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2018 (8) TMI 202 - HC - Income TaxEligible profit for deduction u/s 10A - restriction of eligible profit for deduction u/s 10A on the basis of transfer pricing order - Held that:- As held by the Tribunal in the case of Visual Graphics [2017 (2) TMI 1208 - ITAT CHENNAI] the AO to apply the provisions of 10A(7) r.w.s 80(i)(a)(10) of the Act, has to independently come to the conclusion that the assessee has entered into the transaction with its AE to claim higher deduction. In the case before us the AO has not carried out any such exercise nor has he come to such conclusion independently. It is the DRP who has applied the above provisions, again without carrying out such exercise. As facts and circumstances are similar in this case before us, the grounds against the restriction of eligible profit for deduction u/s 10A on the basis of transfer pricing order are allowed. Exemption u/s 10A – manner of computation – Held that:- If deduction u/s. 40[a][ia] of the Act is not allowed, the same would have been to be added to the profits of the undertaking on which the Assessee would be entitled for deduction u/s. 10A of the Act. This view is fortified by the decision of Bombay High Court in the case of ‘Commissioner of Income Tax v. Gem Plus Jewellery India Ltd.,’ [2010 (6) TMI 65 - BOMBAY HIGH COURT ]
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