Income Tax Appellate Tribunal - Mumbai
Symantec Software Solutions P.Ltd, ... vs Dcit Cir 14(3)(2), Mumbai on 15 September, 2020
IN THE INCOME TAX APPELLATE TRIBUNAL "J"
BENCH, MUMBAI
BEFORE SHRI S. RIFAUR RAHMAN, AM &
SHRI AMARJIT SINGH, JM
आयकरअपीलसं./ I.T.A. No. 565/Mum/2016 &
1907/Mum/2017
(निर्धारणवर्ा / Assessment Year: 2011-12 & 2012-13)
M/s Symantec Software DCIT, Circle-14(3)(2),
Solutions Pvt. Ltd. Mumbai
Unit No. 1801, 18th floor, Pin-
बिधम/
The capital, Plot No. 70, G.
Vs.
Block, Bandra-Kurla
Complex, Bandra,
Mumbai-400 051
स्थायीले खासं ./जीआइआरसं ./ PAN No. AABCV2624B
(अपीलाथी/Appellant) : (प्रत्यथी / Respondent)
अपीलाथीकीओरसे/ Appellant : Shri M. P. Lohia, AR
by
प्रत्यथीकीओरसे/Respondentby : Shri Uodhalraj Singh, DR
Virtual Date of Hearing 23.07.2020
:
Date of Pronouncement 15.09.2020
:
आदे श / O R D E R
Per S. Rifaur Rahman, Accountant Member:
The present two appeals have been filed by the assessee against the order of Ld. Dispute Resolution Panel -2 in short referred as 'Ld. DRP', Mumbai dated 14.12.2015 and 08.12.2016 2 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
for Assessment Year (in short AY) 2011-12 & 2012-13 respectively .
2. Since the issues raised in both the appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed of by this consolidated order. Firstly, we are taking appeal in ITA No. 565/Mum/2016 for AY 2011-12.
4. The brief facts of the case are, assessee filed its return of income on 29.11.2011 declaring total income of Rs. 99,55,45,172/-. The return was processed under section 143(1) of the Income Tax Act 1961 (in short ' The Act). The case was selected for regular assessment under section 143 (3) and notice under section 143 (2) and 142 (1) of the Act were issued and served on the assessee along with questionnaire calling for various details. In response, AR of the assessee filed relevant information as called for. Assessing officer observed that assessee had carried out international transactions with associated enterprises for more than ₹ 15 crores. Accordingly, the case was referred to Transfer Pricing officer.
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5. The transfer pricing officer (TPO) observed that assessee is a part of Symantec Group. Assessee is a service provider engaged in providing marketing support services, general and administrative services (reported as technical support services) and software development services to the overseas Symantec Group Entities. The details of international transactions undertaken by the assessee are given below:-
Sr. Nature of transaction Amount (Rs. Method No.
1. Provision of marketing 54,82,56,061 TNMM using support services OP/OC as PLI
2. Provision of general 4,16,73,240 and administrative services
3. Provision of software 11,38,13,387 TNMM using development services OP/OC as PLI (R & D fees)
4. Reimbursement of 98,06,845 Reimbursement expenses to AEs of expenses
5. Recovery of expenses 43,19,216 Recovery of from AEs expenses.
6. TPO observed that assessee benchmarked its international transaction pertaining to software development services rendered to its AEs by using TNMM as the most appropriate method using OP/OC as PLI. Assessee also provided copy of agreement entered between AEs. For the purpose of comparability TP study, assessee's operating margin of 12% from software development services segment is compared with 10 Indian companies 4 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
identified by assessee having weighted average arithmetic mean margin of 10.98%. The updated margins for the selected comparable companies are given below:-
Sr. No. Name of the company FY 2010-11
1. Akshay Software Technologies Ltd. 0.69%
2. Caliber Point Business Solutions Ltd (Seg) 2.16%
3. Cat Technologies Ltd. 9.72%
4. CG-VAK Software & Exports Ltd. (Seg) 4.98%
5. Evoke Technologies Pvt. Ltd. 8.11%
6. Goldstone Technologies Ltd. 6.01%
7. Maveric Systems Ltd. -9.68%
8. Savern Technologies Ltd. (consolidated Seg) 17.30%
9. Thinksoft Global Services Ltd. 2.47%
10. Thirware Solutions Ltd. 16.34% Arthmetic Mean 5.81%
7. After considering the submissions of the assessee, TPO rejected 6 comparables out of 10 comparable companies selected by the assessee and included 3 new companies as comparables i.e., he included
