Global E-Business Operations Pvt Ltd vs Asst. CIT
The assessee is a company belonging to M/s. Hewlette Packard (HP) group. The assessee is engaged in ITES services. The assessee adopted TNMM method to benchmark his transactions and the profit level indicator was taken as operating profit by operating cost. One of the issues is whether foreign exchange fluctuation gain/loss shall form part of operating income/loss or not.
The Ld D.R submitted that the TPO had treated the foreign exchange fluctuation loss incurred by the assessee in the immediately preceding year as non-operating in nature and the assessee did not object to the same. The Ld A.R submitted that the assessee, in its transfer pricing study, has always been treating foreign exchange loss/gain as operating in nature. Bangalore ITAT holds that foreign exchange fluction gain/loss should be treated as operating profit/loss in nature while computing the profit margin of the assessee as well as of the comparable companies.In view of the foregoing discussions, the ALP of the transactions require to be determined afresh in the light of decisions rendered supra. Accordingly, matter is restored to the file of the AO/TPO.