VINEET KOTHARI,J. - (1.) This Appeal is filed by the Revenue purportedly raising substantial questions of law arising from the Order of the Income Tax Appellate Tribunal, 'C' Bench, Bangalore, in IT [TP] A. No. 1290/Bang of 2012 dated 30.07.2015 (Net Scout Systems Softwawre India P.Ltd. v. Income-tax Officer) , relating to the Assessment Year 2009-10.
(2.) The admitted substantial questions of law framed by the Revenue in the Memorandum of Appeal are as under: (1) "Whether, on the facts and circumstances of the case, the tribunal is right in holding that the size and turnover of the company are deciding factors for treating a company as a comparable and accordingly erred in excluding comparables, such as, Tata Elxsi Ltd., Sasken Communication tech Ltd., Persistent Systems Ltd., Zylog Systems Ltd., Zylog Systems Ltd., Mindtree Ltd and L &Tribunal Infotech, by relying upon the decision in the case of Genisys Integrating Systems v. DCIT and other cases when the said decisions have not reached finality and failing to consider the materials on record? (2) Whether, on the facts and circumstances of the case, the Tribunal has erred in holding that the functions of taxpayer is comparable to the functions of KALS Information systems Ltd, and Bodh Tree by following the decision in the case of M/s. Cisco Systems India Pvt. Ltd., which has reached finality and without considering the materials available on record? (3) Whether, on the facts and circumstances of the case, the Tribunal is right in holding that if an expense has direct nexus with Revenue, it has to be taken as operating cost and further erred in holding that if foreign exchange gain is considered as part of operating revenue it naturally follows that foreign exchange losses have to be considered a part of operating cost ?"
(3.) The learned Tribunal, after discussing the rival contentions of both the Appellant - Revenue and Respondent - Assessee, has returned a finding as under: "14. Coming to the argument of Ld. AR that Kals Information Systems Ltd. and Bodhtree Consulting Ltd. have to be excluded on the basis of functionality, we find that the issue had come up before this Tribunal in the case of Cisco Systems India Ltd. (supra), which also was for the very same assessment year. Vis-a-vis Bodhtree Consulting Ltd. it was held as under: xxxxxx 15. Vis-a-vis Kals Information Systems Ltd. it was held as under: xxxxxx Accordingly, we direct exclusion of Kals Information Systems and Bodhtree Consulting Ltd. from the list of companies. 17. Now we take up appeal of the Revenue. In this appeal, its sole grievance raised by the Revenue is that CIT (A) held foreign exchange gain/loss to be operating in nature without ascertaining the nexus of such income/loss with the business activity of the assessee. Ld. DR submitted that establishing the business nexus of the forex gain/loss was essential before considering such gain/loss as operational in nature. 19. We have perused the orders and heard the rival contentions. Financials of the assessee for the relevant assessment year has been reproduced by us at para four above. Whole of the revenue earned by the assessee were on account of exports. Hence, ground of the Revenue that the forex gain/loss would have been from some other source other than the business of the assessee cannot be accepted unless such contention is substantiated. Ld. DR was unable to produce anything before us that forex gain/loss were associated with expert earning of the assessee. Especially so since assessee's earnings were entirely from exports. Therefore, we do find any merit in this ground raised by the Revenue. It stands dismissed.";