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M/s Agilisys IT Services India Pvt. Ltd. Versus Income Tax Officer-Ward 9 (2) 3, Mumbai

2015 (7) TMI 110 - ITAT MUMBAI

Enlargement of the scope of the order passed by the CIT - 1 under section 263 - Held that:- Admittedly in this case the original assessment was set aside by the CIT -1 vide his order dated 27-9-2007. We have carefully gone through the directions issued by the CIT-1 confirmed by the Tribunal. There is no dispute that the CIT-1 has issued directions firstly in respect of the claim of deduction u/s 10B of the Act keeping in mind the provisions of section 10B(3) of the Act and subsequently the CIT - .....

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ot enlarge the scope of the directions of the CIT issued u/s 263 of the Act, therefore, the CIT(A) also cannot enlarge the same. We, accordingly, set aside the findings of the ld. CIT(A)- Decided in favour of assessee.

Disallowance of deduction u/s 10B in respect of the addition suo motu made by the assessee u/s 92-C - Held that:- In our considered opinion and understanding of the law and the understanding of the legislative intention, we cannot permit the assessee to stretch the bene .....

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or deduction u/s 10B in respect of the addition of ₹ 4,09,54,804/- suo moto made by the assessee as per Form 3CEB. The cases relied upon by the assessee have not considered the relevant provisions of the Act with legislative intent and are therefore distinguished from peculiar facts and modus operandi of the case in hand.- Decided against assessee.

Computation of amount eligible for exemption u/s 10B of the Act by setting of the losses of non-STPI unit - Held that:- This issue i .....

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be allowed before setting off brought forwarded losses of a non-section 10A unit - Decided in favour of assessee. - I.T.A. No.2113/Mum/2011, I .T.A. No.2226/Mum/2011, C.O. No. 89/Mum/2011 - Dated:- 29-4-2015 - SHRI I.P. BANSAL AND SHRI N.K. BILLAIYA, JJ. For The Assessee : Shri Yogesh A Thar For The Respondent : Shri N.K. Chand ORDER PER BENCH. : ITA No. 2113/M/11 and ITA No. 2226/M/11 are cross appeals by the assessee and Revenue respectively against the very same order of the ld. CIT(A), Visak .....

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VSEZ, Visakhapatnam. The return for the year was filed on 24-11-2003 wherein the assessee claimed exemption u/s 10B of the Act. The assessment was completed u/s 143(3) of the Act on 29-3-2006. The CIT -1, Visakhapatnam vide his order u/s 263 of the Act noticed from the computation of income that an amount of ₹ 4,09,45,804/- was added to the taxable income towards transfer pricing adjustment. As per the provisions of section 10B(3) of the Act the deduction is allowed on the sale proceeds t .....

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TPO) for the determination of arm s length price as per Instruction No. 3 of CBDT dated 20-5-2003. The CIT -1 accordingly directed the A.O. to refer the question of determination of transfer pricing to the TPO and finalise the assessment de novo. 4. Pursuant to the direction of the CIT -1 u/s 263 of the Act, the A.O. proceeded by issue of notice u/s 143(2) of the Act. The matter was referred to the TPO and after considering the facts and detail submission of the assessee the A.O. finally compute .....

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mputation of income : ₹ 26,49,333/- Rs.4,70,74,030/- Less: Expenses/allowances claimed by the Assesee as deduction : ₹ 61,33,648/- TOTAL INCOME BEFORE EXEMPTION U/S 10B Rs.4,09,40,382/- Eligible profit u/s 10B= 4,09,40,382 x 2,18,29,348 6,27,75,153 Exemption u/s 10B works out = ₹ 1,42,36,553/- Taxable income after allowing exemption 10B (Rs.4,09,40,382 - ₹ 1,42,36,553 : ₹ 2,67,03,829/- Tax thereon : ₹ 93,46,340/- Add: surcharge @ 5% : ₹ 4,67,317/- : S .....

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l consideration of the facts relating to the issue, it may be stated that there is substantial force in the contention of the appellant that the assessing officer ought not to have touched upon issues that were not directed by the Commissioner in the proceedings u/s 263 of the Act. However, it needs to be stated that the Commissioner of Income tax (Appeals) being the first appellate authority, his powers under the Act are coterminous with that of the assessing officer, and further he is vested w .....

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and otiose. Aggrieved by this, the assessee is before us. 6. Before us, the ld. Counsel for the assessee reiterated what has been submitted before the lower authorities. It is the say of the ld. Counsel that the ld. CIT(A) has admitted that the A.O. has travelled beyond the scope of the directions issued by the CIT-1 u/s 263 of the Act yet the ld. CIT(A) confirmed the assessment order, therefore, the order of the ld. CIT(A) is erroneous. In support of his contention, the ld. Counsel has relied .....

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y in this case the original assessment was set aside by the CIT -1 vide his order dated 27-9-2007. We have carefully gone through the directions issued by the CIT-1, This order of the CIT-1 was confirmed by the Tribunal in ITA No. 468/Vizag/07 dated 11-12-2013. There is no dispute that the CIT-1 has issued directions firstly in respect of the claim of deduction u/s 10B of the Act keeping in mind the provisions of section 10B(3) of the Act and subsequently the CIT -1 directed the A.O. to refer th .....

