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2013 (4) TMI 642 - AT - Income TaxInvocation of the provision of section 10A(7) r.w.s. 80IA(10) of the Act on the basis of the Transfer Pricing (TP) Study undertaken by the assessee - assessee's service Center is registered under the Software Technology Parks of India and provides services to its Associate Enterprise (AE) – Assessee choose CUP method for determination of ALP - the Assessing Officer invoked the provisions of S.10A(7) read with S.80IA(10) to consider that the assessee has earned more than the ordinary profit and considering the same TP study submitted by the assessee under TNMM method, determined the excess profit and denied deduction under S.10A while completing the assessment. Held that - In view of the decisions of the Coordinate Benches of the Tribunal we hold that the exercise undertaken by the Assessing Officer under S.10A(7) is neither sustainable on facts nor under the provisions of law. The Coordinate Bench in the above referred case has relied on the decision in the case of Tweezerman (India) (P.) Ltd. v. Addl. CIT [2010] 4 TMI 892 - ITAT Chennai]. In this case, the transfer pricing study has not resulted in any addition and ALP was accepted. Even though the authorities relied on "arranged" transaction between the assessee and AE, we do not see any such arrangement on the facts of the case. Nor there is any passing of profits directly or indirectly. In view of this, since the assessee's operations are efficient enough to obtain more profits and since the receipts are at arms length and there is no passing of excess profits by the parent company (AE) to the assessee, we are of the opinion that Assessing Officer's action in restricting the profits is not correct. We also do not see any reason to restore it to the Assessing Officer since there is nothing else to examine. Accordingly, we allow the grounds of the assessee and direct the Assessing Officer to treat the profits declared by the assessee as ordinary profits and allow deduction under S.10A, without any further adjustment.
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