1. E-Zest Solutions Limited.
2. Infosys Ltd and
3. Wipro technologies Ltd (segmental).
8. TPO finalized the report with the 7 comparables with a arithmetic mean average of 22.72% and estimated the adjusted operating revenue of ₹ 13,03,56,269/- and calculated the adjusted operating profit of ₹ 2,41,33,755/-, determined the ALP of ₹ 1,65,42,882/-.
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9. For determining the above ALP, TPO noticed that in segment details provided in the Annual Report, the assessee has taken all the income and expenses related to R&D segment and disclosed the earnings from the segments. The presence of the column 'Unallocable expenses/Income' (where nothing has been allocated by the company) shows that there are no such allocable items. He noticed that in the Transfer Pricing study report, the assessee on its own wisdom has reduced the operating cost of the R&D division by ₹ 46.03 lakhs stating it to be' expenses to be allocated from P&L to segmental expenses. (Refer note below) Further he observed that the note states that "unallocated expenses are allocated in the ratio of segmental revenue". He observed that the assessee has done an arbitrary reduction in operating cost in the TP study, when the audited financials clearly state that no income or expense is pending allocation. Accordingly he reduced ₹ 46.03 lakhs from the operating cost as not allowed.
10. The assessing officer issued a draft assessment order with the TP adjustment of ₹ 1,65,42,882/- to the assessee. Aggrieved with the above order, assessee filed objections before the DRP. 6
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After considering the detailed submissions of the assessee DRP accepted the contention of the assessee relating to objection on inclusion of comparable company M/s E-Zest Solutions Limited and accordingly directed the TPO to not to be taken as comparable. DRP rejected all other objections raised by the assessee. Accordingly, AO passed the final assessment order with the TP adjustment of ₹ 1,43,97,187/-.
11. Aggrieved with the above order, assessee is in appeal before us raising 8 grounds of appeal. At the time of hearing, Ld. AR submitted that assessee is pressing ground No. 3 and ground No. 4. All other grounds are not pressed. Accordingly, all other grounds raised by the assessee are dismissed.
12. Before us, Ld AR submitted that assessee is a captive service entity engaged in rendering marketing support and general administrative support services (as technical support services) and software development services to its overseas AEs. The assessee has carried out TP study and benchmarked Arms Length Price. He submitted that no dispute with regard to benchmark and method adopted by the assessee. He submitted that assessee's margin stood at 12% and assessee has selected 10 7 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
comparables and TPO has rejected 6 comparables and selected 3 new comparables and determined arithmetic mean margin of 22.72%. He brought to our notice paras 14 and 15 of the TPO order in which TPO rejected turnover filter to be applied to service oriented companies like assessee that services less in turnover are also functionally different or that the assets and risks undertaken are substantially and materially different, turnover by itself would not be a reason to differentiate profitability of comparability. With the above observation, TPO included companies like Infosys and Wipro. He brought to our notice turnover of the assessee which is at ₹ 11.38 crores whereas turnover of the Infosys is ₹ 25, 385 crores. Further he brought to our notice page 630 of the paper book filed for the assessment year 2012 - 13, in which assessee has submitted before DRP that Infosys fails the turnover filter that it is having turnover more than hundred crores. He also brought to our notice case law in which Infosys was rejected as comparable company even though it matches profiles of the respective comparable companies and Infosys always reported super normal profit. He also brought to our notice page 631 of the paper book in which assessee has 8 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
submitted a table with a comparable chart in which the risk profile, nature of services, revenue, intangibles, products and brand ownership were compared with the assessee. He submitted that in assessment year 2012 - 13, the Hon'ble DRP has accepted the contention of the assessee and directed TPO to exclude Infosys from the final list of comparables by relying on decision of Hon'ble Bombay High Court and ITAT. Further he also brought to our notice order of DRP for assessment year 2015 - 16 in which DRP has issued similar direction as in assessment year 2012 - 13.
