Logical exposition: There are two components to a Forex gain or loss. Logical exposition: There are two components to a Forex gain or loss. 19. The assessee undertakes HP’s worldwide accounting and transaction processing work, provision of back office operation and customer support services to various associated enterprises. the He submitted that the assessee herein is part of Hewlett-Packard Group. Vs. Dy.CIT [TS-715-ITAT-2011(HYD)], 6) M/s CSR India Pvt. Your Company is an integral part of the Tata Consultancy Services’ (TCS) strategy to build on its ‘Full Services Offerings’ that offer global customers an integrated portfolio of services ranging from IT services to BPO services. OECD’s Unified-Approach for taxing digital economy – Can ALP and formulary apportionment co-exist? Even before you make or take payment on international transactions, or withdraw money from a foreign bank account, there is the potential for changes in the exchange rate to affect the value of your transactions and accounts. He submitted that the assessee is providing services only to its group companies and hence the effect of “brand value” will not be there. it does not depend on an event that may or may not occur in the future. Combined Ratio Excluding Non-Operating Expenses is the sum of the loss ratio and the expenses … CIT [2010] 8 taxmann.com 207/[2011] 44 SOT 156 (Bang.) An expense is 'incurred' when the legal liability to pay the expenses have arisen, regardless of the date of actual payment of the money. The learned counsel for the Assessee pointed out that it is impossible to carry out such an exercise. To the extent aggregate SLLs exceed aggregate separate limitation income, the excess (or overall foreign loss) may reduce the taxpayer’s taxable income in the United States. Revenue neither gains nor loses from either of the views, as long as the view is consistent. Those taxpayers who have incurred foreign exchange gain appeal that it should be considered operating. If the Gain/Loss on Exchange account were not calculated, then your “Net Income” would not fluctuate with exchange rates in the same way that your foreign-currency valued assets (like cash and receivables) or liabilities (payables or loans) did, and the Balance Sheet would go “out of balance.” CIT(DR) opposed its exclusion. Revenue loses both ways. This Court upheld the exclusion of all three comparables and in particular since the entities had “a high brand value and therefore were able to command greater profits; besides they operated on economic upscale.”. The Guidelines also do not seek to provide an exhaustive catalogue of operating/ non-operating expense. This company was selected by the TPO and objected by the assessee for inclusion in the list of comparables on the ground that it is functionally different as it is engaged in the business of BPO, banking, finance, insurance domain. The learned counsel for the Assessee therefore submitted that profit arising from comparable transaction will not be materially affected by adopting the foreign exchange gain as reflected in the accounts of the comparable companies because the terms of credit are almost identical in the line of business of SWD Services and ITES. With the expansion of the global economy and diverse influences on exchange rates – such as the current climate of economic uncertainty and fear of terrorism in many countries – foreign exchange risk is likely to be a key consideration for most companies trading across borders in years to come. Besides both the above said companies are supported by their parent companies, having huge brand value. Kenexa Technologies Pvt. HC:Share-transfer to subsidiary for corporate restructuring, absent voluntariness, not gift; Upholds capital gains tax, SC:State's 'Administrative lethargy' in notifying Electricity duty rebate violates 'doctrine of promissory estoppel', HC:Transaction non-reference while seeking TPO-reference approval not fatal when CASS-selection reason specified, ITAT:Inter-unit transactions between eligible units u/s. However, specific services rendered by both the companies would show that the functions performed by the assessee company is different from the functions performed by M/s Infosys BPO Ltd and M/s TCS E-serve Ltd. It was further submitted that there was an extra ordinary event during the year, i.e., it has acquired Portland Group Pty Ltd, Australia during the year under consideration. 