SAP Labs India Pvt. Ltd. v. ACIT

44 SOT 156Income Tax Appellate Tribunal2011#1114 most cited

What is SAP Labs India Pvt. Ltd. v. ACIT authority for?

Foreign exchange fluctuation gains or losses are operational in nature and must be included in the computation of the operating margin for both the assessee and comparable companies when determining the Arm's Length Price.

100

judgments rely on this decision, according to BharatTax’s citation analysis of 366,339 Indian tax judgments — from 2012 to 2022.

Also referred to as

SAP Labs India v ACIT · 44 SOT 156 · 6 ITR (Trib) 81 · foreign exchange fluctuation gain loss · operating margin computation · Arm's Length Price · transfer pricing adjustment · operational income · comparable companies · section 92C(2) · associated enterprises · TNMM

Also reported as

6 ITR (Trib) 81

Issues it is cited on

functional analysis section 92c(2)working capital adjustment related party transaction arms length price comparable companies most appropriate method arm's length price associated enterprises transfer pricing adjustment associated enterprise tnmm

Judgments citing SAP Labs India Pvt. Ltd. v. ACIT

Fresenius Kabi India Private Limited, Pune vs. Assistant Commissioner of Income Tax

In the result, appeal of the assessee is partly allowed and that of the Revenue appeal is partly allowed for statistical purpose

ITA 2572/PUN/2016[2011-12]Status: DisposedITAT Pune02 Nov 2018AY 2011-12

Bench: Shri R.S. Syal & Shri Vikas Awasthy, Jm

For Appellant: Shri Ketan VedFor Respondent: Smt. Nandita Kanchan (CIT)

…Special Bench held that such exchange rate fluctuation gain/loss arising from exports cannot be viewed differently from the sale proceeds. 7. In the context of transfer pricing, the Bangalore Bench of the Tribunal in SAP Labs India Pvt. Ltd. Vs ACIT (2011) 44 SOT 156 (Bangalore) has held that foreign exchange fluctuation gain is part of operating profit of the company and should be included in the operating revenue. Similar view has been taken in Trilogy E Business Software India (P) Ltd. Vs DCIT (2011) 47 SOT 45 (URO) (Bangalore). The Mumbai Bench of the Tribunal in S. Narendra Vs Addtl. CIT (2013) 32 tax…

Commissioner of Income Tax vs. M/S Sys Arris Software

ITA/431/2014HC Karnataka13 Jul 2018

Bench: S.SUJATHA,VINEET KOTHARI

…1/14 IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 13th DAY OF JULY 2018 PRESENT THE HON'BLE Dr.JUSTICE VINEET KOTHARI AND THE HON’BLE Mrs.JUSTICE S.SUJATHA I.T.A.No.431/2014 Between: Commissioner of Income-tax, Bangalore-IV, C.R. Building, Queens Road, Bangalore-560 001. …Appellant (By Mr. E.I.Sanmathi, Advocate) And: M/s. Sys Arris Software Pvt. Ltd., No.19/2, 13th Cross, Dollars Colony, J.P.Nagar, 4th Phase, Bangalore-560 078. PAN: AABCP2952J …Respondent (By Mr. S.Sharath for Mr. Chythanya K.K, Advocate) This I.T.A…

Commissioner of Income Tax-III vs. M/S Mercedes-Benz

ITA/230/2013HC Karnataka10 Jul 2018

Bench: S.SUJATHA,VINEET KOTHARI

…erating in nature:- Date of Judgment 10-07-2018, ITA No.230/2013 Commissioner of Income Tax-III & Another Vs. M/s Mercedes-Benz Research & Development India Pvt. Ltd., 5/10 • M/s SAP Labs India Private Limited v. ACIT (44 SOT 156 (BANG)} • Gem Plus Jewellery India Limited V. CIT (330 ITR 175) (Bom.) xxx xxx xxx 6. We have heard the learned DR present. The Tribunal has remitted the entire matter to the Assessing Officer/TPO by following the decision of the Bangalore Bench of the Tribunal in the case of M/s Insilica Semiconductors India Pvt. Ltd. V. ITO, Ward-…

