9911796707
Advanced Search 
TMI Blog2019 (4) TMI 2129X X X X Extracts X X X X X X X X Extracts X X X X ..... as raised the following effective grounds of appeal : 1. The DRP erred in excluding Persistent Systems and Solutions Ltd from the list of comparables for software development services even though it was satisfying all the quantitative and qualitative filters. 2. The DRP erred in directing the TPO / AO to include the foreign exchange loss / gain for determining the Profit Level Indicator of the assessee in transfer pricing analysis without ascertaining the nexus with the business activity of the assessee even though it is not operating in nature. 3. The DRP erred in directing the TPO to grant risk adjustment without analysing the difference in risk level between the tested party and the uncontrolled comparables and without advising any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ously considered foreign exchange gain / loss as part of operating income when the TPO has excluded this item while computing the operating margins of the assessee. On the contrary, the assessee contends that the foreign exchange loss / gain are closely linked to its business operations and therefore should be considered as operational in nature as has been held by the DRP. 6.2.1 We have heard the rival contentions, perused and carefully considered the material on record. In the case on hand, the DRP has accepted the assessee's contention that foreign exchange loss / gain is operational in nature, by following the decision of the coordinate bench of this Tribunal in the case of SAP Labs Ltd. v. Asstt. CIT [2012] 134 ITD 253/17 taxmann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d relied on its decision in the earlier Assessment Year 2010-11 and directed the TPO to allow risk adjustment and decide the percentage of risk adjustment to be allowed. As a matter of guidance, the DRP referred to a decision of the ITAT, Hyderabad in the case of Dy. CIT v. Hellosoft (P.) Ltd.[2013] 32 taxmann.com 101/57 SOT 4 wherein 1% risk adjustment was allowed. From the above, it is seen that the DRP has merely referred to a decision in which 1% risk adjustment was granted and it is not correct to say that DRP directed that 1% risk adjustment is to be granted in this case. 7.3.2 The Bangalore Benches of the Tribunal, while allowing risk adjustment to captive service providers, as a matter of principle has held in many cases, ;includi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard the rival contentions and perused the record. As we had already remanded back TP grounds to the file of the DRP, further we feel that the various companies will be included / excluded based on our remanding back the entire TP issues to the file of DRP. In view of the above, and more particularly when the assessee had provided the details of working risk adjustment before the DRP as well as the AO, in view of the above, we also remand risk adjustment issue to the file of DRP for deciding afresh, after affording opportunity of hearing and provide time to explain the case of the assessee. With respect to the ground no. 2 , we had taken consistent view that only forex gain / loss which have nexus with the transactions of the year shall a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
