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2019 (6) TMI 1705 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected. Also where the RPT exceeds 15%, such companies should not be taken as comparable companies. Improper allocation of operating expenditure to ITES segment - TPO has increased the Operative revenue of the Assessee in ITES by adding reimbursements made by AE, which cannot be regarded as part of the operating revenue - TPO has also tampered with the operating expenditure by allocating the total cost of the entity on the basis of proportionate segment revenue of the ITES segment. While allowing deduction u/s.10A of the Act, the AO has accepted the segmental details as given by the Assessee for the SWD segment and the ITES segment. The question is, can the treatment be different when it comes to determining ALP. The issue requires reexamination by the TPO. The parties therefore agreed that the issue requires to be examined afresh by the TPO in the light of the submissions made by the Assessee before DRP extracted of this order. Set off of losses prior to relief under section 10A of the Act - HELD THAT:- As decided in M/S YOKOGAWA INDIA LTD. [2016 (12) TMI 881 - SUPREME COURT] Provision of set off and carry forward as contemplated under Chapter-VI of the Act would not be attracted and therefore intra head set off sought by seeking to rely on the provision of section 70(1) of the Act and seeking to restrict the deduction u/s 10A and 10AA of the Act to the extent of gross total income as contemplated u/s 80A(2) of the Act, cannot be sustained. We therefore hold that deduction u/s.10A of the Act has to be allowed without setting off losses of non-10A unit before allowing the deduction under section 10A of the Act. In view of the aforesaid decision of the Hon’ble Supreme Court, the AO is directed not to set off the losses of non-10A units against profits of 10A units before allowing deduction u/s. 10A of the Act. Grant of lower deduction u/s 10A - As taking into consideration the decision rendered in the case of Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] we are of the view that it would be just and appropriate to direct the Assessing Officer to exclude the charges referred to in Gr.No.10 referred to above both from export turnover and total turnover, as has been prayed for by the assessee in the alternative. In view of the acceptance of the alternative prayer, we are of the view that no adjudication is required on the ground whether the aforesaid sums are required to be excluded from the export turnover. Moreover, the order of the Hon’ble Karnataka High Court has been upheld by the Hon’ble Supreme Court in the case of CIT v. HCL Technologies Ltd.[2018 (5) TMI 357 - SUPREME COURT] Credit for tax deducted at source not having been allowed - We direct the AO to verify the certificates filed by the Assessee for TDS and allow credit after due verification and in accordance with law.
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