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2020 (2) TMI 450 - AT - Income TaxTP Adjustment - adjustment in value of international transaction (by increasing the margin of comparable companies - comparable selection - HELD THAT:- The taxpayer is engaged in activity defined as technical consultancy of engineering services, which can be classified as technical engineering service provider. The taxpayer in order to benchmark its international transactions qua technical support services provided to the Associated Enterprises (AE) applied Transactional Net Margin Method (TNMM) with Operating Profit/ Total Cost (OP/TC) as Profit Level Indicator (PLI) as the Most Appropriate Method (MAM), arrived at its own margin at 12.28% on cost, thus companies functionally dissimilar with that of assessee need to deselected. Risk adjustment - issue of this year is also required to be restored to TPO/AO to decide afresh after providing an opportunity of being heard to the taxpayer as there is no change in the business model of the taxpayer during the year under assessment. The taxpayer is directed to bring on record evidence to prove the risk adjustment vis-à-vis comparables in the light of the decisions of the coordinate Bench of the Tribunal in cases of Mentor Graphics (Noida) Pvt. Ltd. vs. DCIT [2007 (11) TMI 339 - ITAT DELHI-H] and DCIT vs. Hellosoft India Pvt. Ltd. [2013 (10) TMI 747 - ITAT HYDERABAD] Deduction u/s 10A(1A) - AO/TPO/DRP restricting the deduction at 90% instead of 100% as provided in section 10A(1A) of the Act on the ground that the taxpayer has inadvertently claimed deduction at 90% of the eligible profit of the undertaking instead of 100% of the eligible profit - HELD THAT:- In AY 2010-11, identical issue was also raised by the taxpayer as additional ground which was allowed as per order dated 26.12.2018 and restored the issue back to the AO for passing order afresh in accordance with law. Since this is a mistake apparent on record on the part of the taxpayer, this issue is required to be restored back to the AO to decide afresh keeping in view the provisions contained u/s 10A(1A) of the Act. Consequently, the AO is directed to decide the issue afresh after providing an opportunity of being heard to the taxpayer. So, ground no.2 is determined in favour of the taxpayer for statistical purposes.
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