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2011 (7) TMI 509 - ITAT, MUMBAITransfer Pricing - areas of dispute is regarding the exact nature of services rendered by the assessee - assessee contended that it was purely providing voice based call centre service and BPO sector selected by the TPO (9 companies) were not mere call centre but performing much more skilled jobs than that of a call center - no valid reasons have been assigned by the TPO while ignoring assessee's submissions - AY 05-06 - Held that:- It is only after finding out exact nature of services rendered by the assessee can a comparative uncontrolled transaction can be brought to the picture. We, therefore, set aside the order of the CIT(A) and restore the issue to the TPO/Assessing Officer for a fresh consideration., set aside the order of the Assessing Officer and remand the question of determination of ALP by the Assessing Officer afresh in the light of the directions given above. Order of AO in respect of AY 06-07 is also set aside and remanded back in view of non-consideration of objections of assessee in respect of non-comparability of comparable on ground of functionally, submission as to why the comparable transactions relied upon by the assessee cannot be rejected, reasons as to why saving on account of link cost, recovery of reimbursement of expenses should be considered while working ALP Deduction u/s 10A before setting off of unabsorbed depreciation - Held that:- Deduction u/s 10A has to be allowed on profits of the undertaking before set-off of unabsorbed depreciation. Unabsorbed depreciation has therefore to be allowed to be adjusted against interest income - Decided against the revenue. Treatment of 'exchange rate gain' - Business Income or Income from other sources - Held that:- CIT(A) rightly held that exchange rate gain is integral part of the exports and hence part of "Business Income" and cannot be treated as "Income from other sources." Interest on L/C Margin & Bank Guarantee - assessee contended that AO erred in treating said interest as "Income from Other Sources" as against "Business Income" of the eligible 10A unit for the first time in his final assessment order without having considered so in his draft assessment order u/s 144C and accordingly, erred in denying deduction u/s 10A in respect of such interest income - Held that:- AO had no jurisdiction to consider an issue which was not considered in the draft assessment order passed u/s 144C. AO is therefore directed to consider the interest income in question as Income from business.
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