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2021 (1) TMI 238 - AT - Income TaxTransfer pricing adjustment made in respect of royalty payment - HELD THAT:- We notice that the co-ordinate bench, in AY 2005-06 and 2006-07, has given a specific direction to the effect that, if the TPO could not find any comparable in respect of royalty payment, then the TPO/AO may consider the royalty payment as part of the international transactions under trading segment and he may consider royalty payment as part of operating cost for the purpose of computing margin in the trading segment. According to Ld A.R, the TPO has followed the alternative direction given by ITAT while giving effect to the order of the ITAT in AY 2005-06 and 2006-07. CIT(A) did not properly consider the direction given by ITAT on an identical issue in AY 2005-06 & 2006-07, more particularly, the alternative direction given by ITAT. Hence we are inclined to follow the order passed by ITAT in the assessee’s own case for AY 2005-06 & 2006-07. Accordingly, we set aside the order passed by Ld CIT(A) on this issue in all the three years under consideration and, following the decision rendered by ITAT in AY 2005-06 & 2006-07 on an identical issue, we restore this issue to the file of the AO/TPO in all the three years under consideration with similar direction. Re-computation of deduction allowable u/s 10A - A.R submitted that it is well settled principle that the deduction u/s 10A is allowed at undertaking level and not at entity level and the Ld CIT(A) has, however, considered the profits available at entity level while adjudicating this issue, which is not correct proposition of law - HELD THAT:- We notice that the Ld CIT(A) has not discussed on jurisdictional issue. Further, it is the submission of the assessee that the Ld CIT(A) has considered the profits at entity level instead of the considering the profit at undertaking level. In any case, it is the submission of Ld A.R that the assessee was not given opportunity of being heard by the AO before making adjustment in the quantum of deduction allowed u/s 10A . Thus we set aside the order passed by Ld CIT(A) on this issue in all the years under consideration and restore the same to the file of the AO.
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