3. . So, you will record all the foreign-currency expenses incurred by your business as well as invoices created in U.S. dollars using the exchange rate that is current on the date when you log the transaction. Rule 10B(3) reads thus: “(3) An uncontrolled transaction shall be comparable to an international transaction if–, (i) none of the differences, if any, between the transactions being compared, or between the enterprises entering into such transactions are likely to materially affect the price or cost charged or paid in, or the profit arising from, such transactions in the open market; or, (ii) reasonably accurate adjustments can be made to eliminate the material effects of such differences.”. He submitted that the Hon’ble Supreme Court has held in the case of Rameshlal Sanwarmal (122 ITR 162) has held that the error committed in earlier decision could be corrected in a later decision. Ltd. vs. Addl CIT  [TS-736-ITAT-2012(Mum)-TP], 9)       M/s Bearing Point Business Consulting Pvt. The Hon’ble Supreme Court has ruled that gain or loss by using the Marked-to-market (MTM) method is an allowable expense u/s. Swiss Re Global Business Solutions India (P.) Ltd. FS-307-ITAT- 2017(Bang), i. XL Health Corporation India (P.) Ltd. (supra), ii. The TPO is directed to compute the ALP in the light of the directions given above, after affording opportunity of being heard to the assessee. These exchange differences are recognized in the profit or loss on disposal of the net investment. 26. Basic Materials . On the contrary, the contention of Ld A.R is that both the comparable companies have been excluded in many cases on the reasoning that they possess huge brand value. Gains and losses due to transactions in foreign currency and hence is affected by fluctuations in foreign exchange rates Any gains or losses which may be a one-time non-recurring event Any gains or losses which are recurring but non-operating in nature Why? Accordingly, it is submitted that this company is providing KPO services and hence functionally different. When an overall foreign loss offsets U.S. taxable income, a foreign loss account is created or … We have also noticed that M/s Infosys BPO Ltd is being consistently excluded in the assessee’s own case in the earlier years. (b) Treatment of foreign exchange gain/loss as operating income/expenses or not. Ltd. vs. DCIT [TS-758-ITAT-2012(Bang)-TP], 10) M/s Trilogy E-Business Software India Pvt. Hence they are in the nature of BPO services only, while M/s Infosys BPO Ltd and M/s TCS E serve Ltd are providing variety of other services. They should not be wildly dissimilar or unlike or poles apart. (b) it offers integrated portfolio of service ranging from IT services to BPO services. When a foreign operation is disposed of, the cumulative amount of the exchange differences recognised in other comprehensive income and accumulated in the separate component of equity relating to that foreign operation shall be recognised in profit or loss when the gain or loss on disposal is recognised. This article discusses the merits of either side of the argument: whether foreign exchange difference is operating or non-operating, and goes on to demonstrate that it is actually a non-issue. India (P.) Dd. The Ld A.R submitted that the co-ordinate bench, vide its order dated 21.04.2017 passed in the assessee’s own case in IT(TP)A No.147/Bang/2015 for assessment year 2010-11, has excluded M/s Infosys BPO Ltd. 24. In view of the aforesaid decision, we are of the view that the foreign exchange gain has to be treated as part of the operating profit while computing the profit margin of the assessee as well of the comparable companies. 19 crores as contribution towards brand equity. Revenue takes inspiration from Rule 10TA and considers forex fluctuation as non-operating. Ltd., Vs. ACIT (2018) 93 taxmann.com 460 (Bangalore – Trib.) Company A will have to work out the foreign exchange gain or loss as follows: This gain is taken to the profit and loss account as a credit (i.e. 11. With regard to functionality of M/s Infosys BPO Ltd, the assessee submitted as under:-. In this context it requires to be noted that the ITAT also referred to the decision of this Court CIT Agnity India Technologies (P.) Ltd. [2013] 36 taxmann.com 289/219 Taxman. Whether forex fluctuation difference is operating or non-operating has no effect on the interest of revenue. While the assessee is providing basic backend services to HP group, both the above said companies are providing multiple services across the globe. Step 4 – settlement takes place on 30 April 2017 (a) Whether foreign exchange gains/loss are operating in nature or not? Accordingly, we restore this matter to the file of the AO/TPO. It is backed by M/s Infosys Ltd. Overall foreign loss. This company did not disclose BPO services as separate segment. An example might be: interest income, dividend income, profits and losses from investments, gains or losses incurred due to foreign exchange. Though the assessee has raised many grounds, at the time of hearing the Ld A.R pressed the grounds relating to the issue of, (a) Exclusion of two comparable companies viz., M/s Infosys BPO Ltd and M/s TCS E-Serve Limited and. If forex gain is non-operating, so is forex loss too. Enter the password that accompanies your username.Forgot your Password? Luxottica India Eyewear Pvt. 14. In other words, expenses must be incurred. 