13. He also brought to our notice Hon'ble High Court of Delhi in the case of PCIT versus M/s Cadence Design Systems ITA 333/2019 in which Hon'ble High Court rejected the company Infosys as comparable company for the purpose of TP study. The above case was referred to Hon'ble Supreme Court and Hon'ble Supreme Court dismissed the SLP filed by the revenue. The copy of the respective decisions are placed at page 657 and 658 of the paper book. He also brought to our notice decision of the ITAT, Hyderabad bench in the case of AMD Research & Development Centre India Private Limited. The copy of the 9 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
decision is placed at page 668 of the paper book. He also brought to notice other decisions of ITAT Mumbai benches and prayed that this company should be deleted as a comparable company to the assessee.
14. With regard to ground No. 4, Ld AR submitted that assessee has claimed amortization of goodwill during this year to the extent of ₹ 45,51,139/- (refer page 17 of the paper book) and brought to our notice the fixed assets schedule as per Companies Act and page 192 of the paper book, which is computation statement, in which assessee has disallowed the total depreciation/amortization claimed as per Companies Act and claimed depreciation as per section 32(1) of the Act excluding amortization of goodwill. The depreciation schedule as per Income Tax Act is placed on record at page 192A of the paper book. He submitted that the goodwill claimed by the assessee as per Companies Act is excluded in the computation statement for the tax purpose. He submitted that when the expenditure is excluded for the purpose of tax, the same cannot be part of arm's length price adjustment.
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15. Further he brought to our notice in assessment year 2013 - 14, TPO has made similar adjustment, the DRP directed the TPO to exclude such non-operating expenditure for calculating PLI for comparable study. The direction of the DRP is placed at page 655 of the paper book. He also brought to our notice ITA No. 5341/Delhi/2010, the case of Haworth (India) Private Limited versus DCIT. He brought to our notice ratio of the decision placed at page 456 of the paper book, in which the coordinate bench of Delhi held that the major component of receipt of international transaction of the assessee is commission income as it constitute ₹ 15,39,33,769/- of the total operating income of ₹ 17,73,98,197/-. Therefore, it cannot be said that commission expenses which have been suo moto disallowed by the assessee were not claimed as operating expenses while computing the arm's length price. If they are subsequently disallowed suo moto by the assessee in the revised return they are required to be excluded from the operating cost and calculation of the assessee should have been accepted that its profit margin should have been taken according to the income computed in the revised 11 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
return for which the assessee has also paid the due taxes. Accordingly, contention of the assessee is allowed.
16. Further, he brought to our notice the case of Eaton Technologies Private Limited versus DCIT (ITA No. 1621/PN/2011), in this case the Coordinate Bench observed that the assessee has not claimed any benefit of deduction under section 10A on account of disallowance of any of the expenditure disallowed by it suo moto in the statement of computation of income. The coordinate bench held that with reference to section 92 of the Act, it is clear that the allowance of any expenditure arising from an international transaction shall also be determined having regard to ALP. However, in the instant case the assessee has not claimed the expenditure of ₹ 7,42,20,575/- during the impugned assessment year and has itself disallowed the same while computing its taxable income. Therefore, we agree with the submissions of the learned counsel for the assessee that the provisions of section 92 are not applicable. We also find force in the submission of the learned counsel for the assessee that there cannot be double disallowance/addition of the same amount. We, therefore, are of the opinion that although the transaction 12 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
between the assessee and its AE falls within the meaning of an international transaction still no adjustment on account of ALP can be made since the assessee has suo moto added the amount while computing its taxable income for the impugned assessment year and no benefit of the same has been taken in either by capitalizing it and claiming depreciation on it or taken benefit in subsequent years. Ld AR submitted that the case before us is similar. Further he brought to our notice page 518 of the paper book, in the case of Pole to Win India Private Limited versus DCIT (IT (TP) A No. 1275/Bang/2010, In the similar situation ITAT Bangalore A bench held that expenses disallowed should be excluded from operating cost is well placed and therefore agree with the assessee's contention that expenses disallowed in computation of taxable income should be excluded from operating cost by relying in the case of Haworth India Private Limited (supra).