Commissioner of Income Tax-III vs. M/S Sap Labs India Pvt Ltd

ITA/340/2012HC Karnataka10 Jul 2018

Bench: S.SUJATHA,VINEET KOTHARI

Section 260Section 260ASection 92

…xxxxxxxxxxxx 13. After considering the submissions of both the parties and the materials available on record, it is noticed that a similar issue has been decided in favour of the assessee by the ITAT ‘A’ Bench in assessee’s own case which is reported at 44 SOT 156. Relevant findings has been given Date of Judgment 10-07-2018 I.T.A.No.340/2012 Commissioner of Income Tax-III & Anr. Vs. M/s. SAP Labs India Pvt. Ltd., 5/8 in para 42 of the said order which reads as under: xxxxxxxxxxxxxx Respectfully following the aforesaid referred to order in assessee’s own case, the present issu…

Commissioner of Income Tax-III vs. M/S Trilogy E-Business

ITA/171/2013HC Karnataka10 Jul 2018

Bench: S.SUJATHA,VINEET KOTHARI

…though they may form part of the gain/loss of the enterprise and therefore they should be excluded while determining operating cost. On the above issue we find that the Bangalore Bench of ITAT in the case of Sap Labs India [P] Ltd., Vs. ACIT [2011] 44 SOT 156 [Bang.] has taken the view that Date of Judgment 10-07-2018, ITA No.171/2013 Commissioner of Income Tax-III & Another Vs. M/s. Trilogy E-Business Software India Private Ltd., 10/14 Foreign Exchange Fluctuation gains are required to be added to operating revenue. Following the same, the AO is directed to accept the claim of the…

The Pr Commissioner of Income Tax vs. M/S Acusis Software India

ITA/372/2017HC Karnataka05 Jul 2018

Bench: S.SUJATHA,VINEET KOTHARI

Section 10ASection 260

…annot be said to be one realized from gain/loss of the enterprise and therefore they should be excluded while determining operating cost. On the above issue we find that the Bangalore Bench of ITAT in the case of Sap Labs India [P] Ltd., Vs. ACIT [2011] 44 SOT 156 [Bang.] has taken the view that Foreign Exchange fluctuation gains are required to be directed to accept the claim of the Assessee in this regard. As far as provision for bad debts are concerned, the TPO has accepted that the same would be part of operating expenses provided the same is incurred every year for at least three years and the…

Deputy Commissioner of Income-Tax vs. Intervet India Pvt. Ltd

In the result, appeal of the assessee for assessment year 2008-09 is

ITA 801/PUN/2014[2004-05]Status: DisposedITAT Pune29 Jun 2018AY 2004-05

Bench: Shri D. Karunakara Rao, Am & Shri Vikas Awasthy, Jm आयकर अपील सं. / Ita No.155/Pun/2013 "नधा"रण वष" / Assessment Year : 2008-09

For Appellant: Shri Danesh BafnaFor Respondent: Smt. Nirupama Kotru

…/cost. In the following decisions also (filed in the paper book by the assessee), it has been held that foreign exchange fluctuation cannot be excluded from the computation of the operating margin of the assessee company: 1. SAP Labs India P. Ltd. Vs. ACIT – 44 SOT 156 (bang) 2. Prakash I Shah reported in (2008) 115 ITD 167 (Mum) (SB) 3. Smt. Sujata Grover Vs. Dy.CIT (2002) 74 TTJ (Del) 347 4. M/s. S. Narendra Vs. Addl.CIT – ITA No.6839/Mum/2012 – Mumbai Tribunal 5. M/s. Mercedes Benz Research & development India Pvt. Ltd. Vs. DCIT (IT/TP A.No.1222/Bang/2011 –Bangalore Tribunal 6. M/s. Trilogy E-Business Softwar…

Intervet India Private Ltd., Pune vs. Deputy Commissioner of Income-Tax

In the result, appeal of the assessee for assessment year 2008-09 is

ITA 722/PUN/2014[2004-05]Status: DisposedITAT Pune29 Jun 2018AY 2004-05

Bench: Shri D. Karunakara Rao, Am & Shri Vikas Awasthy, Jm आयकर अपील सं. / Ita No.155/Pun/2013 "नधा"रण वष" / Assessment Year : 2008-09

