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2014 (4) TMI 427 - AT - Income TaxTransfer pricing adjustment – Eligibility for tax holiday u/s 10A of the Act – Offshore business process outsourcing service – Assessee rendered data support services - Held that:- Relying upon CBDT vide its Circular No.14 of 2001, dated 09.11.2001 and the decision in Philips Software Centre ( P.) Ltd. Vs. ACIT, [2008 (9) TMI 466 - ITAT BANGALORE-B] The provisions of the Transfer Pricing were introduced in the Statute to ensure that due to any arrangement made by the assessee with its AE in the course of an international transaction income taxable in India is not reduced for any reason -in a case where the income derived from an international transaction is exempt from tax in India because of provisions of Section 10A, then it cannot be held that because of an arrangement between the assessee and its AE any income taxable in India had been under reported - there is no provision in the Statute to show that in case of an assessee whose income is exempt u/s 10A and international transaction made with an AE should not be benchmarked with ALP determined on the basis of the provisions of Transfer Pricing. The assessee has not reported any excess exempt income from its international transactions with AE - as per the opinion of the lower authorities exempt income declared by the assessee when benchmarked with the ALP determined in accordance with the provisions of Transfer Pricing, the assessee has declared lesser exempt income and thereby no taxable base in India was eroded - no adjustment with the exempt income of the assessee was required to be made as per provisions contained in Chapter X of the Act – thus, the AO is directed to treat the income declared from the business at the amount as shown by the assessee in its return of income – Decided in favour of Assessee.
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