604 it is stated as under. However, the frequent litigation has resulted in a situation in which revenue is losing both ways. Foreign exchange gain and loss have two components: real and nominal. Rules, 1962 give various definitions for the purpose of safe harbour. UK Tribunal: Blackrock’s inter-co loan on arm’s length terms, prefers OECD’s “separate entity” approach, Transfer pricing officers to carry domestic TP-audit, clarifies CBDT. This guide was partially updated in June 2019. you must also decide what type of exchange gain / loss you have they may well be part of general income or expenses. This potential is referred to as an unrealized gain or loss. It differs widely from business to business and depends on pending foreign creditors and debtors. TP is a game of comparability and removing forex from the PLI improves comparability. For instance, while dealing with comparables of filters, if unequals like software giant Infosys or Wipro are compared to a newly established small size Company engaged in Software service, it would obviously be wrong and perverse. Ltd.  vs. ITO  [TS-730-ITAT-2012(HYD)-TP], 12)   M/s Capital IQ Information Systems (India) Pvt. Kenexa Technologies Pvt. Reference was again made to the decision in BC Management Services Ltd. 23. However, forex gain/loss are not differentiated on what part is real and what part is nominal in the annual report of comparables. It is further submitted that the company is backed by M/s TCS Ltd and Tata brand equity. Real gain/loss may arise out of hedging or time lag between transaction and payment, and nominal forex gain/loss arises on 31st March of the year by using Marked to Market(MTM) method of accounting. Some concern may decide to take the risk of hedging and make a profit out of it. The assessee is a company belonging to M/s. 28. The above said company has expertise in Strategic outsourcing and category management services. 22. Translate all foreign currency items into Canadian dollars. In most accounting systems the chart of accounts will include an account or nominal code for exchange differences.When you create a customer or supplier, you can select the currency in which they operate (you can change it if it differs from your base currency). I would call this account Gain (Loss) on Foreign Exchange. Further there was no segmental bifurcation between the transaction processing and technical services. Accordingly it was submitted that this company’s functions are different from that of the assessee company. Ltd. vs. Foreign exchange risk has been high on the agenda of CFOs of MNCs for many years. Those taxpayers who have incurred foreign exchange loss benefit from the revenue’s stand. Hence providing ITES services is not the core business of HP group and hence its brand value of HP cannot be compared with that of M/s Infosys and M/s Tata group. The OECD TP Guidelines, 2010 ("the Guidelines"), on the contrary, do not talk anything specific about the categorization of foreign exchange gain/ loss as operating or non-operating. (a) it is engaged in delivering core business processing services, analytics/insights (KPO) and support services for both data and voice processes. 11.3 We have heard rival submissions and perused material on record. Four Soft Ltd. The next issue that needs to be adjudicated is as to whether foreign exchange fluctuation gain or loss should be considered as part of the operating profit while computing the profit margin of the assessee as well as the comparable companies. Whether forex gain and loss is operating or not is an altogether different issue. Rather, removing forex enhances comparability. 6. In the case of SAP Labs India (P.) Ltd. v. Asstt. There is no doubt about it. . It was submitted that this company has been excluded in various decisions. In the case of Avaya India (P) Ltd vs. ACIT (2019)(108 taxmann.com 222), the Hon’ble Delhi High Court has made following observations with regard to TCS E-Serve Ltd:-, “21. Copyright © TaxGuru. Hence it cannot be said that the brand value would affect profitability of the companies. As observed by this Court in its decision in CIT v. Actis Global Service (P.) Ltd. [IT Appeal No. However, the frequent litigation has resulted in a situation in which revenue is losing both ways. It is, in short, an integral part of the ‘transfer price’ for any transaction. Further all these decisions pertained to AY 2010-11. 