For Appellant: Shri Danesh BafnaFor Respondent: Smt. Nirupama Kotru

…/cost. In the following decisions also (filed in the paper book by the assessee), it has been held that foreign exchange fluctuation cannot be excluded from the computation of the operating margin of the assessee company: 1. SAP Labs India P. Ltd. Vs. ACIT – 44 SOT 156 (bang) 2. Prakash I Shah reported in (2008) 115 ITD 167 (Mum) (SB) 3. Smt. Sujata Grover Vs. Dy.CIT (2002) 74 TTJ (Del) 347 4. M/s. S. Narendra Vs. Addl.CIT – ITA No.6839/Mum/2012 – Mumbai Tribunal 5. M/s. Mercedes Benz Research & development India Pvt. Ltd. Vs. DCIT (IT/TP A.No.1222/Bang/2011 –Bangalore Tribunal 6. M/s. Trilogy E-Business Softwar…

Intervet India Pvt. Ltd., Pune vs. DCIT, Circle 1(2), Pune

In the result, appeal of the assessee for assessment year 2008-09 is

ITA 155/PUN/2013[2008-09]Status: DisposedITAT Pune29 Jun 2018AY 2008-09

Bench: Shri D. Karunakara Rao, Am & Shri Vikas Awasthy, Jm आयकर अपील सं. / Ita No.155/Pun/2013 "नधा"रण वष" / Assessment Year : 2008-09

For Appellant: Shri Danesh BafnaFor Respondent: Smt. Nirupama Kotru

…/cost. In the following decisions also (filed in the paper book by the assessee), it has been held that foreign exchange fluctuation cannot be excluded from the computation of the operating margin of the assessee company: 1. SAP Labs India P. Ltd. Vs. ACIT – 44 SOT 156 (bang) 2. Prakash I Shah reported in (2008) 115 ITD 167 (Mum) (SB) 3. Smt. Sujata Grover Vs. Dy.CIT (2002) 74 TTJ (Del) 347 4. M/s. S. Narendra Vs. Addl.CIT – ITA No.6839/Mum/2012 – Mumbai Tribunal 5. M/s. Mercedes Benz Research & development India Pvt. Ltd. Vs. DCIT (IT/TP A.No.1222/Bang/2011 –Bangalore Tribunal 6. M/s. Trilogy E-Business Softwar…

Imerys Newquest (India) P. Ltd., Pune vs. Deputy Commissioner of Income-Tax

In the result, appeal of the assessee is partly allowed in the terms aforesaid

ITA 590/PUN/2015[2010-11]Status: DisposedITAT Pune23 May 2018AY 2010-11

Bench: Shri Anil Chaturvedi, Am & Shri Vikas Awasthy, Jm आयकर अपील सं. / Ita No. 590/Pun/2015 "नधा"रण वष" / Assessment Year : 2010-11

For Appellant: Shri Rajendra Agiwal

…/cost. In the following decisions also (filed in the paper book by the assessee), it has been held that foreign exchange fluctuation cannot be excluded from the computation of the operating margin of the assessee company: 1. SAP Labs India P. Ltd. Vs. ACIT – 44 SOT 156 (bang) 2. Prakash I Shah reported in (2008) 115 ITD 167 (Mum) (SB) 14 A.Y. 2010-11 3. Smt. Sujata Grover Vs. Dy.CIT (2002) 74 TTJ (Del) 347 4. M/s. S. Narendra Vs. Addl.CIT – ITA No.6839/Mum/2012 – Mumbai Tribunal 5. M/s. Mercedes Benz Research & development India Pvt. Ltd. Vs. DCIT (IT/TP A.No.1222/Bang/2011 –Bangalore Tribunal 6. M/s. Trilogy…

Asst.C.I.T., Bangalore vs. M/S Misys Software Solutions (India) Pvt. Ltd., Bangalore

In the result, IT(TP) A.No

ITA 491/BANG/2016[2011-12]Status: DisposedITAT Bangalore02 May 2018AY 2011-12

Bench: Shri N.V Vasudevan & Shri Jason P Boazit(Tp)A No.529/Bang/2016 (Asst. Year – 2011-12)

For Appellant: Shri T Suryanarayana, AdvocateFor Respondent: Shri C.H Sundar Rao, CIT

