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TMI Blog2019 (10) TMI 1491X X X X Extracts X X X X X X X X Extracts X X X X ..... ] . Since the turnover of following companies are more than 200 crores, they are liable to be excluded under turnover filter Infosys Ltd, Larsen Toubro Infotech Ltd, Mindtree Ltd, Sasken Communication Technologies, Persistent Systems Ltd and Tata Elxsi (seg) Al following the decision of the co-ordinate bench rendered in the case of Electronics for Imaging India P Ltd. [ 2016 (2) TMI 1123 - ITAT BANGALORE] we direct the AO/TPO to exclude above said two companies ICRA Techno Analytics Ltd and KALS INFORMATION SYSTEMS Ltd also. Determining the ALP - We direct the AO to compute margins by taking foreign exchange fluctuations gains/loss as part of operating income both in the case of the assessee and comparable companies. X X X X Extracts X X X X X X X X Extracts X X X X ..... comparable companies, whose average margin was 6.63%. Accordingly, the assessee submitted that its international transactions are at arms length. 5. The TPO, however, selected following eleven comparable companies:- The average margin of the above said eleven companies was 22.71%. Even though, the TPO did not give credit towards "Working capital adjustment" in the original order, yet he gave credit of 1.98% in the rectification order passed u/s. 154 of the Act. Accordingly the TPO proposed Transfer pricing adjustment of ₹ 1,08,58,381/-. 6. The Ld. DRP confirmed all the comparable companies selected by the TPO. 7. The Ld. A.R. submitted that the turnover of the assessee company for the year under consideration was ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e required to be excluded, as the turnover of these companies do not fall under the category of 1 to 200 crores:- (a) Infosys Ltd - 21,140 crores (b) Larsen & Toubro Infotech Ltd - 1,776.76 crores (c) Mindtree Ltd - 698.02 crores (d) Persistent Systems Ltd - 504.41 crores (e) Sasken Communication Technologies - 401.50 crores (f) Tata Elxsi (seg) - 336.94 crores The Ld. A.R. further submitted that the following companies are functionally not comparable and hence they should also be excluded:- (11) ICRA Techno Analytics Ltd. (seg) (12) Kals Information Systems Ltd The Ld. A.R. further submitted that all the above said eight comparable companies have been excluded in the case of DCIT vs. M/s. Electronics for Imagi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arable with software development services segment of the assessee. The DRP has given its finding at pages 13 to 14 as under:- "Having heard the contention, on perusal of the annual report, it is noticed by us that the segmental information is available for two segments, i.e., services and sales. However it is evident from the annual report that the service segment comprises of software development, software consultancy, engineering services, web development, web hosting etc., for which no segmental information is available and therefore, the objection of the assessee is found acceptable. Accordingly, Assessing Officer is directed to exclude the above company from the comparables." 15. We find that the facts recorded by the DRP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Electronics for Imaging India P Ltd. (supra), we direct the AO/TPO to exclude above said two companies also. 12. The Ld. A.R. submitted that the Ld. DRP had directed the AO, vide paragraph 6.4 of its order, to consider foreign exchange fluctuation in respect of the assessee as well as the comparables as operating in nature while determining the ALP in the case of the assessee. He submitted that the AO has not followed the above said directions. Accordingly he prayed that the AO may be directed to follow the directions given by the Ld. DRP on the above matter. We find merit in the prayer of the assessee and accordingly direct the AO to compute margins by taking foreign exchange fluctuations gains/loss as part of operating income bot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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