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2023 (11) TMI 751 - ITAT CHANDIGARHTP adjustments - Arm''s length price - Benchmark analysis on Deduction u/s 80IC - Profit split method - inter-unit transactions have to be benchmarked as per section 92CA read with section 80-IA(8)/80IC - whether the assessee has claimed deduction u/s 8IC for the present year or not? - HELD THAT:- TPO has returned a finding that Unit V is eligible for deduction u/s 80IC as per claim of the assessee and its inter-unit transactions have to be benchmarked as per section 92CA read with section 80-IA(8)/80IC of the Income Tax Act, 1961 and there cannot be any dispute in this regard. TPO has noticed that the assessee has declared profit of Rs. 8,45,95,489/- for Unit V which has been adjusted by brought forwarded earlier years' losses of Rs. 10,65,85,348/- and carried forward loss of Rs. 2,19,89,859/- as per the information filed and any downward adjustment made in the present order u/s 92CA(3)/80- lA(8)/80IC would lead to reduction in profit for the current year and increase in carried forward of loss for the purpose of deduction u/s 80IC. TPO thereafter has proposed an adjustment and which has been upheld by the DRP. The effect of such an adjustment would therefore be reduction in profits of the Unit V for the current year and increase in its carried forward losses by equivalent amount. Further, given that there are past accumulated losses and no profits available for the year after such setoff, there is no claim which has been made by the assessee u/s 80IC in the return of income prior to such adjustment. Even post such adjustment, no profits will become available which has been considered by the AO for allowing deduction u/s 80IC - Thus, the adjustment so made by the TPO and upheld by the DRP cannot lead to enhancement by way of addition to the returned income as has been done by the AO while passing the final assessment order. The adjustment will lead to increase in carry forward of losses to the subsequent years. In light of aforesaid discussions, we agree with the contention advanced by the ld AR in this regard and the addition is hereby directed to be deleted.
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