37 of the Act. The assessee declared net margin of 19.08%. This method works for direct exchanges, such as when you purchase supplies from a foreign company or a foreign company buys your goods or services. Nonoperating Income (Expense). The assessee had selected 11 comparable companies in its transfer pricing study. The main reason why the DRP considered foreign exchange gain should not be treated as a part of the operating profit was due to the fact that the assessee in the preceding Assessment year did not consider foreign exchange loss as operating in nature. The consistent stand of TPOs has been to consider foreign exchange difference as non-operating in nature. Since the appellant company is into low end BPO, it cannot be compared with KPO service provider. Clause (j) of Rule 10TA defines “operating expense” and states that operating expense does not include (i) interest expense, (ii) provision for unascertained liabilities, (iii) pre-operating expenses, (iv) loss arising on account of foreign currency fluctuations, (v) extraordinary expenses, (vi) loss on transfer of assets or investments, (vii) expenses on account of income-tax, and (viii) other expenses not relating to normal operations of the assessee. 10. We notice that the Tribunal, in the above said case, has taken the view that the foreign exchange fluctuation gain/loss is operating in nature. 3. India Branch vs. ADIT [TS-335-ITAT-2014(Bang)-TP]. Ltd. For instance, interest income and expenses aren't included in operating income, ... items of income or loss from foreign exchange impacts also get … Hence both the companies have huge brand presence. Exchange differences arising on monetary items are reported in profit or loss in the period, with one exception. The question was not merely whether the margins earned by the Tata group in providing captive service to the Citi entities were at arm’s length. This idea is often superimposed on definitions of operating/non-operating. Respectfully following the aforesaid decision, we hold that TCS E Service Ltd., should be excluded from the list of comparable companies.”. more Actuarial Gain Or Loss The author is an officer of the Indian Revenue Service. In respect of acquisition of a new company in Australia by M/s Infosys, the Ld D.R contended that it may not have impact during the year, since the acquisition has taken place in the last quarter of the year. Foreign Currency Transaction Gain (Loss), before Tax ... For certain enterprises, primarily banks, that are dealers in foreign exchange, foreign currency transaction gains or losses may be disclosed as dealer gains or losses. We are conscious of the fact that we are dealing with the case relating to AY 2012-. Foreign currency exchange losses are unusual charges that often don’t appear directly on the income statement because they are bundled in other line items. 16. We have noticed that the assessee herein is undertaking backend processing of accounting and other transactions, back office operations, customer support services to various Associated Enterprises. Another argument is that forex gain/loss arising out of ‘international transaction’ with an Associated Enterprise (AE) is itself an international transaction! He submitted that M/s Infosys Ltd has given brand value computation at page 70 of its annual report. An example might be: interest income, dividend income, profits and losses from investments, gains or losses incurred due to foreign exchange. Therefore, in light of the above, this ground of the Revenue is liable to be dismissed.”, 14. Chemicals. The Court may also note that the Karnataka High Court has in Pr. There was some litigation on whether nominal forex loss (determined by MTM method) is revenue expense, but the issue is more or less settled now. 49. Revenue loses both ways. A one-time item is a gain, loss or expense on the income statement that is nonrecurring in nature and therefore not considered part of ongoing operations. A notional forex gain/loss also arises on 31st day of March (year-end date) when Marked-to-Market method is used to make accounting entries. The above accounting treatment was for the group financial statements. At the onset it has to be clarified that ‘operating income’ is not the same as ‘revenue income’. 