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2015 (4) TMI 716 - AT - Income TaxValidity of draft assessment order passed u/s 143(3) r.w.s. 144C - contention of the assessee that since there is no transfer pricing adjustment proposed by the Transfer Pricing Officer in his order, the Assessing Officer cannot pass draft assessment order u/s 143(3) r.w.s. 144C - Held that:- This issue is covered against the assessee by the decision of Visual Graphics Computing Services (India) P. Ltd. v. Asst. CIT [2012 (5) TMI 147 - ITAT CHENNAI]. Respectfully following the above order we dismiss grounds of the assessee challenging the validity of draft assessment order under section 143(3) read with section 144C of the Act. - Decided against assessee. Adjusting/restricting the claim of deduction u/s 10B on the basis of the arm's length price determined by the TPO - Held that:- Ongoing through the order of the co-ordinate Bench of this Tribunal in the case of Visual Graphics Computing Services (India) P. Ltd. v. Asst. CIT [supra] we find that the issue is squarely covered in favour of the assessee. The coordinate Bench of this Tribunal held that it is not permissible for the Assessing Officer to work out deduction under section 10A on the basis of arm's length price profit generated out of the order of the Transfer Pricing Officer. - Decided in favour of the assessee Foreign exchange gain - whether it should be taken as part of export turnover or not? - Held that:- As decided in the case of CIT v. Pentasoft Technologies Ltd. [2010 (7) TMI 75 - MADRAS HIGH COURT] gains due to fluctuation in the foreign exchange is directly related to export sales of the assessee and therefore, it cannot be treated as other than part of profit from export. Similar view has been expressed by the hon'ble Bombay High Court in the case of CIT v. Gem Plus Jewellery India P. Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT]. Here in the case of the assessee the gain in foreign exchange is also in connection with the export sales, respectfully following the above decision of the hon'ble jurisdictional High Court, we hold that the foreign exchange gain has to be considered as part of the export turnover for the purpose of computing deduction under section 10B of the Act and at the same time following the same analogy, foreign exchange loss cannot be considered as part of the export turnover for the purpose of section 10B of the Act. - Decided in favour of assessee. Foreign exchange loss having excluded from export turnover it has to be excluded from the total turnover also - Held that:- As applying the Special Bench decision of this Tribunal in the case of Sak Soft Ltd. [2009 (3) TMI 243 - ITAT MADRAS-D] we are of the view that the ratio of the Special Bench decision has no application in respect of losses arising due to foreign exchange. The ratio of the said decision can be applied only in case where certain expenditures are incurred in foreign currency/Indian rupee and not for losses due to exchange fluctuation.- Decided against assessee Exclusion of unrealised export proceeds from the export turnover - Held that:- Counsel for the assessee submits that the Assessing Officer excluded this amount from the export turnover ignoring the fact that the assessee has already excluded such unrealised export proceeds from the export turnover while computing deduction allowable under section 10B of the Act. We restore this issue back to the file of the Assessing Officer to examine whether the assessee has reduced such unrealised export proceeds of ₹ 17,21,397 from the export turnover or not as the contention of the assessee was that the same were already excluded by the assessee himself. - Decided in favour of assessee for statistical purposes. Non-consideration of correct quantum of "profits and gains of business" for the purpose of computing deduction under section 10B - Held that:- On reading of the provisions of section 10B of the Act, prima facie, we feel that the deduction is allowable on the "profits and gains of the undertaking" and not on the profits as per the profit and loss account, as rightly contended by counsel for the assessee. Therefore, we remit this issue back to the file of the Assessing Officer to examine this issue and decide in accordance with law - Decided in favour of assessee for statistical purposes.
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