Section 143(3)Section 144C(13)Section 92Section 92(1)Section 92B(1)Section 92C

…IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH ‘A’ BEFORE SHRI N.V VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER IT(TP)A No.529/Bang/2016 (Asst. Year – 2011-12) Finastra Software Solutions (India) Pvt. Ltd., (formerly Misys Software Solutions India Private Limited), Bagmane Constellation Business Park, 4 to 6th Floor, Virgo Building, ORR, Doddanekkundi, Marathahalli, Bengaluru. PAN – AAACK 9067G. …..Appellant Vs. The Asst. Commissioner of Income-tax, Circle-(4)(1)(2), Bengaluru. …. Respondent AND IT(TP)A No.491/Bang/2016 (Asst. Year – 2011-12) (By Revenue) Assessee by : Shri T S…

Madhu Jayanti International Limited, Kolkata vs. DCIT, Circle - 4(1), Kolkata

In the result, the appeal of the assessee is allowed for statistical purposes

ITA 214/KOL/2016[2011-2012]Status: DisposedITAT Kolkata01 Dec 2017AY 2011-2012

Bench: Hon’Ble Shri Aby. T. Varkey, Jm & Shri M.Balaganesh, Am ] I.T.A No. 214/Kol/2016 Assessment Year : 2011-12 Madhu Jayanti International Ltd. -Vs- Dcit, Cc-4(1), Kolkata [Pan: Aabcm 7502 R] (Appellant) (Respondent)

For Appellant: Shri Akash Mansinka, ARFor Respondent: Shri G. Mallikarjune, CIT DR

Section 139(5)Section 143(3)Section 144C(5)Section 92CSection 92D

…transaction though they may form part of the gain/loss of the enterprise and therefore they should be excluded while determining operating cost. On the above issue we find that the Bangalore Bench of ITAT in the case of Sap Labs India (P) Ltd. Vs. ACIT (2011) 44 SOT 156 (Bang) has taken the view that Foreign Exchange Fluctuation gains are required to be added to operating revenue. Following the same, the AO is directed to accept the claim of the Assessee in this regard" 19 Madhu Jayanti International Ltd. A.Yr.2011-12 • In the case of Sujata Grover 74 TT J 347 (Del) which was in the context of deduction under s…

M/S. E4E Business Solutions India Private Limited, Bangalore vs. Income Tax Officer, Bangalore

In the result, the assessee’s appeal for asst

ITA 451/BANG/2017[2012-13]Status: DisposedITAT Bangalore03 Nov 2017AY 2012-13

Bench: Shri Sunil Kumar Yadav & Shri Jason P Boazit(Tp)A No.451/Bang/2017 (Assessment Year : 2012-13) M/S. E4E Business Solutions India Pvt. Ltd., 5Th Floor, Vakil Square, Bannerghatta Road, Bengaluru. ……. Appellant Pan – Aaaci 6324A. Vs. The Income-Tax Officer, Ward 2(1)(2), Bengalore. …………..Respondent

For Appellant: Shri Ravindra T, C.AFor Respondent: Shri R.N. Parbat, CIT-III (D.R)

Section 115JSection 143(3)Section 144C(5)Section 92CSection 92C(3)(c)Section 92D

…IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH 'C' BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER IT(TP)A No.451/Bang/2017 (Assessment Year : 2012-13) M/s. e4e Business Solutions India Pvt. Ltd., 5th Floor, Vakil Square, Bannerghatta Road, Bengaluru. ……. Appellant PAN – AAACI 6324A. Vs. The Income-tax Officer, Ward 2(1)(2), Bengalore. …………..Respondent Appellant by : Shri Ravindra T, C.A Respondent by : Shri R.N. Parbat, CIT-III (D.R) Date of Hearing : 10-8-2017 Date of Pronouncement : 3-11-2017 O R D E R PER SHRI JASON P BOAZ, A. M. : This appeal by the assess…

DCIT, Bangalore vs. M/S Intellectual Venture India Consulting Pvt. Ltd., Bangalore

In the result, the appeal by the Assessee is allowed, while the appeal by the revenue is dismissed