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ections of the CIT issued u/s 263 of the Act, therefore, the CIT(A) also cannot enlarge the same. We, accordingly, set aside the findings of the ld. CIT(A) and allow ground No. 1 of this appeal. 8. Ground No. 2 relates to the disallowance of deduction u/s 10B in respect of the addition suo motu made by the assessee u/s 92-C of the Act. 9. While scrutinizing the return of income, the A.O. noticed that during the year under consideration, the assessee has made export turnover of ₹ 6,27,75,15 .....

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ovisions of section 10B(3) of the Act the assessee was not entitled for the exemption. The assessee was asked to explain its claim. The assessee vide its letter dated 13-11-2009 stated that all the export turnover reported in the books have been received in convertible foreign exchange within the stipulated time, therefore, the claim of exemption should be allowed. This submission of the assessee did not find favour with the A.O. who was of the firm belief that the increased profit of ₹ 4, .....

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e consequent to determination of the arm s length price by the A.O. u/s 92-C(3) of the Act. The ld. Counsel for the assessee pointed out that in this case the assessee himself has made transfer pricing adjustment. Our attention was drawn to page 36 & 37 of the paper book. The transfer pricing adjustment made by the assessee was accepted in toto by the TPO therefore it cannot be said that there has been enhancement. Referring to the proviso to section 92-C of the Act, the ld. Counsel for the .....

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se of I Gate Global Solutions Ltd. vs. ACIT in ITA No. 248 & 249(Bang) of 2007 order dated November 27, 2007. 11. Per contra, the ld. D.R. strongly supported the findings of the authorities below. In addition, the ld. D.R. relied upon the decision of the Mumbai Bench of this Tribunal in the case of Deloitte Consulting India (P.) Ltd. vs. DCIT [2012] 22 taxmann.com 107 (Mumbai) and Delhi Bench of this Tribunal in the case of ACIT vs. Bechtel India (P.) Ltd. [2013] 29 taxmann.com 376 (Delhi). .....

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nstitutes to enhancement of income whereby the claim of deduction u/s 10B of the Act can be denied to the assessee as per the proviso to section 92-C of the Act. The proviso to section 92-C read as under:- Provided that no deduction under section 10A or section 10AA or section 10B or under Chapter VI-A shall be allowed in respect of the amount of income by which the total income of the assessee is enhanced after computation of income under this sub-section. Section 92-C(3) read as under:- 92C. ( .....

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ned by the assessee in accordance with the provisions contained in sub-section (1) of section 92D and the rules made in this behalf; or (c) the information or data used in computation of the arm s length price is not reliable or correct; or (d) the assessee has failed to furnish, within the specified time, any information or document which he was required to furnish by a notice issued under subsection (3) of section 92D, the Assessing Officer may proceed to determine the arm s length price in re .....

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ssion of the Assessing Officer. 13. Undoubtedly the emphasis is on the enhancement of the total income by way of transfer pricing adjustment. The Act is silent in respect of the suo moto adjustment made by the assesse as done in the case in hand. If section 92-C of the Act is read in isolation to other provisions of the Act there would be no difficulty in interpreting the word enhance as done by the Bangalore Bench of this Tribunal in the case of I Gate Global Solutions Ltd. (supra). However in .....

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software exported out of India are received in, or brought into India by the assessee in convertible foreign exchange, within a period of six months from the end of the previous year or within such further period as the competent authority may allow in this behalf. 14. Thus the legislative intention is clear to give incentive to 100% export oriented unit but at the same time expecting such EOU to bring the sale proceeds in the convertible foreign exchange in India within a period of six months f .....

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er will first under-price its sale with associated enterprises and thereafter suo moto enhance the sale price by making transfer pricing adjustment and claiming the deduction u/s 10B of the Act, stating that the under- price sale originally declared by the assessee in its books of account have been brought in India in convertible foreign exchange thereby keeping a certain portion of the sale abroad. 16. In our considered opinion and understanding of the law and the understanding of the legislati .....

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ties. In our considered opinion, the assessee is not entitled for deduction u/s 10B of the Act in respect of the addition of ₹ 4,09,54,804/- suo moto made by the assessee as per Form 3CEB. The cases relied upon by the assessee have not considered the relevant provisions of the Act with legislative intent and are therefore distinguished from peculiar facts and modus operandi of the case in hand. Ground No. 2 is accordingly dismissed. 17. Ground No. 3 is consequential and is directly related .....

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covered in favour of the assesse and against the Revenue by the decision of the Hon ble High Court of Bombay in the case of CIT vs. Black and Veatch Consulting Pvt. Ltd., [2012] 348 ITR 72 (Bom) wherein the Hon ble jurisdictional High Court has held as under:- Section 10A of the Income-tax Act, 1961 is a provision which is in nature of a deduction and not an exemption. The deduction under section 10A has to be given effect to at the stage of computing the profits and gains of business. This is a .....

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purposes of Chapter VI-A "gross total income" to mean the total income computed in accordance with the provisions of the Act, before making any deduction under the Chapter. Therefore, the deduction under section 10A has to be given at the stage when the profits and gains of business are computed in the first instance. The Tribunal was right in holding that the deduction under section 10A in respect of the allowable unit under section 10A has to be allowed before setting off brought for .....

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