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2014 (8) TMI 867 - AT - Income TaxDeduction u/s 10A for GE-GDC STP Unit – setting of new unit or expansion of existing unit - Held that:- even if a new unit was established by the assessee company as expansion of its existing unit, substantial fresh capital having been invested in the said unit and it was capable of doing business of its own, independent of the old unit, the same was eligible to be treated as a newly established undertaking; and that therefore, the CIT (A) was not correct in holding that both the units were liable to be treated as one unit for the purpose of computing deduction u/s 10A of the Act – the order of the CIT(A) is upheld – Decided against Revenue. Set off of losses against income from STP units – Unabsorbed losses and depreciation - Held that:- The matter has already been decided in assessee’s own case for the earlier assessment year, the Tribunal has held that as per Section 10A (1) of the Act, any profits and gains derived from an industrial undertaking, to which this Section applies, shall not be included in the total income of the assessee - the profits of the eligible industrial undertaking did not form part of the total income at all - it did not enter the computation provision - what was to be computed was the profits of the eligible industrial undertaking and not the resultant business income after set off of loss in other activities - the loss from other business activities should not be set off against profits derived from eligible industrial undertaking - the action of the CIT (A) is upheld in directing the AO to re-compute the total income of the assessee after allowing the set off of the losses arising out of the STP units of the assessee against the income of its non-STP undertakings and to allow carry forward of unabsorbed losses and depreciation – Decided against Revenue. Travelling expenses allowed – Held that:- The matter has already been decided in assessee’s own case for the earlier assessment year, the Tribunal has held that the observations of the AO with regard to the assessee not having produced the relevant documentary evidence in the shape of bills/vouchers concerning the travelling expenses claimed, have been found by the CIT (A) to be incorrect – The finding of the CIT (A) has not been successfully refuted by the department - The deductible expenditure incurred for the purpose of business does not require the presence of a receipt on the credit side to justify deduction of an expense - expenditure wholly and exclusively for the purpose of business cannot be disallowed merely because the assessee's income or the turnover would be very much reduced - the AO has not brought any material or evidence on record to show and establish that the travelling expenses incurred by the assessee during the year have not been expended for the purpose of assessee's business or have not been incurred in the course of carrying of any business activity of the assessee – Decided against Revenue. Treatment of miscellaneous income – Eligibility for deduction u/s 10A – Held that:- The matter has already been decided in assessee’s own case for the earlier assessment year, the Tribunal has held that the amount received by the assessee towards notice period was to be treated as income derived from the eligible undertaking and that deduction u/s 10A of the Act shall be allowed accordingly - the amount received by the assessee towards notice period is to be treated as income derived from the eligible undertaking and deduction u/s 10A of the Act is to be allowed accordingly – Decided against Revenue. Transfer pricing adjustment u/s 92CA(3) – Software development and related services with AE - Held that:- The assessee is right in contending that since the profit of each of the STP units of the assessee company cannot be evaluated separately and independently of one another, they cannot be segregated and the approach of the TPO in considering the result of each STP unit, on a standalone basis, for the purpose of determining the ALP relating to the assessee's international transactions, was incorrect - The action of the CIT(A) in accepting this contention of the assessee is upheld – CIT(A) has rightly concluded that the benchmarking of the transactions should be based on the aggregation at the entity level and not at the unit level – Decided against Revenue.
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