This company did not disclose BPO services as separate segment. MERITS OF TAKING FOREIGN EXCHANGE GAIN/LOSS AS NON-OPERATING. However, forex gain/loss are not differentiated on what part is real and what part is nominal in the annual report of comparables. 6839/Mum/2012], 8) M/s Sumit Diamond (India) Pvt. We notice that M/s TCS E-serve Ltd has been excluded, inter alia, for the reason that it is providing KPO services and further it is explicitly stated that it is an integral part of Tata Consultancy Services strategy to build on its “Full Service offerings” that offer global customers an integrated portfolio of services ranting from IT services to BPO services. How to Account for Foreign Exchange. Kenexa Technologies Pvt. Unrealised foreign currency translation gains or losses as of the balance sheet date are usually accounted for under financial expenses or income on accounts 563 or 663 – this relates to receivables, payables, stamps and vouchers, foreign currency treasury and foreign currency accounts. ), Samsung Heavy Industries India (P.) Ltd. v. Dy. In a recent case it was held that the foreign exchange fluctuation loss shall be considered as a part of the Operating Cost. In view of the foregoing discussions, the ALP of the transactions require to be determined afresh in the light of decisions rendered supra. Ltd. vs. DCIT [TS-758-ITAT-2012(Bang)-TP], 10)   M/s Trilogy E-Business Software India Pvt. It is, in a way, speculative. The difference is a forex loss. While working out the margin, the assessing officer treated the foreign exchange gain as non-operating in nature. 1. This potential is referred to as an unrealized gain or loss. He submitted that the assessee is providing services only to its group companies and hence the effect of “brand value” will not be there. If a taxpayer has made forex gain, TPO’s stand is disadvantageous to taxpayer and it appeals in appellate forums. Safe harbour definitions of the government clearly portray the rules governing TP audit. Accordingly he submitted that the assessee cannot change its stand and contend that the foreign exchange gain should be treated as operating income. Ltd. vs. DCIT  [TS-414-ITAT-2012(HYD)], 13)   M/s Trilogy E Business Software India Pvt. Revenue takes inspiration from Rule 10TA and considers forex fluctuation as non-operating. 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. 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. A detailed Business Continuity Plan has also been put in place to ensure the services are provided to the customers without any disruptions.”. Besides both the above said companies are supported by their parent companies, having huge brand value. It can … “2. Foreign exchange gain and loss have two components: real and nominal. (c) it caters to diverse business segments. The Ld D.R submitted that both the assessee and Infosys BPO Ltd fall under the category of companies providing ITES services in the form of business process outsourcing, i.e., both the companies are providing solutions to business processes outsourced to them. 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. 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. 3. We have also noticed that M/s Infosys BPO Ltd is being consistently excluded in the assessee’s own case in the earlier years. Ltd. vs. ITO [TS-730-ITAT-2012(HYD)-TP], 12) M/s Capital IQ Information Systems (India) Pvt. It is a strategic decision, and leads to profit or loss independent of the business. COMPANY OVERVIEW Your Company, along with its subsidiary companies – TCS e-Serve International Limited and TCS e-Serve America Inc., is primarily engaged in the business of providing Business Process Services (BPO) for its customers in Banking, Financial Services and Insurance domain. Ltd. The other part is definitely non-operating – the part arising from nominal forex gain/loss calculated by MTM method on 31st of March each year. 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. Cisco Systems Services B.E. We notice that an identical issue has been decided 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) as under:-. Another argument is that forex gain/loss arising out of ‘international transaction’ with an Associated Enterprise (AE) is itself an international transaction! When an overall foreign loss offsets U.S. taxable income, a foreign loss account is created or … The basic argument behind considering forex gain/loss as operating is that foreign exchange fluctuation is an integral part of sale and purchase transactions. The assessee is a company belonging to M/s. 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