17. On the other hand, Ld. DR heavily relied on the orders passed by the revenue authorities and DRP.
18. Considered the rival submissions and material placed on record. We noticed that in order to include Infosys as a 13 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
comparable company, TPO observed that turnover filter to be applied to service oriented companies like assessee that services less in turnover are also functionally different or that the assets and risks undertaken are substantially and materially different, turnover by itself would not be a reason to differentiate profitability of comparability, accordingly rejected the contentions of the assessee. We noticed that the turnover of the assessee is only ₹ 11.38 crores whereas turnover of the Infosys is ₹25.385 crores. Further we noticed that assessee has differentiated functions, risks and various assets held by Infosys is far bigger and superior compared to assessee. It is a consistent view of the ITAT Mumbai benches and various courts that turnover filter and size of the comparative company does matter for the comparability study. It is settled matter that the size does matter for the purpose of TP study and comparability study. We are in agreement with the submissions of the Ld AR and the various case law relied by him. We further notice that in the subsequent assessment years the DRP itself has agreed and directed the TPO to exclude the Infosys as a comparable company to the assessee. In substance, we direct TPO to exclude 14 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
the company Infosys as a comparable company to the assessee and accordingly rework the benchmark of the ALP purpose. Accordingly, ground No. 3 raised by the assessee is allowed.
19. With regard to ground No. 4, we noticed that assessee has claimed amortization of goodwill of ₹45,51,139/- during this year in the profit and loss account and while calculating computation of income under the head profits and gains from business/profession, it has disallowed the same in the computation of statement. The expenditure/amortization of goodwill is not part of segmental operating cost. We noticed that while reporting the segmental performance of segments i.e., sales and marketing and R&D segments reported at schedule No. 28 of schedules to the financial statements. In the above schedule assessee has reported the total revenue and segmental expenses to both the segments and kept the unallocable expenses/income as nil. As far as the segment relevant for TP study that is R&D segment, it has reported total operating revenue of ₹ 11,38,13,387/- and total operating expenses of ₹ 10,62,22,514/- and declared operating profit of ₹ 75,90,873/-. However, while doing the analysis of segmental margin, which is placed at page 15 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
165 of the paper book. The assessee has reworked the segmental margin and arrived at the operating profit at 12%. In this study assessee has reported segmental profits as per the schedule 28 reported above that segmental profit at ₹ 75,90,873/- for the software developments services and it has reduced the unallocated expenses from profit and loss account to segmental expenses to the extent of ₹ 46,03,418/- (it includes amortisation of goodwill of ₹ 45,51,139/-). As per the note 1 given in the analysis sheet, it states that "unallocated expenses are allocated in the ratio of segmental revenue". We noticed that assessee has allocated the unallocated expenses of ₹ 48,99,687/- between the segments as ₹ 2,96,267/- in marketing support segment and ₹ 46,03,418/- in software development segment. But the note declares that it is allocated based on segmental revenue.
20. With regard to calculation of segmental results, we are in agreement with the submissions of the Ld AR that the segmental results can be determined only with operating income and operating expenses. Even though assessee has determined the segmental results and declared the same in schedule 28 of the schedule for the financial statements. It has declared that there is 16 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
no unallocable expenses in the above schedule No. 28 but however we are aware that amortisation of goodwill is not part of operating expenses and moreover assessee has not claimed the above amortisation of goodwill as deductible expenditure while computing the income under the head business income. The various decisions submitted by the assessee is in support of the elimination of expenses which are non-operative for the purpose of determining ALP and also when a expenditure is not claimed as a deduction, the same cannot be considered for determining ALP. Accordingly, we are directing the TPO to exclude the non- operative expenses while determining the operating profit of the reported segments.
21. However at the same time we observe that assessee has declared that it is allocating the unallocated expenses based on the ratio of segmental revenue but while allocating the unallocated expenses, it has allocated ₹ 46, 03, 418/- without any basis to the software development services segment. In our considered view, assessee should have allocated the unallocated expenses in the ratio of 85.15 : 14.85 between the segments (which is the ratio of operating revenue). In the given case the 17 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
amortisation of goodwill is not an operating expenses, it should be allocated based on the segmental revenue between the segments and accordingly we are directing the TPO to allocate 14.85% of the amortized value of goodwill for this year to the software and Development Services Segment. In order to carry out the TP study, it is relevant to determine the operating margin of the segment before it can be compared with other comparative companies. The assessee has arrived the margin of the R&D segment at 12% by allocating the unallocated expenses without proper basis. When we allocate the unallocated expenses in the operating revenue basis, we will know the exact operating profit from the segment and then the TP analysis can be carried out based on the updated segment results. Accordingly, we are directing AO/TPO to calculate the updated segment results and do TP adjustment. Accordingly, the ground raised by the assessee is partly allowed.
