Converters Ltd. 12.the learned AO/TPO erred in not considering the foreign exchange fluctuation gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of assessee's request for exclusion of various comparables. The ld. AR of assessee drawn our attention to page no. 20 and 21 of the DRP directions where this issue was decided by the DRP. At this juncture, it was observed by the bench that the order of DRP is cryptic because no speaking order is passed by the DRP regarding various objections raised by the assessee. In reply, it was submitted by ld. AR of assessee that TPO has passed a speaking order and the DRP has approved the same and therefore, the issue involved may be decided on merit instead of restoring back the same to the file of DRP for passing a speaking and reasoned order as proposed by the bench. The ld. DR of revenue submitted that in view of the cryptic order of DRP, the matter may be restored back to the file of DRP for fresh decision. 7. We have considered the rival submissions. First of all, we reproduce the relevant paras from the order of DRP on pages 20 and 21. These are as under:- "The Eligible Assessee contends that the inclusion of comparables with high turnover, over size, brand and high profitability is erroneous 15; The Eligible Assessee contains that giant companies should be rejected on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessee are good only for those specific cases in which they were decided. Factually the present case is different and therefore the views taken in the specific cases as per the Case Laws relied upon by the Eligible Assessee cannot be imported for application in the instant case. The issues like high growth rate and Related Party Transaction, different turnover band etc. have been dealt with in general in the preceding paragraphs. They do not support the contentions of the Eligible Assessee. No interference is called for in the given context. 15 The Eligible Assessee relies on the decisions of ITAT Pune in the case of E-Gain Communications Pvt. Ltd. (ITA No. - 1685/PN/07); ITAT Bangalore in the case of Philips Software Centre Pvt. Ltd. (ITA No. - 218/Bang/2008); ITAT Chandigarh in the case of DCIT Mohali vs. Quark Systems Pvt. Ltd. (ITA No. - 100/CHD/2009); ITAT, Delhi in the case of Sony India Ltd. (1189/De1/2005, 819 & 820/Del/2007); ITAT Bangalore in the case of Aztec Software & Technologies Services Ltd. (ITA No. 585/2006); ITAT Delhi in the case of Mentor Graphics (Noida) Pvt. Ltd. (ITA No. 1969/D/2006); ITAT, Delhi in the case of Ranbaxy Laboratories Ltd. (ITA. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the gain is on the turnover of the present year or an earlier year. In reply, it was submitted that such details are not readily available and therefore, the matter be restored back to the file of AO for fresh decision with suitable directions. The ld. DR of revenue also submitted that the matter may be restored back to the file of AO with suitable directions. 11. We have considered the rival submissions. We find that in Assessment Year 2006-07, the Tribunal order followed the tribunal order rendered in the case of Sap labs India Pvt. Ltd. as reported in ITA Nos. 398 & 418/Bang/2008 dated 30.08.2010 relevant Para of this Tribunal order have been reproduced by Tribunal in that order as per which it was held that foreign exchange gain is nothing but an integral part of the sales proceeds of an assessee carrying on export business. To this extent, there is no quarrel but in our considered opinion, even after holding that the Foreign Exchange fluctuation gain is operating profit, it has to be seen as to whether the same can be considered for the purpose of computing ALP if the said gain is not in respect of sale of the present year. This is so because for the purpose of ALP ..... X X X X Extracts X X X X X X X X Extracts X X X X
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