9911796707
TMI Blog2016 (9) TMI 1658X X X X Extracts X X X X X X X X Extracts X X X X ..... to be considered as part of operational income under TNM method while working out the margin of an assessee for comparability. As for exchange gains, there is no case for the Revenue that it was earned through any hedging or speculative activity. It is not disputed that such gains were on account of transactions related to the exports. Hence, such gains, has to be considered as operational in nature. We set aside the orders of the authorities below on this issue and direct the AO/TPO to rework the results of the assessee after considering the above terms as operational in nature. Needless to say same treatment shall be followed while working out the average PLI of the comparables as well. Comparable selection - M/s Venus Garments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DER PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER Grounds taken by the assessee in this appeal against an order of assessment passed u/s 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) are reproduced hereunder: “1. The AO and the DRP erred both in law and facts of the case In making an upward adjustment of Rs. 1,87,05,079/- to the total Income. 2. The AO and the DRP erred in excluding the Export incentive received of Rs.1.52 Cr and Foreign Exchange gain of Rs.0.23 Cr in computing the operating income under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t:48px; text-align:justify">(i) Delhi Bench of this Tribunal in the case of Goodyear India Ltd vs DCIT[2013] 43 ITD 35 had held export incentives to be not a part of operating income. (ii) Foreign exchange fluctuation gain/loss had nothing to do with the business operations of the assessee since each gain/loss was dependent on the respective management policy of the company. 4. Now, before us, ld. AR assailing the orders of the authorities below submitted that there were a lot of decisions in favour of the assessee by various Benches of the Tribunal, holding that export incentives and forex gains were operational in nature. Specific reliance was plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... niformly held that such incentives were to be considered as part of operational income under TNM method while working out the margin of an assessee for comparability. As for exchange gains, there is no case for the Revenue that it was earned through any hedging or speculative activity. It is not disputed that such gains were on account of transactions related to the exports. Hence, such gains, as held in the cases relied on by the ld. AR, has to be considered as operational in nature. Hence, we set aside the orders of the authorities below on this issue and direct the Assessing Officer/TPO to rework the results of the assessee after considering he above terms as operational in nature. Needless to say same treatment shall be followed while w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roduct profile is not essential. In fact, this is rarely possible. However, the question here is not matching of profile as such. There is a cardinal difference in method of procurement of the garments for sale. Nature of expenditure and business environment of a manufacturer is different from that of a trader. A garment trader cannot be considered as functionally similar to a garment manufacturer. Hence, in our opinion, M/s VGL had to be excluded from the list of comparables. Ordered accordingly. Ground No.5 of the assessee is allowed. 11. Ld. Assessing Officer/TPO is directed to rework the Arm’s Length Price of the international transactions based on our direction in paras supra. X X X X Extracts X X X X X X X X Extracts X X X X
|
