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2018 (4) TMI 1722

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..... mputation mechanism prescribed in section 10A. The TPO has not made any adjustment in his order dated 10/09/20012 passed u/s. 92CA(3). The assessee has explained that the proviso to section 92C(4) is not applicable in its case as the assessee has on its own determined its total income in the return of income having regard to the arm's length price. In the instant case, the assessee himself has computed the arm's length prices and has disclosed the income on the basis of arm's length prices. It is not a case, where there is an enhancement of income due to determination of arm's length price. Hence, it was rightly held that assessee was entitled to deduction under section 10A in respect of income declared in the return of i .....

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..... appreciate the fact that the amount of RP adjustment of ₹ 10,75,80,929/- is not the sale proceed of any export. 3. The appellant craves leave, to add, alter or amend any ground of appeal raised above at the time of the hearing. 3. The brief facts of the case are that the assessee filed its return of income on 30.9.2009 for the AY 2009-10 declaring income ₹ 2,90,47,940/-. The case of the assessee was selected for scrutiny and notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred as the Act) was issued on 30.8.2009. Again notice u/s. 143(2) of the Act alongwith questionnaire u/s. 142(1) of the Act was issued on 14.2.2011. In response to the notices, the A.R. of the assessee appeared from time to t .....

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..... section 10B or under Chapter VI-A shall be allowed in respect of the amount of income which the total income of the assessee is enhanced after computation of the income under this sub section. The above mentioned Transfer Pricing adjustment is done by the assessee in order to compute Arm's Length Price. AO further noted that the above adjustment was not recorded in the financial statement/Profit Loss account of the assessee. The assessee has also not considered the above mentioned adjustment while computing book profit u/s. 115JB. It is evident that the Transfer Pricing addition was made in order to claim deduction u/s. 10A on the value which is not a part of any export activity. Even if the above mentioned adjustment would have not b .....

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..... ot been routed through Profit Loss account and not forming part of the book profit of the assessee. The assessee also could not explain as to why the above adjustment has not been considered for calculating Book Profit for Minimum Alternative Tax u/s. 115JB. From the above discussion, it is established that the assessee, by no means, is eligible for deduction u/s. 10A against the amount of adjustment on account of Transfer Pricing which has been carried out of the financial statement of the assessee and taken directly to the computation of income. Hence, the whole amount of Transfer Pricing adjustment i.e. ₹ 10,75,80,929/- was treated as forming part of taxable income of the assessee and accordingly, addition of ₹ 10,75,80,929 .....

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..... 6. We have heard both the parties and perused the relevant records, especially the impugned order. We find that the assessee has clarified that (i) it does not have any business other than the unit which is eligible for exemption u/s. 10A, (ii) the voluntary TP adjustment has been made in respect of international transaction involving export of engineering design services and (iii) the voluntary TP adjustment has been made through a disclosure in Form 3CEB and is not an ad-hoc addition in the income tax return. The assessee has excluded voluntary TP adjustment from 'export turnover' in line with the computation mechanism prescribed in section 10A. The TPO has not made any adjustment in his order dated 10/09/20012 passed u/s. 92C .....

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..... eturn of income on the basis of computation of arm's length price. We are of the considered view that the facts in the present case are exactly similar to the facts as in the case of iGate Global Solutions Ltd. (supra). Therefore, the Ld. CIT (A) respectfully following the decision of the ITAT Bangalore in the case of iGate Global Solutions Ltd. (supra), has held that the assessee is eligible for deduction u/s. 10A in respect of income declared in the return of income on the basis of computation of arm's length price. Accordingly, he directed the A.O. to allow the claim for deduction of ₹ 4,32,49,245/- u/s. 10A in the instant case, which does not need any interference on our part, hence, we uphold the action of the Ld. CIT (A) .....

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