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2015 (12) TMI 296 - AT - Income TaxRe-computation of the arm s length price of the assessee s international transaction in respect of Information Technology Enables Services ( ITES ) - main argument of the Ld. Counsel was that since the mark-up MAP has concluded the Arm s Length mark-up at 14.38% for 96% of the total transactions done with the AE s then without prejudice to the other submissions for remaining transactions of 4% also same treatment should be given same bench marking should be done and ALP mark-up of 14.38% should be applied more particularly because of the fact that the AO or DRP have not made any distinction between the US entities and non-US entities - Held that - letter dated 9th April 2015 in Fno. 480/13/2010-FTD-1 has been issued in the case of the assessee company under MAP proceedings for A.Y.2006-07 to 2010-111 by the DCIT(OSD) APA-I on behalf of the Foreign Tax and Tax Research Division -I Central Board of Direct Taxes New Delhi wherein it has been confirmed that for A.Y.2006-07 for US related transactions the margin has been determined at 14.38% as against margin of 21.58% as was determined by the Transfer pricing officer (TPO). It has been further clarified by way of note in the said letter that apportionment between US and non-US ALP and TP adjustment had been margined out by the APA section (of FT and TR Division) on the basis of US and non-US revenue. It is further noted from the perusal of the annual accounts of the assessee company that aggregate turnover has been shown at Rs. 47, 30, 521/- and no distinction has been made between the US and non-US transactions. Similarly in the orders passed by the lower authorities also no such distinction as ever been made by any of the authorities. Under these circumstances in our considered view whatever margin has been determined for the 96% of the transactions same margin should be determined for the remaining 4% transactions as well. It is worth noting that even before us no distinction in facts or nature of transactions has been brought out on record. Therefore in our considerate view mark-up of 14.38% should be determined for the remaining 4% transactions pertaining to non-US entities as well. Exemption u/s 10A - lower authorities held that unabsorbed depreciation has emanated from exempt unit and accordingly exemption u/s 10A of the Act should be computed after setting off of the unabsorbed depreciation - Held that - Respectfully following the judgment of coordinate Bench in assessee s own case we direct the AO to allow deduction u/s 10A before setting off of the brought forward unabsorbed depreciation. Interest income on deposits with banks - chargeable to income tax under the head Income from other Sources as against the assessee s claim that such interest income is chargeable to tax under the head profit and gains of business of profession - Held that - Respectfully following orders of coordinate bench of earlier years in assesee s own case we hold that interest income would be assessable under the head income from business. Since the income from interest has been treated as part of business income it shall be included for determining the amount of total turnover of the business and accordingly the benefit of deduction u/s 10A shall be provided on the amount of interest income proportionately in terms of mechanism provided in subsection (4). In other words the amount of profit eligible for deduction u/s 10A shall be the amount which bears to the profits of the business of undertaking the same proportion as export turnover bears to the total turnover the business of the undertaking of the assessee. The AO is directed to grant the benefit of deduction u/s 10A by re-computing the same in terms of our directions as given above. MAT calculation - assessee s claim rejected that book profit u/s 115JB has to be computed inter alia by reducing the amount of interest income on deposits of Rs. 2, 05, 03, 390/- credited to profit and loss account to which provisions of section 10A apply in terms of clause (ii) to Explanation 1 to Section 11JB - Held that - Respectfully following the judgment of Coordinate Bench in assessee s own case we hold that for the purpose of computing to profit u/s 115JB of the Act income has to be computed as per the schedule VI of the Companies Act and not on the basis of provisions of Income Tax Act.
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