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TMI Blog2022 (12) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the year the assessee entered into international transactions with the Associate Enterprises (AEs), the value of which is more than Rs. 15 Crores and, therefore, the determination of the Arms Length Price ("ALP") was referred to the Ld. Transfer Pricing Officer (Ld. TPO) and the Ld. TPO by order dated 30/04/2013 suggested an adjustment of Rs. 3,57,66,546/- on account of provision of ITES and a sum of Rs. 1,02,02,815/- on account of receivables. Pursuant to such report of the Ld. TPO under section 92 CA(3) of the Act, learned Assessing Officer passed draft assessment order dated 12/03/2014 determining the income of the assessee at Rs. 5,18,48,281/- and in the process apart from the adjustment suggested by the Ld. TPO, learned Assessing Officer also added a sum of Rs. 77,16,500/- on account of disallowance of interest on unsecured loan and Rs. 92,20,769/- by considering the foreign exchange loss as nonoperational expenditure. 3. Assessee filed objections before the Ld. DRP. Ld. DRP issued directions to the learned Assessing Officer/Ld. TPO to delete three of the comparables chosen by the Ld. TPO, upholding the addition made by the Ld. TPO/learned Assessing Officer in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer to exclude M/s Infosys BPO Limited and TCS e-Serve Limited from the list of comparables due to high turnover of these companies. Ld. DRP directed the exclusion of Eclerx Services Ltd also on the ground of such company being a KPO company. 6. Insofar as this segment of ITES, assessee is challenging before us the inclusion of Accentia Technologies Ltd., Acropetal Tech (Seg) and TCS e- Serve International Ltd., as retained by the Ld. DRP. Further the assessee is also challenging the inclusion of cosmic global limited and Crossdomain Solutions Ltd, before us, though not challenge before the Ld. DRP. 7. Insofar as the entities Accentia Technologies Ltd., and TCS e-Serve International Ltd., are concerned, in this appeal assessee is challenging the inclusion of only Accentia technologies limited and TCS e-Serve international Ltd. In respect of these two entities, it was contended before the Ld. TPO by the assessee that this entity is having huge turnover and high profit margins and, therefore, the same may not be accepted. Learned Assessing Officer held that no economic rational was given by the taxpayer as to why the high turnover company is be excluded for the comparison. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the same assessment year as that of the assessment year in the case on hand, namely, assessment year 2010-11, Ld. AR placed reliance on the decision reported in Cognizant Technology Services (P) Ltd vs. DCIT (2016) 67 taxmann.com 99 (Hyderabad-Trib), ACIT vs. Hyundai Motors India Engineering (P) Ltd (2015) 64 taxmann.com 442 (Hyderabad-Trib) wherein it was held that during the relevant financial year, the TCS e-Serve international Ltd had acquired the Citi group India-based captive business processing outsourcing (BPO) arm for an all cash consideration and in return had acquired the business of an aggregate amount of $2.5 billion over a period of 90.5 years, this definitely is an exceptional circumstance etc., 11. In these decisions, namely, Cognizant Technology Services (P) Ltd vs. DCIT (2016) 67 taxmann.com 99 (Hyderabad-Trib), ACIT vs. Hyundai Motors India Engineering (P) Ltd (2015) 64 taxmann.com 442 (Hyderabad- Trib) it is further held that Cosmic Global Limited has outsourced major of its activities, the entire outsourcing is confined to translation charges paid at Rs. 3 crores which is strictly in the realm of translation segment revenue is from which are to the tune of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not filed by the CBDT vide notification No. 73/2013 on 18/09/2013 to submit that operating expense means cost incurred in the previous year by the assessee in relation to the international transaction during the course of its normal operations including depreciation and amortisation expenses relating to the assets used by the assessee, but not include certain expenses like interest expense, provision for an unascertained liabilities, P operating expenses, loss arising on account of foreign currency fluctuations, extraordinary expenses, loss on transfer of assets or investments, expenses on account of Income Tax and other expenses not relating to normal operations of the assessee. 15. In DHL Express (India) (P) Ltd. vs. ACIT (supra) and DCIT vs. Hanil Tube India (P) Ltd. (supra) it is held that foreign exchange fluctuations and profit on sale of assets do not form part of the operational income because these items have nothing to do with the main operations of the assessee. In these circumstances, we are of the considered opinion that the foreign exchange loss should not have been treated as operational expense and we direct the learned Assessing Officer/Ld. TPO to treat the foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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