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2019 (6) TMI 1092 - AT - Income TaxDeduction u/s 10A on suo moto transfer pricing adjustment made by the assessee - as per AO suo moto transfer pricing adjustment could not be included as part of the ‘total turnover’ of the undertaking and resultantly could not also form part of the total profit of the undertaking - HELD THAT:- An identical case came up for hearing in the case of I-Gate Global Solutions Limited [2014 (6) TMI 1007 - KARNATAKA HIGH COURT] as returned a finding that the assessee was entitled to deduction u/s 10A in respect of income declared in the return of income on the basis of computation of ALP. Also in APPROVA SYSTEMS PVT. LTD. VERSUS THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 1, PUNE [2018 (3) TMI 1031 - ITAT PUNE] allowed deduction u/s 10A of the Act on the voluntary transfer pricing adjustment made by the assessee by noting that the assessee was entitled to deduction u/s 10A of the Act on additional income offered on account of suo moto adjustment on account of transfer pricing provisions and that the provisions of section 92C(4) of the Act were not attracted The first proviso to section 92C(4) is evidently applicable only to situations where adjustment to the ALP is made by the Assessing Officer/TPO/Ld. DRP and not to the voluntary adjustment made by the assessee itself. If the legislative intent was to treat the adjustments made by the Assessing Officer at par with the voluntary adjustment made by the assessee, the legislative intent would have been expressed in different words and section 92C(4) would not have referred to computation of income made by the AO in terms of the ALP determined u/s 92C(3) based ‘enhanced’ income - Thus we direct the AO to delete this disallowance and grant benefit of deduction u/s 10A on the amount of voluntary TP adjustment made by the assessee. - Decided in favour of assessee. Transfer pricing adjustment in respect of notional interest on outstanding receivables - HELD THAT:- As in M/S COTTON NATURALS (I) PVT. LTD. [2015 (3) TMI 1031 - DELHI HIGH COURT] held that the interest rate should be market determined interest rate applicable to the currency concerned in which the loan has to be repaid and that the interest rate should not be computed on the basis of interest payable on the currency or legal tender of the place or the country of residence of either party. A perusal of the order of the TPO as well as the directions of the Ld. DRP shows that these aspects have not been duly considered by either of the authorities below and they have simply proceeded to make the transfer pricing adjustment on a certain notion without looking into the specific facts of this case. Therefore, in view of aforementioned anomalies, as pointed out by the Ld. AR, with which we are in complete agreement, we deem it appropriate to restore this issue to the file of the TPO for adjudicating the issue afresh after duly considering our observations as well as after giving due opportunity to the assessee to present its case - Assessee's ground allowed for statistical purposes. Not allowing set off of brought forward loss - AO is directed to allow the same after due verification. Set off of available MAT credit - AO is directed to do the needful as per law.
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