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2018 (7) TMI 2209 - AT - Income TaxTP adjustment for US transactions - use of contemporaneous data - request of assessee that the price adopted for US transactions may be adopted for non-US transactions also - prices were fixed under MAP in respect of US AEs and this was the claim of the assessee before the Tribunal that the same price may be adopted in respect of non-US AEs - HELD THAT:- As in assessee’s own case for Assessment Year 2006-07 [2016 (9) TMI 403 - ITAT BANGALORE] Tribunal has restored back the matter to the file of AO/TPO for fresh decision with the direction that the matter should be analyzed by AO/TPO on the same line for non-US transactions and if it is found that factors influencing the price are similar between US and non-US transactions, the price adopted for US transactions may be adopted for non-US transactions also. This was also directed by Tribunal that it was open to TPO to examine the validity of the proposition that price adopted under MAP mechanism can be adopted in respect of other countries also where MAP was not resorted to. Respectfully following this Tribunal order, we restore the TP matter back to the file of AO/TPO for fresh decision with the same directions. The TP issue stands decided in this manner. Addition of relinquishment and compensation received for such relinquishment of lease option - Revenue or capital receipt - objection of the assessee is this that the lease option is not a tenancy right and therefore, section 55(2) is not applicable - whether the lease option is a capital asset or not? - HELD THAT:- As per the definition of capital asset in section 2(14) as reproduced above, property of any kind held by the assessee whether or not connected with his business or profession is covered by the definition of the term capital asset. There are some exclusions such as stock in trade andconsumable stores or raw materials held for the purposes of his business or profession, personal effects excluding jewellery, archaeological collections, drawings, paintings, sculptures or any work of art and agricultural land situated at some places. These are excluded from the definition of capital asset and in addition to that, certain Gold Bonds, Special Bearer Bonds, 1991 and Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 are also excluded from the definition of term capital asset but lease option is not an exclusion and therefore, lease option is definitely a capital asset because lease option is a valuable right in our opinion. Hence the first aspect of the issue is decided against the assessee and we hold that lease option is a capital asset. Whether lease option is equivalent to tenancy right and therefore, section 55(2) of IT Act is applicable? - in the present case, the lease option has expiry date which means that the lease option can be exercised only up to this date i.e. 01.09.2008 and hence, in our considered opinion, whether the property is in existence or not has no relevance because the builder i.e. M/s. Vipul Ltd. has given an option to the assessee to acquire, exact area on lease and assessee decided to surrender and relinquish lease option for a consideration. It is also seen that the lease option was along with all rights and benefits arising there from, including but not limited to any right to sub-lease and any other right, interest benefit etc. consequential in nature, both under the Memorandum of Agreement dated 31.01.2006 and the lease deed dated 10.08.2007 and all these rights were relinquished by the assessee for a consideration of ₹ 34.90 Crores as per agreement dated 08.05.2008. Under these facts, in our considered opinion, the lease option granted to the assessee by the developer is nothing but tenancy right and therefore section 55(2) is applicable in the facts of present case. What is the amount of consideration received? - As agreed upon between the parties that the outstanding consideration should be reduced to ₹ 16.95 Crores as against ₹ 24 Crores. This supplementary agreement has been executed between the parties in the next Financial Year i.e. Financial Year 2009-10 relevant to Assessment Year 2010-11 whereas we are dealing with Assessment Year 2009-10. As per section 48 of IT Act, income chargeable under the head capital gains shall be computed by deducting from the full value of consideration received or accruing as a result of the transfer of capital asset, some amounts being cost of acquisition, cost of transfer and cost of improvement. Hence for the purpose of computing capital gains, consideration received or accrued both are relevant. As per the relinquishment agreement dated 08.05.2008, consideration of ₹ 34.90 Crores has accrued to the assessee and assessee has also received part payment of it and has relinquished its rights of lease option. By a subsequent event of reduction in agreed consideration, the accrued consideration does not get reduced and such reduction in accrued consideration in future has no relevance for the purpose of determining the capital gain in the present year. Hence on this aspect of the matter also, we find no merit in the claim of the assessee. Accordingly this issue is decided against the assessee. Disallowance of value of unendorsed FIRCs from export turnover of the company - addition only ground that the same have not been endorsed by the Authorised Dealer ("AD") bank as on date - HELD THAT:- Disallowance was made by the AO for this reason that FIRCs amounting to ₹ 14,84,16,444/- had not been endorsed by authorized dealer bank as on date and before DRP, the assessee submitted that the endorsed FIRCs and DRP has decided the issue in favour of the assessee without obtaining any remand report from AO in this regard. In this view of the matter, we find force in the submission of ld. DR of revenue that the matter should go back to the file of DRP for fresh decision after obtaining remand report from the AO. Accordingly we set aside the order of DRP and consequently the order of AO on this issue and this issue is restored back to the file of DRP for fresh decision after obtaining remand report from the AO. In this manner, ground no. 3 of the revenue’s appeal is allowed for statistical purposes Disallowance of deduction u/s. 10A for Pune STPI unit - HELD THAT:- As submission of the assessee before the AO that mere inadvertent error of not completing the information sought in the Softex forms should not be considered as the ultimate test to allow the deduction u/s. 10A of the Act. The DRP has simply reproduced these submissions of assessee before the AO and decided the issue in favour of the assessee and even the result of submission of the assessee before STPI authorities for endorsing of the Softex forms which were having mistakes as per the assessee was not insisted upon. Even before us, this is not shown that the STPI authorities of Pune has endorsed such Softex forms which were defective as per the assessee - assessee has not satisfied the requirement of law regarding allowability of deduction u/s. 10A for Pune unit. Hence we reverse the order of DRP on this issue and restore the order of AO in draft assessment order on this issue - Decided in favour of revenue.
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