ITA No. 1906/mum/2017 for AY 2012-13
22. At the time of hearing, learned AR submitted that assessee is pressing the ground No. 4 and 5 only and rest of the grounds 18 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
are not pressed. Accordingly, the ground No. is 1, 2, 3, 6 to 11 are dismissed as not pressed.
23. With regard to ground No. 4, we noticed that the ground No. 4 is similar to the ground No. 4 argued by Ld. AR for the assessment year 2011 - 12. The facts and issue are similar except during this assessment year the assessee has reported amortisation of goodwill of ₹ 68.27 lakhs and achieved segmental revenue to total operating revenue of 25.96% compared to previous year ratio of 14.85%. Since the facts and issues are similar to the previous year, we direct TPO/AO to follow the direction as per para no 21 above. Accordingly, the grounds raised by the assessee is partly allowed.
24. With regard to ground No. 5, we noticed that during assessment proceedings, the assessee submitted that it used to raise the invoices for services rendered in USD equivalent to Indian rupees recorded in its books of accounts. The overseas Symantec Group Entities made payments to the assessee company in USD equivalent to Indian rupees. Since the invoices were raised in USD, the assessee followed the practice of knocking of the payment received in USD against the invoices 19 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
raised in USD terms. Due to this system of accounting, the assessee recorded foreign exchange fluctuation to the extent of difference in the exchange rate on the date of raising of invoices and exchange rate on the date of realization of invoice. The assessee submitted that due to this system of accounting, the foreign exchange fluctuations recorded in the earlier assessment years i.e., AYs 2009 - 10 to AYs 2014 - 15, on account of transactions with overseas entities of the assessee company are being reversed in the books of accounts for financial year 2014 -
15. Accordingly, the profit in the books of accounts for the year ended 31 March 2015 is overstated by ₹ 3,63,30,696/- on account of reversal of foreign exchange gain and losses of the earlier assessment years being the prior period item. However, the assessee has stated that for income tax purposes, such foreign exchange losses for the respective years for which assessment proceedings have already been completed, are now being voluntarily offered to tax, without claiming reversal of foreign exchange gain of the respective years viz AYs 2009 - 10, AYs 2010 - 11 and AYs 2011 - 12 on conservative basis. The assessee stated that since the time limit for filing revised return of 20 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
income has expired for AYs 2009 - 10, AY 2010 - 11 and AYs 2011 - 12, the assessee could not revise the return of income for the respective assessment years. However for AYs 2012 - 13, the assessee voluntarily offered to tax the reversal of foreign exchange loss of ₹ 1,95,94,193/- pertaining to transactions with overseas group entities which was earlier debited to profit and loss account for financial year 2011 - 12 i.e. for AYs 2012 - 13. Since the assessee has earlier claimed the foreign exchange loss of ₹ 1,95,94,193/- while filing the original return of income and time limit for revising the return of income has expired, the assessee wanted to offer the above reversal of losses. Since the assessee offered the above in income voluntarily, AO accepted the same and added the above into the taxable income of the assessee and issued the draft assessment order. After DRP order, while passing the final order under section 143 (3) r.w.s 144C (13) of the Act, AO has not considered the above said addition. The assessee filed application under section 154 of the Act, brought to the notice of assessing officer, the above defect, accordingly the assessing officer passed the order under section 154 rectifying the above mistake.
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25. The assessee filed objection before the DRP that assessee has voluntarily offered the foreign-exchange loss while filing revised return of income, therefore the segmental result originally filed by the assessee has to be modified since assessee has offered this loss of foreign exchange during assessment proceedings and it requested that the operating expense has to be reduced to the extent of foreign exchange loss declared in segmental results. The DRP rejected the contention of the assessee and retained the transfer pricing adjustment made by the TPO. Aggrieved with the above order, assessee is in appeal before us rising the ground No. 5 that inappropriately denying reduction of foreign exchange loss from operating cost of the assessee.
