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2013 (11) TMI 901 - AT - Income TaxTransfer pricing adjustments - selection of comparable - ALP – Held that:- matter remanded back to AO to again refer the matter to the TPO for determining the arm’s length price afresh in the light of his order for AY 2008-09 after verifying whether the assessee was carrying on same functions in the year under consideration as in AY 2008-09. In case he finds that there is no change in functional profile then the assesse company should be treated as involved in the business of engineering, design and drawing and accordingly, arm’s length price is to be determined. Regarding deduction u/s 80HHE - Held that:- The proviso to sec. 92C(4) prohibits any deduction under Chapter VI-A to be allowed on the enhancement made as per the TPO’s order. Therefore, the only logical conclusion that can be drawn is that no effect is to be given to the addition made by the Assessing Officer as per the TPO’s order while computing deduction under Chapter VI-A. The Assessing Officer’s view cannot be accepted that by the enhancement of income as per the TPO’s order, only the total turnover would be increased and not the export turnover or the total income - If at all the effect is to be given to the enhancement of income made by the TPO, it will have the impact of increasing the assessee’s export turnover, then total turnover and finally, the total income. If all three are increased, obviously, the deduction claimed by the assessee under Chapter VI-A would increase – Matter remanded to the file of A.O. to decide the issue in the light of the above observation. Interest on delayed payment to be treated as income derived from activities contemplated u/s 80HHE - Whether in view of Explanation (d) to sec. 80HHE, which defines the ‘profits of the business’, 90% of the impugned amount is to be reduced or not as it is in the form of interest on delayed payment – Held that:- As per Govinda Chaudhary & Sons [1992 (4) TMI 8 - SUPREME Court], wherein it was held that interest awarded to assessee by arbitrator in respect of a contract was assessable as business income - In the present case also there is no dispute that the impugned amount was business income. However, for the purposes of claiming deduction u/s 80HHE, the profits of the business have been specifically defined in Explanation (d) to sec. 80HHE – Relying upon the judgment in the case of Liberty India vs. CIT, [2009 (8) TMI 63 - SUPREME COURT], it has been held that interest on delayed payment cannot be treated as income derived from activities contemplated u/s 80HHE. Amount written back u/s 41(1) to be included in total turnover for computation of deduction u/s 80HHE – Held that:- There was no effect on turnover of the respective years because these amounts were claimed only as expenditure and did not affect the turnover of the respective year. Therefore, in the current assessment year when these amounts are written back then they cannot form part of total turnover – Decided against the Assessee.
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