ITA 161/BANG/2015[2010-11]Status: DisposedITAT Bangalore20 Oct 2017AY 2010-11

Bench: Shri N.V. Vasudevan & Shri Jason P Boaz

For Appellant: Shri S. Raghunathan, C.AFor Respondent: Shri G.R. Reddy, CIT (D.R)

Section 143(3)Section 144CSection 92Section 92C

…issue raised by the revenue is with regard to inclusion of foreign exchange gain as part of the operating profits of the Assessee and the comparable. The DRP following the decision of the ITAT Bangalore in the case of SAP Labs India Pvt. Ltd. VS. ACIT (2010) 6 ITR (Trib) 81 (Bang-ITAT) held that foreign exchange fluctuation gain/loss has to be regarded as part of the operating profits. The grievance of the revenue in this regard, before the tribunal, is that the nexus of such gain with the business of the Assessee has to be seen and such gain cannot be regarded as operating profit without such nexus. The revenue…

Nomura Research Institute Financial Technologies India Pvt. Ltd., Kolkata vs. DCIT, Cir-2(1), Kolkata

In the result the appeal of the assessee is partly allowed and the appeal by the revenue is dismissed

ITA 590/KOL/2015[2010-2011]Status: DisposedITAT Kolkata04 Oct 2017AY 2010-2011

Bench: Hon’Ble Sri N.V.Vasudevan, Jm & Shri M.Balaganesh, Am]

For Appellant: Shri J.P.Khaitan, ARFor Respondent: Shri G.Mallikarjuna, CIT(DR)

Section 143(3)Section 144C(13)Section 144C(5)

…vices should be considered as part of the operating profit and the law in this regard is well settled. Reference was made to several judicial pronouncements in this regard especially the decision of the Bangalore ITAT in the case of SAP Labs (P) Ltd. Vs. ACIT 44 SOT 156 (Bang.) wherein it was held that foreign exchange gain should be included while computing operating margin of comparables as well as that of the Assessee for the purpose of comparison of margins while determining ALP. The learned DR relied on the order of the TPO. 31. We have considered the rival contentions. From a perusal of the order of the TP…

DCIT, Cir-2(2), Kolkata vs. M/S Nomura Research Institute & Financial Technologies Pvt. Ltd., Kolkata

In the result the appeal of the assessee is partly allowed and the appeal by the revenue is dismissed

ITA 587/KOL/2015[2010-2011]Status: DisposedITAT Kolkata04 Oct 2017AY 2010-2011

Bench: Hon’Ble Sri N.V.Vasudevan, Jm & Shri M.Balaganesh, Am]

For Appellant: Shri J.P.Khaitan, ARFor Respondent: Shri G.Mallikarjuna, CIT(DR)

Section 143(3)Section 144C(13)Section 144C(5)

…vices should be considered as part of the operating profit and the law in this regard is well settled. Reference was made to several judicial pronouncements in this regard especially the decision of the Bangalore ITAT in the case of SAP Labs (P) Ltd. Vs. ACIT 44 SOT 156 (Bang.) wherein it was held that foreign exchange gain should be included while computing operating margin of comparables as well as that of the Assessee for the purpose of comparison of margins while determining ALP. The learned DR relied on the order of the TPO. 31. We have considered the rival contentions. From a perusal of the order of the TP…

Allegris Services India Pvt Ltd, Bangalore vs. Deputy Commissioner of Income Tax, Bangalore

In the result, the appeal of the assessee is partly allowed and appeal of the revenue is dismissed

ITA 1370/BANG/2014[2009-10]Status: DisposedITAT Bangalore15 Sept 2017AY 2009-10

Bench: Shri Vijay Pal Rao & Shri Inturi Rama Rao

For Appellant: Shri Chavali Narayan, CAFor Respondent: Shri B.R. Ramesh, JCIT (D.R)

…transaction though they may form part of the gain/loss of the enterprise and therefore they should be excluded while determining operating cost. On the above issue we find that the Bangalore Bench of ITAT in the case of Sap Labs India (P) Ltd. Vs. ACIT (2011) 44 SOT 156 (Bang.) has taken the view that Foreign Exchange Fluctuation gains are required to be added to operating revenue. Following the same, the AO is directed to accept the claim of the Assessee in this regard. As far as provision for bad debts are concerned, the TPO has accepted that the same would be part of operating expenses provided the same is inc…

