INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Computation of ALP - Adjustment of foreign exchange fluctuation gain/loss -

Assessee filed appeal against the order of TPO excluding foreign exchange fluctuation from operating income for the purpose of comparative analysis to determine the arm's length price of the international transactions. Held: It was clear finding that in case of assessee, the amount of foreign exchange gain was arisen out of the revenue transactions. When foreign exchange fluctuation income is an operating income then same has to be taken into consideration while determining ALP of international transactions entered into by assessee . Thus, it could be considered that the amount of foreign exchange gain/loss arising out of revenue transaction is required to be considered as an item of operating revenue/cost and therefore, matter was restored to the TPO to compute the assessee's margin as well as comparables by considering foreign exchange gain/loss as an item of operating revenue/cost.

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FAVOUR : Matter remanded.

A.Y. : 2009-10

INCOME TAX ACT, 1961

Section 92C

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