Case Law Details
Tech Mahindra Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that expenditure incurred on foreign currency on telecommunication charges and provision of technical services outside of India should not be excluded from export turnover for the purpose of computing u/s 10A of the Income Tax Act.
Facts- The assessee is a joint venture between M/s Mahindra & Mahindra Limited and British Telecom Plc, which is a venture partner and also the major customer of the assessee. The assessee is engaged in the business of development of computer software and other related services. The case of the assessee was selected for scrutiny. Since the assessee had international transaction with its Associated Enterprise (AE), a reference was made to the Transfer Pricing Officer (TPO) to determine the arm’s length price of the international transaction. The TPO made a transfer pricing adjustment of Rs.552,69,73,774/-
Besides TP adjustment, the Assessing Officer made a disallowance of Rs.6,50,290/- under section 14A of the Act and also made an adjustment in the 10A deduction claimed by the assessee by reducing from the export turnover (i) Technical services expenses incurred in foreign currency, (ii) telecommunication charges and (iii) Unrealised export proceeds.
CIT(A) granted partial relief. Being aggrieved, both revenue and assessee has preferred the present appeal.
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