2010 (4) TMI 704 - ITAT, MUMBAI

Arms Length Price – Deduction u/s 80HHC – In this case, the assessee in our humble opinion,contrary to the stand of many similar organizations, has taking unsustainable stand that none of the methods prescribed under law, can be followed by it - Mumbai 'L' Bench of the Tribunal in the case of UCB India P. Ltd. vs. ACIT (2009 -TMI - 59726 - ITAT BOMBAY-L) where it is held that section 92C read with Rule 10B(l)(e) deals with Transactions Net Margin Method (TNMM) and it refers to only net profit margin realised by an enterprise from an international transaction or a class of such transaction, but not operational margins of enterprises as a whole - . As both the assessee as well as the Assessing Officer have not followed the law, in the interest of justice, we deem it appropriate to permit the assessee to furnish a fresh transfer pricing study report, in support of its contention, that the transactions with associated enterprises were in fact at arms length – Accordingly the matter is referred back to AO for fresh adjudication

Business income or other sources - Interest income from the bank deposits - assessee has placed certain monies with the Bank as FD and these deposits were kept as margin money for availing facilities from the bank - The Jurisdictional High Court in the case of Indo Swiss Jewels Ltd. & Another, 284 ITR 389 (Bom) – It was held that such interest income, is to be assessed only as income from business – Decided in the favour of the assessee

Regarding exclusion of 90% of such income from profits of business while computing relief u/s. 8OHHC - The Hon'ble Bombay High court in the case of CIT-III Vs. Asian Star Co. Ltd (2010 -TMI - 77709 - BOMBAY HIGH COURT),held that only 90% gross interest is to be eliminated - In the result, both these appeals are allowed for statistical purposes