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TMI Blog2015 (7) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... filed its return of income for Assessment Year 2008-09 on 18.12.2008 declaring NIL income. In the return of income, the income from business was computed at Rs. 63,02,287; which included an amount of Rs. 28,61,352 by way of a suo moto transfer pricing adjustment to the Arm's Length Price of the assessee's international transactions under Section 92 of the Income Tax Act, 1961 (in short 'the Act'). The assessee claimed deduction under Section 10A of the Act in respect of the entire business income of Rs. 63,02,287 and arrived at NIL total income. 2.2 The assessee's return of income filed for Assessment Year 2008-09 was processed under Section 143(1) of the Act and the case was subsequently taken up for scrutiny. In the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... low the assessee's claim for deduction under Section 10A of the Act in respect of the suo moto T.P. Adjustment of Rs. 28,61,352 and the same was separately assessed to tax. The Assessing Officer also varied the assessee's claim for deduction under Section 10A of the Act by reducing telecommunication expenses only from export turnover without reducing the same from total turnover. The Assessing Officer completed the assessment under Section 143(3) of the Act, incorporating the above adjustments to the assessee's claim for deduction under Section 10A of the Act, vide order dt.9.12.2010. 3. Aggrieved by the order of assessment dt.9.12.2010for Assessment Year 2008-09, the assessee preferred an appeal before the CIT (Appeals) - IV, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act in respect of the suo moto T.P. Adjustment of Rs. 28,61,352, the assessee has preferred this appeal raising the following grounds :- "1. The order of the Learned Appellate Authority is bad in law. 2. The Learned Appellate Authority erred in confirming the action of the learned assessing authority in not granting the benefit of section 10A to the appellant on the suo moto adjustment made by the appellant under Section 92(1) of the Income Tax Act, 1961 determining the income having regard to the arm's length pricing. 3. The Learned Appellate Authority erred in denying the benefit of Section 10A on Rs. 28,61,352." 5. Ground No.1 being general in nature, no adjudication is called for thereon. 6. Ground Nos. 2 & 3 - Deduction u/s. 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10A on the adjustment made by the assessee to the arm's length price. 22. In the instant case, the assessee company entered into transaction with associated enterprise. The assessee company determined arm's length price and accordingly made adjustment to the income because arm's length price determined was more than the consideration, at which the transactions were shown in the books of account. The deduction under Section 10A has not been allowed as per proviso to section 92C(4). As per this proviso, no deduction under Section 10A or 10B or under Chapter VI-A is to be allowed in respect of amount of income, by which the total income of the assessee is enhanced after computation of income under the sub-section. The learned Authorised Repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ength price. Hence, it is held that assessee was entitled to deduction under Section 10A in respect of income declared in the return of income on the basis of computation of arm's length price." 6.3.2 Revenue, being aggrieved, carried the matter in appeal to the Hon'ble Karnataka High Court challenging the aforesaid finding/conclusion of the co-ordinate bench in the case of iGate Global Solutions Ltd. (supra). The Hon'ble High Court of Karnataka in its order in the case of iGate Global Solutions Ltd. I n ITA No.453/2008 dt.17.6.2014, inter alia, considered the following substantial question of law raised by Revenue :- " (4) Whether the Tribunal was correct in holding that deduction under Section 10A of the Act is allowable in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernational transactions. The said judgment deals with the issue of whether deduction under Section 10A of the Act should be allowed before or after set off of losses of other units, unabsorbed depreciation and brought forward losses. The said decision, in our view, does not apply to the issue before us in the case on hand and hence is distinguishable and not applicable. 6.3.4 Respectfully following the decision of the Hon'ble High Court of Karnataka in the case of iGate Global Solutions Ltd. (supra) and the decision of the co-ordinate bench in the same case reported in (2008) 24 SOT 3(Bang), we hold that the assessee in the case on hand be allowed deduction claimed under Section 10A of the Act, in the return of income filed, in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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