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2023 (3) TMI 391 - ITAT MUMBAITP Adjustment Transaction of slump sale between the subsidiaries of Foreign Holding Company - To be considered as an international transaction or not - HELD THAT:- The agreement for purchase of asset, on the basis of slump sale is between two resident companies/AEs. It is an admitted fact that both the aforesaid companies are subsidiaries of Foreign Holding Company i.e. MWH Europe Ltd. A bare reading of section 92B defining ‘international transaction’ would show that there is no such condition that the transaction between two resident companies, subsidiary of a Foreign Holding Company shall be deemed as international transaction for the purpose of section 92C - Since, the asset purchase agreement is between two resident companies such transaction cannot be regarded as ‘international transaction. The meaning of international transaction ‘contained in section 92B of the Act is plain and clear. It does not envisage that if a resident AE is a subsidiary of a foreign holding company, the transaction between such Indian subsidiary and another Indian company would fall within the ambit of international transaction as defined u/s. 92B of the Act. Thus, we do not agree with the findings of authorities below that the transaction of slump sale between the assessee and MWH ResourceNet (India) Pvt. Ltd. is an international transaction. Valuation of assets u/s 50B - HELD THAT:- Another facet of slump sale transaction is that the assessee has not furnished Form 3CEA along with the return of income. The assessee purportedly filed form 3CEA on 23/03/2013 before AO during draft assessment proceedings. However, the draft assessment order was already passed on 22/03/2013 i.e. a day prior to the filing of form 3CEA. The assessee pointed this fact during the course of objection raised before the DRP. No finding was given by the DRP on this issue. It is relevant to mention here that filing of Form 3CEA was a mandatory requirement for determining the value of the asset. The assessee has furnished the same at a belated stage. Taking into consideration entirety of facts we deem it appropriate to restore this issue back to the file of AO for the limited purpose of ascertaining the value of transaction for the purpose of section 50B of the Act. Addition on account of unbilled receivables - DRP and AO have treated the aforesaid amount reflected in the Balance Sheet as the income of the assessee and AO made addition of the aforesaid amount - HELD THAT:- . Assessee on instructions from the assessee stated at Bar that aforesaid amount has already been offered to tax . Assessee we deem it appropriate to restore this issue to the file of Assessing Officer for the limited purpose of verification of the fact whether the amount has been offered to tax by the assessee. If it is so, no addition on this account is warranted. The ground No.7 of the appeal is allowed for statistical purpose in the terms aforesaid. Denial of deduction u/s 10A - DRP not satisfied with the nature of documentation, accounts maintained by the assessee upheld rejection of books of account of the assessee - HELD THAT:- We find that the DRP after holding that the accounts of the assessee are not proper, erred in coming to the conclusion that assessee did not earn any profit from eligible undertaking. - there is no link between the first conclusion about unreliable nature of the books of account of the assessee and denial of deduction u/s.10 A - deduction u/s.10 A of the Act is allowable on the profit of eligible undertaking. Therefore, assuming that the accounts of the assessee are not reliable, it cannot be held that assessee did not earn any profit from the eligible undertaking. The assessee is eligible for deduction u/s. 10A of the Act to the extent of profit of eligible unit are determinable. The ground No. 8 to 10 of the appeal are restored to the file of AO to determine correct profit eligible for deduction u/s.10A - The assessee is directed to furnish necessary documents before the Assessing Officer to substantiate and determine eligible profit for deduction u/s 10 A of the Act. AO is directed to decide the issue afresh, in accordance with the law. The ground No. 8 to 10 of appeal are allowed for statistical purpose with above directions. Claim of depreciation on Pune unit - This ground is consequent to disallowance of deduction u/s. 10 A - As we have already set-aside the issue of allowability of deduction u/s.10 A of the Act to the file of Assessing Officer, this ground is also required to be restored to the file of the Assessing Officer. Non consideration of revised computation of income filed during the course of assessment proceedings - assessee pointed that the DRP had directed the Assessing Officer to consider revised computation of income - HELD THAT:- As Assessing Officer has not given effect to the direction DRP. This issue is restored back to the file of Assessing Officer to comply with the direction of DRP to consider revised computation of income. The ground No.12 of the appeal is allowed for statistical purpose.
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