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TMI Blog2015 (6) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... llant are opposed to law, weight of evidence, natural justice, facts and circumstances of the case. 2. The assessment is bad in law as the mandatory conditions to invoke jurisdiction under section 92CA of the Act did not exist and consequently the assessment made is bad in law as the reasons recorded for invoking the provisions of section 92CA of the Act did not exist under the facts and circumstances of the case. 3. Without Prejudice the learned Commissioner of Income Tax (Appeal) has erred in making a adjustment of Rs. 51,20,400/- to the value of international transactions by accepting the CUP method adopted by Appellant but rejecting the appellant's adjustments to Comparable Uncontrolled Prices on law and facts of the case. 4. Wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Price is Comparable Uncontrolled Price Method (CUP). It is noticed that even during the earlier assessment years 2003-04 2004-05, 2005-06, 2006-07 and 2007-08, under similar circumstances, the CUP method for valuing the international transaction was rejected by the department and TNMM method was applied after detailed discussions made in those orders. It was observed in those orders that the assessee had failed to explain or provide details whether the third party transactions are comparable to its international transactions in every respect which is an essential prerequisite for adopting the CUP method. In view of the above, the AO made TP adjustment of Rs. 73,46,697/-. 6. By the impugned order CIT(A) given relief of Rs. 22,26,247/- on a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant which is rate charged by the TCS - Rs. 1000 per hour. The number of hours charged to the AE for Junior Developer is at 34,136 hours. As mentioned above, there is difference in the comparable rate vis-a-vis the rate charged to the AE of Rs. 150/- per hour. Accordingly, an adjustment of an amount of Rs. 51,20,400/- (Rs.150 x number of hours for junior developer billed at 34136 hours) is required to value of this international transaction to arrive at the ALP of the international transaction. The other rate charged by the appellant are higher compared to the comparable rates taken for the purpose of comparability and thus need no adjustment. 2.4.14 The AO in his assessment order has made an adjustment or Rs. 73,46,647/-. However, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties in the same line of business for the same job and the assessee has proved the same with evidence. ii) The TPO has not brought out any material on record to prove that the per hour rate charged by the assessee company is lower than that charged by the third parties in the same line of business; iii) No reason is given for rejecting the CUP method; iv) OECD guidelines state that CUP method is most direct and reliable method when comparable uncontrolled transactions are available; v) The Assessing Officer has not given any reason that TNM is the best method and the CUP method is not appropriate; vi) The TPO has not dealt with the arguments of the assessee that the assessee is not a normal software service company and is in fact en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material on record to prove that the per hour rate charged by the assessee company is lower than that charged by third party in the same line of business. However, in the instant case, after recording categorical finding regarding rate difference of Rs. 150 per hour, the TP adjustment has been restricted by the CIT(A) to Rs. 51,20,400/- as against adjustment of Rs. 73,46,647/- made by TPO. Detailed finding recorded by CIT(A) at para 2 of his order has not been controverted by ld. AR by bringing any positive material on record. Accordingly, we do not find any reason to interfere in the findings recorded by the CIT(A) resulting into addition of Rs. 51,20,400/-. 8. The next grievance of the assessee was that the AO was not justified in adjus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 10A, which would not be permissible unless a specific statutory provision to that effect were to be made. In the absence thereof, such an approach cannot be accepted. In the circumstances, the decision of the Tribunal would have to be affirmed be given at the stage when the profits and gains of business are computed in the first instance." 8.2 Respectfully following the decision of Hon'ble jurisdictional High Court, we do not find any merit in the order of lower authorities for adjusting brought forward losses against income of Section 10A unit, before deduction u/s.10A. Accordingly, the AO is directed to allow claim of deduction u/s.10A on the profit of eligible unit before adjusting the brought forward losses against the income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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