M/S. Doowon Automotive Systems India Pvt. Ltd., Kancheepuram vs. JCIT (OSD), Chennai

In the result, the appeal of Revenue is allowed

ITA 2560/CHNY/2016[2012-13]Status: DisposedITAT Chennai18 Aug 2017AY 2012-13

Bench: Shri Chandra Poojari & Shri Duvvuru Rl Reddy

For Appellant: Shri S.P.Chidambaram, AdvocateFor Respondent: Dr. Milind Madhukar Bhusari, CIT

Section 143(3)Section 144C(5)

…n- speculative only if the transaction quality under clause (d) of the proviso to section 43(5). “Marked to Market” losses claimed as notional losses prior to settlement has to be treated as speculative loss in terms of section 43(5). Ltd. Vs. ACIT (2011) 44 SOT 156 (Bang.) is applicable. 13 - - ITA 2560/Mds/16 Following the same, objection of the assessee is to be accepted and Assessing Officer / TPO is directed to consider the foreign exchange fluctuation in respect of the assessee as well as the comparables as operating in nature while determining the ALP in the case of the assessee”. 8.3 The TPO has…

Mckinsey Knowledge Centre India Pvt. Ltd., Gurgaon vs. DCIT, New Delhi

In the result ground No. 14 of the appeal of the assessee is dismissed

ITA 6648/DEL/2016[2012-13]Status: DisposedITAT Delhi11 May 2017AY 2012-13

Bench: Shri Bhavnesh Saini & Shri Prashant Maharishimckinsey Knowledge Centre India Pvt. Vs. Dcit, Ltd, Circle-16(2) 3Rd Floor, Block-Iii, Vatika Business Park, New Delhi Sector-49, Sohna Road, Gurgaon Pan:Aaccm2356G (Appellant) (Respondent)

For Appellant: Shri Porus KakaFor Respondent: Shri Amrendra Kumar, CIT DR

Section 143(3)Section 143(3)(ii)Section 144CSection 92C

…, the Special Bench held that such exchange rate fluctuation gain/loss arising from exports cannot be viewed differently from sale proceeds. 67. In the context of transfer pricing, the Bangalore Bench of the Tribunal in SAP Labs India Pvt. Ltd. Vs ACIT (2011) 44 SOT 156 (Bangalore) has held that foreign exchange fluctuation gain is part of operating profit of the company and should be included in the operating revenue. Similar view has been taken in Trilogy E Business Software India (P) Ltd. Vs DCIT (2011) 47 SOT 45 (URO) (Bangalore). The Mumbai Bench of the Tribunal in S. Narendra Vs Addtl. CIT (2013) 32 taxman.…

Pangea3 Legal Database Systems P.Ld, Mumbai vs. ITO WD 3(2)(4), Mumbai

In the result, the appeal of the assessee is partly allowed for statistical purposes, whereas the appeal of the Revenue is dismissed

ITA 2128/MUM/2014[2009-10]Status: DisposedITAT Mumbai06 Mar 2017AY 2009-10

Bench: Shri Amit Shukla & Shri Manoj Kumar Aggarwalassessment Year: 2009-10

For Appellant: Shri Rajan Vora, &For Respondent: Mrs. Malathi Shridharan, CIT DR

Section 143(3)Section 144C(5)

…ure. In support he relied on following decisions: i) HOV Services Ltd. Vs. JCIT (OSD), ITA No. 1969/PN/2013 dated 04.08.2016; ii) DCIT Vs. Federal Mogul Automotive Products (I) Pvt. Ltd., ITA No. 5769/Del/2011 dated. 25.03.2015; iii) SAP Labs India Pvt. Ltd. 44 SOT 156 (Bang) iv) Mylan Laboratories Ltd. Vs. ACIT, ITA lNo. 66/Hyd/2013 dated 10.01.2014 He pointed out that, once the loss on cancellation of forward contract is considered as non-operating, then the operating margin of the assessee will be 10.46% as against 2.85% determined by the TPO. ITA Nos.2128 & 1958/M/2014 12 Pangea3 & Legal Database Systems…