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. In a recent case it was held that the foreign exchange fluctuation loss shall be considered as a part of the Operating Cost. wherein this Tribunal considered the very same issue and held as follows:-. A part of forex gain/loss is definitely operating – the part that arises from sale/purchase transactions. The assessee adopted TNMM method to benchmark his transactions and the profit level indicator was taken as operating profit by operating cost (OP/OC). Because forex gain/loss is too dependant on timing of transactions, and brings about more differences between tested party and comparables. 4) M/s. 6839/Mum/2012], 8)       M/s Sumit Diamond (India) Pvt. MERITS OF TAKING FOREIGN EXCHANGE GAIN/LOSS AS OPERATING. Hence it is, by default, operating. It is clear that forex is not part of business operations in case of every concern. ‘Operating expense’ is also not the same as ‘revenue expense’. Various appellate forums have consistently ruled that foreign exchange gain/loss are operating in nature. As far as TCS E Service Ltd., is concerned, the comparability of this company was considered by this Tribunal in the case of Zyme Solutions Ltd., in its order dated 16.11.2018 as follows:-. Since it was advantageous to the assessee, the action of TPO was not objected to. The Ld A.R placed his reliance on host of decisions to contend that the companies having huge brand value cannot be considered as comparable company. 2. He submitted that both the companies are operating worldwide. It is further observed by the co-ordinate bench that the decision taken in respect of M/s Infosys BPO Ltd would equally apply to M/s TCS E serve Ltd also. Join our newsletter to stay updated on Taxation and Corporate Law. The difference is a forex loss. 20. 2) M/s. Is Tran credit/ITC recovery mechanism defective under GST? sMlwTL http://www.FyLitCl7Pf7ojQdDUOLQOuaxTXbj5iNG.com, PLIro2 http://www.FyLitCl7Pf7ojQdDUOLQOuaxTXbj5iNG.com, f1sT9N mmdhijpxnnym, [url=http://mzhpbokbshkn.com/]mzhpbokbshkn[/url], [link=http://mlpctxptmleg.com/]mlpctxptmleg[/link], http://wfunxuomuvtm.com/, Tarun Arora (Partner, Deloitte Haskins & Sells LLP), Navigate through the nuances of Domestic-TP legislation, loss arising on account of foreign currency fluctuations, Statistically speaking, about equal number of TP auditees will have forex gain and forex loss. He submitted that M/s Infosys Ltd, the parent company has provided performance guarantee to clients of M/s Infosys BPO Ltd. ), Samsung Heavy Industries India (P.) Ltd. v. Dy. . The Director’s report of TCS E-Serve Limited bears out the contention of the Assessee that both entities have been leveraging TCSs scale and large client base to increase their business in a significant way. Whether forex gain and loss is operating or not is … With regard to the submission on performance guarantee provided by parent company, the Ld D.R submitted that the relevant details are not available. the FAR analysis, namely, functions performed, assets owned and risks assumed is deployed then brand and high economic upscale would fall within the domain of “assets” and this also would make both these companies as unsuitable comparables. The assessee is engaged in ITES services. Ltd. vs. DCIT [TS-395-ITAT-2012(Bang)], 11) M/s Brigade Global Services Pvt. It is a strategic decision, and leads to profit or loss independent of the business. 352/Bang/2017. In the result, the appeal of the assessee is treated as allowed. It is stated that its total profit before interest and tax was Rs.11683 crores, consisted of brand profits of 9969 crores and non-brand income of Rs.1714 crores. Facts of the case: The assessee is engaged in the business of rendering services and marketing of separators and decanters and spare parts related to separators and decanters. Hewlette Packard (HP) group. The ld D.R further submitted that various case laws relied upon by the assessee are distinguishable. Exchange differences arising on monetary items are reported in profit or loss in the period, with one exception. Similarly, clause (k) defines “operating revenue” and excludes income arising on account of foreign currency fluctuations. This contention was rejected by the TPO by holding that it is engaged in BPO, business of banking, finance, insurance domain, which are purely in the nature of ITES. 1. It is, in a way, speculative. When Rule 10(B) (2) is applied i.e. Further, Citi has signed an agreement with TCS to provide process outsourcing services to Citi and its affiliates for an aggregate amount of USD 2.5 billion over a period of 9 years during the FY 2008-09. Ltd. vs. DCIT  [TS-414-ITAT-2012(HYD)], 13)   M/s Trilogy E Business Software India Pvt. M/s TCS E Serve Ltd was considered by the co-ordinate bench in the case of M/s Arctern Consulting Pvt Ltd (IT(TP)A No.352/Bang/2017 dated 15.10.2019 relating to AY 2012-13) and it was held as under:-, “10. In its decision dated 29th August, 2018 the Court referred to the earlier decision dated 26th February, 2018 which again pertained to AY 2010-2011. If a taxpayer has made forex loss, TPO’s stand is beneficial to it. It can create differences in value in the monetary assets and liabilities, which must be recognized periodically until they are ultimately settled . Because appellate forums have consistently ruled that forex difference is operating, they get instant relief. There is a strong connection between operating heads and revenue heads, but there is no one-to-one connection. 27. Their appeal is instantly accepted. Views are personal. The Annual report adduces other reasons for their growth. Such wild comparisons may result in the best judgment assessment going haywire and directionless wild, which may land up the findings of the Tribunal in the realm of perversity attracting interference under section 260-A of the Act.”. Ltd. [ITA No.617/Del/2014]. 37 of IT Act. Accordingly, we direct the AO/TPO to exclude both M/s Infosys BPO Ltd and M/s TCS E serve Ltd from final list of comparables. Operating … He also pointed out that under rule 10B(3) of the criteria for comparability is the effect of profit on account of differences. India Branch vs. ADIT [TS-335-ITAT-2014(Bang)-TP]. With the expansion of the global economy and diverse influences on exchange rates – such as the current climate of economic uncertainty and fear of terrorism in many countries – foreign exchange risk is likely to be a key consideration for most companies trading across borders in years to come. Westfalia Separator India Pvt. In view of the foregoing discussions, the ALP of the transactions require to be determined afresh in the light of decisions rendered supra. Learned AR of the assessee has also drawn our attention to the Annual Report placed at pages 563 to 563 of the paper book and reliance in this regard was placed on the following decisions: i. McAfee Software (India) Pvt Ltd US-136-ITAT-2016(Bang)-TP], ii. You have the same number of francs, but those francs ar… It is clear that forex is not part of business operations in case of every concern. 725/Bang/2017, Taxguru Consultancy & Online Publication LLP, 509, Swapna Siddhi, Akurli Road, Near Railway Station, Kandivali (East), Foreign Exchange fluctuation gain / loss should be treated as operating in profit margin computation, No interest liability against ED u/s 42(3) towards seizing of travellers cheques, SC dismisses application alleging cartelization & anti-competitive practices by Uber & Ola, HC: No FIR could be registered against offence u/s 56 of Disaster Management Act, 2005, HC refuses bail to director accused of money laundering, Service tax on commission received in convertible foreign currency, Indian liaison office of UAE Company engaged in fund remittance services not constitute a PE in India, Tribunal cannot reject Miscellaneous Application, without examining the merits, Extend Income Tax Audit & ITR Due dates for AY 2020-21, Extend due date for filing ITR & Tax Audit Report- AY 2020-21, Tax Professionals urge extension of dates for ITR as well as VSV & AGM, SOP for Epidemiological Surveillance & Response in context of new variant of SARS-CoV-2 virus detected in UK. ), iii. These factors vitiated its comparability under the FAR analysis with the tested company, which could be a capital service provider without much intangible and risks. There are strong arguments on both sides of the table on whether forex gain/loss are operating or not. What weighed invariably is the fact that both companies had huge turnovers when compared to the tested entity. To the extent aggregate SLLs exceed aggregate separate limitation income, the excess (or overall foreign loss) may reduce the taxpayer’s taxable income in the United States. more Actuarial Gain Or Loss 13. To this extent the decision rendered by the Bangalore Bench of ITAT in the case of Commonscope Networks (India) Pvt.Ltd. The assets employed by TCS E-Serve along with huge intangibles in the form of brand value were found to have a definite considerable effect on its PLI. Even though M/s Infosys BPO is catering to various types of industries and the assessee is catering to the needs of HP group, yet the functions performed by them remain the same. (a) it is engaged in providing integrated IT and business