TMI Blog2016 (12) TMI 1607X X X X Extracts X X X X X X X X Extracts X X X X ..... AND SMT. BEENA A. PILLAI, JUDICIAL MEMBER For The Revenue : Mr. Neeraj Kumar, Sr. DR. For The Assessee : Mr. Salil Kapoor, Adv., Ms. Ananya Kapoor, Adv. ORDER PER BEENA A. PILLAI, JM: 1. The present appeal by the revenue and cross objection by the assessee against order dated 31/07/2012 passed by ld.CIT (A)-20, New Delhi for assessment year 2007-08. In the department appeal following grounds have been raised. 1. The Learned CIT(A) ;has erred on facts and circumstances of the case and in law in deleting the addition of ₹ 7,76,09,600/- by ignoring the computation of margins (PLI)- ITES adopted by TPO vide order dated 25.10.2010. The Ld. CIT(A) has further eared in believing the version of the assessee and holding the international transaction to be at arm s length as claimed in the return of Income. 2. The Learned CIT(A) has erred on the facts and circumstances of the case and in law by holding that the AO should allow deduction u/s 10A first and only after that the carry forward of losses should be set off from the balance income. 3. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctly similar comparable companies would not be in existence as TNMM as a method tolerates certain level of difference in function as well as employment of assets and risk. Another issue that was raised by the assessee before Ld.CIT(A) was in respect of deduction claimed under section 10 A of the Act. Ld.AO reduced the amount of allowable deduction by setting off carry forward losses before allowing such deduction following decisions of Hon ble Supreme Court, High Courts and this Tribunal. The Ld.CIT(A) directed the ld.AO to calculate the deduction under section 10 A after setting off the carry forward of loss. Aggrieved by the order of Ld.CIT(A), revenue as well as assessee are in cross appeals before us now. ITA No. 5270/del/2012 (revenue s appeal) 4. Ground No. 1: This issue raised is in respect of the exclusion of M/s Mould Tech Technologies Ltd. 4.1. Ld. DR submitted that findings of Ld.CIT(A) in respect of this comparable are irrational and without any substance, it has been held by Ld. CIT (A) that this comparable company is indulging in evasion of tax by overstating profit in 100% exempt ITES division and understating the profit in the plastic division withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r paragraph 38-39 of the decision). 5.1. In respect of comparable M/s Mould-Tech Technologies Ltd., it is observed from reasoning given by Ld.CIT(A) that, this comparable is having an extraordinary profits in ITES segment, reaching up to 213% for the assessment year under consideration. It is also been recorded by Ld.CIT(A), that this company is not functionally similar with that of assessee as assessee is in back-office research service area, whereas the comparable is dealing in engineering design and detailing services, website the design services etc. It is also been observed that ITES segment of this comparable is having 100% exemption. 5.2. Ld. AR has relied upon various decisions of this Tribunal wherein it has been recorded that this company cannot be compared with any other company, which was engaged in providing low end ITES enabled call Centre services. He has placed reliance upon the decision of coordinate bench of this Tribunal in iQur India Services Pvt. Ltd., vs. ITO, reported in (2015) 69 SO T 37, COWI India Pvt. Ltd., vs. ACIT, reported in (2016) 69 Taxmann.com 427, wherein it has been held as under: 18. We have heard the rival submissions and perused the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ereafter set of the brought forward losses of assessment year 2001-02 and 2002-03 against the balance profit under the head. This treatment adopted by the assessee was rejected by the assessing officer, who made an addition of ₹ 16,78,71,339/-. Section 10 A is a provision which is in the nature of a deduction and not an exemption, as emphasised by Hon ble Bombay High Court in the case of Hindustan Unilever Ltd vs. DCIT reported in (2010) 325 ITR 102, while dealing with provisions of section 10 B of the Act. Hon ble Bombay High Court in the case of CIT vs. Black Veatch Consulting Pvt. Ltd., reported in (2012) 348 ITR 72 has held as under: The submission of the revenue placed its reliance on the literal reading of section 10 A under which a deduction of such profit and gains as are derived by an undertaking from the export of articles or things or computer software for a period of 10 consecutive assessment years is to be allowed from the total income of the assessee. The deduction under section 10 A, in our view, has to be given effect to at this stage of computing the profits and gains of the business. This is anterior to the application of the provisions of section 72 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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