TMI Blog2014 (3) TMI 357X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation and brought forward losses – Held that:- For un-absorbed depreciation,the decision in M/s.Himatsingka Seide Ltd., Vs. CIT [2013 (10) TMI 823 - SUPREME COURT] followed - un-absorbed depreciation has to be set-off before computing the exemption allowable u/s.10A – for setting-off of the brought forward losses, the decision in CIT Vs. Yokogawa India Ltd. 2011 (8) TMI 845 - Karnataka High Court] followed – thus, the assessee can claim deduction u/s.10A before setting off of brought forward losses – Decided partly in favour of Assessee. Upward adjustment made by DRP - Difference in PLI of the assessee viz-a-viz PLI of comparables – Held that:- The decision in Assistant Commissioner of Income-tax Versus SRA Systems Ltd. [2013 (9) TMI 334 - ITAT CHENNAI] followed - the PLI of the assessee is determined at 7% - While determining the PLI for the AY.2007-08, the Tribunal had also taken into consideration the directions of the DRP for the AY.2008-09 – thus, it would be appropriate to adopt the PLI at 7% as against 13.35% determined by the DRP - the quantum of ALP has to be re-calculated in accordance with the PLI – Decided partly in favour of Assessee. Value of operating c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es determined the PLI as 21.86% as against PLI of 3.68% determined by the assessee. The TPO accordingly made upward adjustment of Rs. 6.91 Crores in the income of the assessee. The Assessing Officer further made additions in the income returned by the assessee on account of exclusion of internet charges from export turnover only, dis-allowance of deduction u/s.10A on the ground that the assessee-company has been formed by reconstruction and transfer of Plant Machinery previously used and disallowing brought forward losses and un-absorbed depreciation of the previous year before allowing deduction u/s.10A of the Act. Aggrieved against the draft assessment order dt.29-11-2011, the assessee filed objections before the DRP, Chennai. The DRP rejected the objections of the assessee with regard to exclusion of internet charges from export turnover, dis-allowance of deduction u/s.10A and the addition made with regard to setting off of brought forward depreciation before allowing deduction u/s.10A. As regard the objections of the assessee in respect of determination of ALP, the DRP rejected the objections of the assessee on merits but directed the TPO to adopt arithmetic mean of PLI of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as against the total operating cost of Rs. 20.09 Crores as per the audited accounts for the year ending 31-03-2008. 4. On the other hand, Shri P.B.Sekaran , appearing on behalf of the Revenue vehemently supported the assessment order and the reasoning given by the DRP in rejecting the objections of the assessee. The ld.DR fairly conceded that the issue No.1 with regard to exclusion of the amount of internet expenses from the export turnover as well as total turnover is covered by the decision of the Special Bench of the Tribunal in the case of ITO Vs. M/s. Saksoft Ltd (supra) in favour of the assessee. The ld.DR submitted that the issue with regard to setting off of brought forward business losses have recently been decided in favour of the Revenue by the Hon ble Supreme Court of India. In Civil Appeal No.1501/2008 in the case of M/s.Himatsingka Seide Ltd., Vs. CIT decided on 19-09-2013, the Hon ble court dismissed the appeal of the assessee and decided the issue in favour of the Revenue. 5. We have heard the submissions made by the representatives of both the sides. We have also perused the orders of the authorities below and the decisions on which the representatives of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A are pari materia with the provisions of section 10B of the Act. We find that as far as un-absorbed depreciation is concerned, the Hon ble Supreme Court of India in the case of M/s.Himatsingka Seide Ltd., Vs. CIT (supra), has up-held the findings of the Hon ble Karnataka High Court and as such, un-absorbed depreciation has to be set-off before computing the exemption allowable u/s.10A. In respect of setting-off of the brought forward losses, the decision of the Hon ble Karnataka High Court in the case of CIT Vs. Yokogawa India Ltd.(supra) still holds good. Accordingly, the assessee can claim deduction u/s.10A before setting off of brought forward losses. In view of the above, this ground of appeal of the assessee is partly allowed. 8. The fourth issue in appeal relates to upward adjustment of Rs. 5,12,00,000/- made by DRP on the basis of difference in PLI of the assessee viz-a-viz PLI of comparables. The TPO did not accept the submissions of the assessee that the prices charged by the assessee from its associate enterprises were at arm s length. The TPO rejected the transfer pricing study of the assessee on the ground that out of three companies selected by the assessee as c ..... 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