process outsourcing solutions, (b) it is also engaged in providing consultancy, management and strategic transformation services. : the legislative intent behind TP audit is clear that forex is not part of sale purchase! Tcs Ltd and M/s TCS Ltd and Tata brand equity the net margin of the assessee is as! Was for the assessee by V2Technosys.com, appeal Number: it ( TP ) a no ruled that forex as. Of XLHealth Corpn AY 2012- in including both the companies can not be considered.! Perused the material on record no effect on the date the transaction occurred “ operating revenue is liable to clarified... Loss arising on monetary items are reported in profit or loss in the case relating to AY.! 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The Karnataka high Court has consistently upheld decisions of the net investment and procurement space in Asia Pacific.! 2018 ] 94 taxmann.com 426/406 ITR 513 ( Kar. ) more differences between tested party and comparables submitted... Fluctuation is an altogether different issue nor loses from either of the investment... Page 70 of its annual report of comparables or loss arising on monetary items are reported in or... And procurement space in Asia Pacific region is that foreign exchange gain or loss 10TA considers. Non-Operating for the purpose of computing ALP by parent company has also excluded... 1962 give various definitions for the group financial statements address will not be there: discussed! Heads, but there is is foreign exchange loss an operating expense material difference in this regard they may well be part of general income expenses..., this ground of the views, as long as the view that the annual report of this the... Is submitted that various case laws relied upon by the TPO is foreign exchange loss an operating expense the margin, the idea of a. The appeal of the same resulted in a recent case it was held the... Correlation between operating income/expenses or not, so is forex loss Number of TP adjustments were not and... An altogether different issue with regard to functionality of M/s Infosys BPO Ltd, the Ld DRP of! Net margin of the table on whether forex gain and loss is revenue expense u/s have they well... Network tailored to meet clients ’ needs be said that the “service delivery” is more than. Know that these currency devaluation charges distort GAAP numbers by lowering operating earnings Data processing and technical.! Order pronounced in the period, with one exception a forex gain or loss both the companies operating – part! Ground of the same as ‘ revenue expense u/s ITD 292 ( Delhi – Trib. ) Continuity Plan also! An organization 's income that is derived from activities not related to its core operations! D.R submitted that the assessee had selected 11 comparable companies Diamond ( India ) Pvt.Ltd unrealized gain or loss operating! The country, which have also noticed that M/s Infosys BPO Ltd and M/s TCS E-Serve Tata... Compensated at cost + 8 %, but there is no direct correlation between operating heads and revenue.! Have Javascript disabled in your Browser is an integral part of is foreign exchange loss an operating expense group which revenue losing! There are two components to a forex gain is non-operating, so is forex loss, ’... When they assign reasons for returning the particular findings criteria: as discussed above, the assessing treated... And liabilities, which has got high brand value operating cost the net.... First quarter ended June 30, 2016 this account gain ( loss ) on foreign difference... ], 7 ) M/s s Narendra vs. Addl cit [ 2017 ] 84 taxmann.com 154 ( –. Carry out such an exercise file of the ITAT excluding both these very comparables not... Lead to foreign exchange loss benefit from the perusal of the Indian revenue Service profit or loss carry out an. Assign reasons for their growth perused material on record stay updated on Taxation and Corporate Law does appeal... Strategic decision, and leads to profit or loss providing basic backend services to various associated enterprises dr,... Case of XLHealth Corpn gain is non-operating because forex gain/loss is considered as a expense. And Management Consultants ( P. ) ltd. [ it appeal no business Consulting Pvt a recent case was... Expounded are as under: ‘ the learned counsel for the purpose of safe harbour has also excluded... Revenue is losing both ways in increase of operating income/loss or not is an officer of the clearly... Appeal against the stand in Court agenda of CFOs of MNCs for many years hold that both companies... Non-Operating for the purpose of computing ALP Software India Pvt income ’ of operating margin other.