26. The learned AR brought to our notice page 21 of the paper book in which assessee has claimed foreign exchange fluctuation loss (net) of ₹ 224.71 lakhs and he brought to notice segmental reporting in which assessee has apportioned the forex loss between sales and marketing and R&D segments. He brought our notice rectification order passed under section 154 of the Act, it is placed on record at page 626 of the paper book. He submitted 22 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
that assessee has suo-moto offered the foreign-exchange loss as not deductible expenses under Income Tax Act. Therefore, the voluntary declaration under Income Tax Act should be reduced from the operating expenses, since assessee has declared foreign exchange loss as part of operating expenses under segment reporting, accordingly it should be eliminated from the operating expenses.
27. On the other hand, learned DR relied on the orders of the revenue authorities.
28. Considered the rival submissions and material on record. We noticed that assessee has claimed foreign exchange fluctuation loss in the profit and loss account for the period 31 March 2012 and it has apportioned the foreign exchange loss between the segments. It has allocated ₹ 71.18 lakhs as operating cost for the R&D division. During assessment proceedings, assessee voluntarily surrendered the forex loss of this assessment year to the extent of ₹ 1,95,94,193/-. We also noticed that the assessee submitted the financial statement and Transfer Pricing documentation were submitted before completion of assessment however, only during assessment proceedings and subsequent to 23 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
completion of financial statement for AYs 2014 - 15, it came to understand that there is no forex loss as the assessee was invoicing and claiming the revenue in US dollar and reporting the same equivalent Indian rupees. Since this expenditure was offered for taxation only during assessment proceedings. As the assessee has reported the loss in the segment reporting as operating expenditure, now the assessee has reversed the claim of the expenditure in computation of income. In our considered view, the forex loss reported by the assessee in segment reporting as operating expenditure and since assessee has surrendered the same in income tax computation, the same has to be eliminated from the operating expenses. we are in agreement with the submission of the Ld. AR that this reversal of expenditure will have a direct impact on operating expenses declared by the assessee. When the AO accepts the segment reporting reported by the assessee and forex loss as part of operating expenses, the same expenses were surrendered by the assessee as non- deductible expenses then, this expenses should also be removed from the operating expenses in the segment statement. Accordingly, we direct TPO to eliminate the forex loss declared 24 I.T.A. No. 565 /Mum/20 16 & 1907 /Mum/201 7 M/s Symantec Software Solutions Pvt. Ltd.
by the assessee as operating expenses and rework the operating profit of the R&D segment. Since the assessee has declared ₹ 71.18 lakhs as Forex loss for this segment and we noticed that assessee has declared the loss voluntarily, we direct TPO to remove the forex loss from the calculation and then rework the operating profit of the segment and do the TP adjustment accordingly. Considering the above discussion, we allow the ground No. 5 raised by the assessee.
29. In the net result, both the appeals filed by the assessee are partly allowed.
Order pronounced in the open court on 15.09.2020.
Sd/- Sd/-
(Amarjit Singh) (S. Rifaur Rahman)
न्याययकसदस्य / Judicial Member ले खासदस्य / Accountant Member
मंबई Mumbai;यदनां कDated : 15.09.2020
Sr.PS. Dhananjay
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M/s Symantec Software Solutions Pvt. Ltd.
आदे शकीप्रनिनिनिअग्रे नर्ि/Copy of the Order forwarded to :
1. अपीलाथी/ The Appellant
2. प्रत्यथी/ The Respondent
3. आयकरआयक्त(अपील) / The CIT(A)
4. आयकरआयक्त/ CIT- concerned
5. यिभागीयप्रयियनयि, आयकरअपीलीयअयिकरण, मंबई/ DR, ITAT, Mumbai
6. गार्ड फाईल / Guard File आदे शधिुसधर/ BY ORDER, उि/सहधयकिंजीकधर (Dy./Asstt.Registrar) .
आयकरअिीिीयअनर्करण, मंबई/ ITAT, Mumbai