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2015 (1) TMI 360 - AT - Income TaxRevision u/s 263 - Restriction of deduction u/s 10A – Amount representing the profits and gains from business – Held that:- It cannot be said that there is approval of the DRP with regard to the computation of deduction - assessee’s contention that the DRP having approved the computation part of the draft assessment order cannot again be revised by the CIT u/s 263 is not sustainable - the role of DRP cannot be equated with the role of the CIT u/s 158BC - every assessment order passed u/s 158BC requires mandatory approval of the CIT, whereas every assessment order involving transfer pricing issue does not require the prior approval of the DRP - it can be seen that only where variations are made to the returned ‘income of the assessee’, that the AO has to forward the draft assessment order to the assessee and the assessee shall accept the variations or file objections with the DRP and the DRP may confirm, reduce or enhance the variations - Thus, the approval of the DRP is not to the entire draft assessment order but is only to the variations proposed by the AO, unlike the mandatory approval of the CIT of every order passed u/s 158BC. Jurisdiction of CIT u/s 263 - Erroneous and prejudicial to the interests of the Revenue – Held that:- U/s 92C(4) of the Act, it is clearly provided by the first proviso thereto that no deduction u/s 10A or u/s 10AA or section 10B or under chapter VIA shall be allowed in respect of the amount of income by which the total income of the assessee is enhanced after computation of income under sub-section (4) of 92C - the AO has initially aggregated the business income declared by the assessee and also the ALP adjustment and thereafter has allowed deduction u/s 10A - this is in clear violation of the provisions of sec.92C(4) of the Act and hence, the order of the AO is erroneous and prejudicial to the interests of the Revenue - the AO ought to have allowed deduction u/s 10A of the Act before aggregating ALP adjustment and thereafter should have added the ALP adjustment and computed the taxable income - If computation is to be made, then the claim of deduction u/s 10A would have to be restricted to the income from business available before deduction u/s 10A as rightly observed by the CIT – the order of the CIT(A) u/s 263 is upheld – Decided against assessee.
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