Income Tax Appellate Tribunal Mumbai Lionbridge Technologies P.Ltd, Mumbai vs Department Of Income Tax on 18 November, 2015 IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH "K", MUMBAI. BEFORE SH. A.D. JAIN, JUDICIAL MEMBERAND SH. N.K. BILLAIYA, ACCOUNTANT MEMBER I.T.A. No. 668/Mum/2014 Assessment year: 200910 PAN:AABCT3380Q M/s. Lionbridge Technologies Pvt. Ltd. vs. Income Tax Officer, Unit No.301 to 304, Reliable Tech 8(2)(2), M.K. Road, rd 3 Floor, GUT 31, Mumbai. Airoli, Navi Mumbai. (Appellant) (Respondent) I.T.A. No. 1375/Mum/2014 Assessment year: 200910 PAN:AABCT3380Q Income Tax Officer, vs. M/s. Lionbridge Technologies Pvt. Ltd. 8(2)(2), M.K. Road, Unit No.301 to 304, Reliable Tech 3rd floor, Mumbai. Airoli, Navi Mumbai. Assessee by: S/Sh. Ajay Vohra. Sr.Advocate & N.K. Jain, Advocate Respondent by:S/Sh. N.K.Chand, CIT(DR) & Jitendra Yadav I.T.A. No.7415/Mum/2014 Assessment year: 201011 M/s. Lionbridge Technologies Pvt. Ltd. vs. Income Tax Officer, Mumbai 8(2)(2), M.K. Road, Mumbai (Appellant) (Respondent) I.T.A. No. 290/Mum/2015 Assessment year: 201011 Income Tax Officer, vs. M/s. Lionbridge Technologies Pvt. Ltd. 8(2)(2), M.K. Road, Unit No.301 to 304, Reliable Tech 3rd floor, Mumbai. Airoli, Navi Mumbai. S.A.No.376/Mum/2014 2 ITA No.668(Asr)/2014 ITA No.1375/Mum/2014 (Arising out of I.T.A. No.7415/Mum/2014) Assessment year: 201011 M/s. Lionbridge Technologies Pvt. Ltd. vs. Income Tax Officer, Mumbai 8(2)(2), M.K. Road, Mumbai (Appellant) (Respondent) Assessee by: Sh. Ajit Jain, Adv. Respondent by:S/Sh. N.K.Chand, CIT(DR) & Jitendra Yadav Date of hearing : 15/07/2015 & 16/07/2015 Date of pronouncement: 18/ 11/2015 ORDER Per A.D. Jain, JM: These are cross appeals two by the assessee and two by the Department are directed against the separate orders each dated 01.10.2013 & 20.09.2014, passed by the ld. DRP, for the assessment years 200910 & 201011. The assessee has also filed Stay Application. ITA No.668/Mum/2014 2. This is the assessee's appeal for the assessment year 200910, taking the following grounds: "On the facts and circumstances of the case, the Dispute Resolution Panel ('DRP'), the learned Assessing Officer ('AO') and the learned Transfer Pricing Officer ('TPO') on the following grounds making an adjustment of INR 31, 28,41,221/ to the arm's length price ('ALP') in respect of recomputing 10A deduction, thereby determining the total income of the Appellant at INR 36,62,68,380/ as against the returned income of INR 23,91,580/by the Appellant. The assessment order passed in the case of your appellant for Assessment Year ('AY') 200910 is following DRP's directions and this appeal is directed against the said order. Transfer pricing grounds 3 ITA No.668(Asr)/2014 ITA No.1375/Mum/2014 Ground no.1: Treating foreign exchange as nonoperating in nature for the computation of profit level indicator (PLI) 1. 1 On the facts and circumstances of the case, and in law, the DRP has erred in excluding the amount of Foreign Exchange Gain amounting to INR 15,99,29,779 from the operating revenue of the Appellant and treating the same as nonoperating. 1.2 On the facts and circumstances of the case, and in law, the DRP has erred in enhancing the order ignoring the fact that TPO himself has agreed the treatment of foreign exchange as operating in nature in its order on the principle of consistency. In the earlier assessment years foreign exchange loss was also treated as operating in nature, thereby denied consistent treatment of foreign exchange gain/loss to the Appellant. 1.3 The Appellant prays that the foreign exchange gain amounting to INR 15,99,29,779 be treated as operating in nature for the computation of profit level indicator (PLI) and the consequential upward adjustment be deleted. Ground no.2: Systematic exclusion of comparable companies identified by the Appell