Tribunal held that the amount of foreign exchange gain or loss arising out of revenue transactions was required to be considered as an item of operating revenue/cost, both for the assessee as well as the comparables.

Tribunal held that the nature of work and business model of a company can undergo change from one year to another. One had to examine the comparability position on year to year basis independently. For one year, a company may be comparable and for the next year, it may cease to be so for a variety of reasons. Therefore, I was excluded from the list of comparables.

The Tribunal also  held that the provision for doubtful debts had a direct relation with the sales made by a company. In the same way in which the amount of sales is an item of operating revenue, the amount of provision for doubtful debts, having direct link with the sales, is also an item of operating expense. The provision for doubtful debts could not be treated as a non-operating expense. Therefore, the Assessing Officer was directed to include the amount of provision for doubtful debts in the expensed side of CG for calculating the profit margin.  ( AY.2013-14)(