TMI Blog2017 (5) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... of these two years which are before us by respectfully following the judgment of the Hon’ble Karnataka High Court rendered in the case of Sami Labs Ltd. (2010 (12) TMI 683 - Karnataka High Court ). Hence, we decline to interfere with the order of the ld. CIT(A) on this issue. Deduction u/s. 10A computation - Held that:- As the profits & gains u/s. 10A were not to be included in the income of the assessee at all, the question of setting off of loss of the assessee from any business against such profits & gains of the undertaking would not arise. Similarly, as per section 72(2), unabsorbed business loss is to be first set off and thereafter unabsorbed depreciation u/s. 32(2) is to be set off as deduction u/s. 10A has to be excluded from the total income of assessee, the question of unabsorbed business loss being set off against such profits & gains of undertaking would not arise. See C.I.T. & Another Versus M/s Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT] Reduction of telecommunication expenses from the export turnover - Held that:- This issue is covered in the case of Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] in which it has been held that if cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. That on the facts and circumstances of the case, the learned CIT(A) erred in upholding the rejection of Transfer Pricing ( TP ) documentation by the learned TPO. 8. That the learned CIT(A) erred in upholding the rejection of comparability analysis carried in the TP documentation and conducting a fresh comparability analysis for determining the arm's length price by the learned TPO. 9. That the learned CIT(A) erred in not giving reasonable opportunity to the Appellant of refuting and rebutting the basis on which adjustment was proposed by the learned CIT(A) and in not admitting the contentions, arguments, and evidentiary data put forward by the Appellant. 10. That the learned CIT(A) failed to adjudicate on the disallowance of the marketing commission by the learned TPO. 11. That the Appellant craves leave to add to and/or to alter, amend, rescind modify the grounds herein above or produce further documents before or at the time of hearing of this Appeal. IT(TP)A No.452/B/11 (Revenue s appeal) 1. The order of the Learned CIT (Appeals) , in so far as it is prejudicial to the interest of revenue , is opposed to law and the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal before the CIT(Appeals) insofar as it relate to software development services provided by the assessee to its AE in USA. Accordingly the appeal came to be partly allowed by the CIT(Appeals) vide his order dated 17.01.2011. 3. During the pendency of the above cross appeals before the Tribunal, the assessee s AE in Canada approached the competent authority in Canada for resolution of TP adjustment issues insofar as it related to the software development services provided by assessee to its AE in Canada through MAP prescribed under Indo-Canada DTAA. Thereafter, the assessee was informed vide order dated 01.12.2015 that the competent authority of India Canada DTAA has resolved the TP adjustment arising in the appeal insofar as it relates to Canada. The assessee thereafter accepted the terms of MAP resolution as per Rule 44H(4) of the I.T. Rules, 1962 and withdrew its appeal before this Tribunal insofar it relates to software development services provided by assessee to its AE in Canada vide its letter dated 09.02.2016. 4. In view of the above, the cross appeals filed by the assessee before this Tribunal relate to TP adjustment made by the TPO survive only to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the international transactions with its AEs of UK Australia was minimal. The details of transactions are available at page 621 of the compilation and the same is reproduced as under:- Appendix D : Details of International Transactions entered with Associated Enterprises in FY 2004-05 The details of the international transactions entered by CGI India with its associated enterprises during the financial year 2004-05 are as follows: No. Name and Address of the Associated Enterprise Description of the transactions Amount (In Rupees) Paid Received 1 CGI AMS Inc., 600 Federal Street, Andover, MA 01810, US Export of Software development and maintenance services 378,048,343 Payment of Technical service fee 8,339,100 Pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. We have also carefully examined the order of Tribunal in the case of J P Morgan Services (P.) Ltd. V. DCIT (supra) in which the Tribunal has held that whatever margin has been applied through MAP with respect to major international transactions, the same should be applied for the remaining transactions. The relevant observations of the Tribunal is extracted hereunder for the sake of reference:- 3.2. During the course of hearing, it has been submitted that the assessee company is providing IT Enabled Services to its AE s. The assessee had shown a margin of 12.26%. The AO held and treated ITES business as one , and applied mark-up @ 21.58%. It is further submitted that out of the total transactions done by the AE s world over, around 96 transactions were done with the entities based in USA and remaining 4% of the transactions done with other AE s located elsewhere. The lower authorities did not make any distinction while applying mark-up and the entire turnover was treated as one and accordingly mark up was applied. 3.3. It has been further submitted that out of the original TP addition of ₹ 39,30,43,000/- (based on the applied mark-up of 21.58%), MAP has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f of the Foreign Tax and Tax Research Division -I, Central Board of Direct Taxes, New Delhi wherein it has been confirmed that for A.Y.2006-07, for US related transactions, the margin has been determined at 14.38% as against margin of 21.58%, as was determined by the Transfer pricing officer (TPO). It has been further clarified by way of note in the said letter that apportionment between US and non-US ALP and TP adjustment had been margined out by the APA section (of FT and TR Division) on the basis of US and non- US revenue. It is further noted from the perusal of the annual accounts of the assessee company that aggregate turnover has been shown at ₹ 47,30,521/-, and no distinction has been made between the US and non-US transactions. Similarly in the orders passed by the lower authorities also no such distinction as ever been made by any of the authorities. Under these circumstances, in our considered view, whatever margin has been determined for the 96% of the transactions, same margin should be determined for the remaining 4% transactions as well. It is worth noting that, even before us, no distinction in facts or nature of transactions has been brought out on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 10B are similar and therefore, in view of this categorical finding of the ld. CIT(A) that in the initial year, the percentage of old and used plant and machinery was more than 20%, the assessee is not eligible for deduction u/s. 10A of the Act, in the initial year as well as in subsequent years. Therefore, we find no reason to interfere with the order of the ld. CIT(A) on this issue in any of these two years which are before us by respectfully following the judgment of the Hon ble Karnataka High Court rendered in the case of Sami Labs Ltd. (Supra). Hence, we decline to interfere with the order of the ld. CIT(A) on this issue. 9. In ITA No.869(Mum)/2006, although some other grounds are also raised as per grounds of appeal reproduced above but no argument was advanced by the ld. AR of the assessee on any of these grounds and hence, we infer that the learned AR of the assessee has nothing to say on these grounds. In the absence of any contention of the learned AR of the assessee, we find no reason to interfere in the order of the CIT(A) on any such issue. 10. In the result, both these appeals of the assessee are dismissed. 12. Since the impugned issue is squarely cove ..... X X X X Extracts X X X X X X X X Extracts X X X X
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