TMI Blog2018 (10) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... even though the assessee has got a higher RPT and, however, since the TPO has accepted these comparable for AY 2010-11, we agree with the Ld. CIT(A) that this company should not be excluded as a comparable. We also accept the profit level indicators (PLI) computed by the assessee and we reject the seven comparables selected by the Ld TPO. Therefore, we delete the transfer pricing adjustment made by the TPO in assessment year 2008-09 and 2009-10. Liability to pay MAT u/s 115JB of companies eligible for claiming deduction u/s 10A - Held that:- Up to assessment year 2007-08, the 10A, & 10B units were not supposed to pay minimum alternate tax (MAT) under section 115JB of the Act. However, on or after assessment year 2008-09 these 10A & 10B companies should pay minimum alternate tax (MAT) under section 115JB of the Act. Therefore, we note that the companies eligible for claiming deduction u/s 10A are continued to remain liable to Minimum Alternate Tax (MAT) made u/s 115JB of the Act. The issue before us is relating to A.Y. 2008-09 and A.Y. 2009-10, therefore, we are of the view that assessee company is liable to pay MAT. Therefore, we allow this ground raised by the Revenue. Addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed. - I.T.A. No. 1371/Kol/2017, C.O. No.71/Kol/2018, I.T.A. No. 1372/Kol/2017 And C.O. No.72/Kol/2018 - - - Dated:- 19-9-2018 - Shri A. T. Varkey, JM And Dr. A. L. Saini, AM For The Revenue : Shri G. Mallikarjuna, CIT, DR For The Assessee/Cross Objector : Shri S. Jhajharia, A/R ORDER Per Dr. Arjun Lal Saini, AM The captioned two appeals filed by the Revenue, pertaining to Assessment Years 2008-09 and 2009-10 and two Cross-Objections filed by the assessee, pertaining to assessment years 2008-09 and 2009-10, are directed the against the separate orders passed by the Ld. Commissioner of Income Tax (Appeals), Kolkata, which in turn arise out of fair assessment orders passed by the Assessing Officer, which incorporate the findings of order passed by Ld. Transfer Pricing Officer ( TPO ) under section 92CA(3) of the Income Tax Act,1961 (hereinafter referred to as the Act ). 2. Since, the issues involved in all the appeals of Revenue and Cross objections filed by the assessee are common and identical; therefore, these appeals and cross objections have been heard together and are being disposed of by this consolidated order. For the sake of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Level Indicator) which has been disputed by the TPO/AO. Assessee s CO. ground Nos. 2, 3 and 5 are in respect of export incentive and Forex fluctuation which should be considered as part of OR ( Operating Revenue). (4) Revenue s ground No.9 is challenging all the grounds raised by the assessee before CIT(A) right from 2(a) to 2 (h) so raised by the assessee and considered by ld CIT(A). Assessee s CO. ground Nos. 4, 6 7 and 8 are in respect of export from 10A 10B Unit, and relate to grievance that transfer pricing provision did not apply to transaction between the 10A and 10B unit, and to reduce the turnover pertaining to sections 10A 10B in computation of arm s length price. Note: All the above grounds relating to transfer pricing for A.Y. 2008-09 and for A.Y. 2009-10 are similar and identical therefore, we take Revenue s appeal in ITA No.1372/Kol/2017 for A.Y.2009-10, as the lead case to adjudicate all the transfer pricing issues of the Revenue as well as assessee s cross objections. Other Grounds raised by Revenue (1). Revenue s ground No.5 relates to grievance of the Revenue that companies eligible for claiming deduction u/s 10A of the Act, should continue to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round Nos. 2, 3 and 5 are in respect of export incentive and Forex fluctuation which should be considered as part of OR ( Operating Revenue). (4) Revenue s ground No.9 is challenging all the grounds raised by the assessee before CIT(A) right from 2(a) to 2 (h) so raised by the assessee and considered by ld CIT(A). Assessee s CO. ground Nos. 4, 6 7 and 8 are in respect of export from 10A 10B Unit, and relate to grievance that transfer pricing provision did not apply to transaction between the 10A and 10B unit, and to reduce the turnover pertaining to sections 10A 10B in computation of arm s length price. Note: All the above grounds relating to transfer pricing for A.Y. 2008-09 and for A.Y. 2009-10 are similar and identical therefore, we take Revenue s appeal in ITA No.1372/Kol/2017 for A.Y.2009-10, as the lead case to adjudicate all the transfer pricing issues of the Revenue as well as assessee s cross objections. 5. The brief facts qua the issue of transfer pricing adjustment of ₹ 12,31,02,132/- are that the assessee company is engaged in the business of manufacturing and export of silk fabric and garments. During the year under consideration the assessee company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abase was run using the cut-off October, 2012 Number of companies which reflected data for the period 2009 18780 Industry selected Textiles' 828 Sub-industry selected were silk and silk articles 97 Sales greater than 1 crore were selected 77 Mfg sales/Total Sales 65% was selected 68 Companies with positive net worth were selected 60 Export Sales Total Sales 50o% was selected 15 Companies after qualitative analysis 7 Final Comparables OP/TC Grabal Alok Impex Ltd. [Merged] 37.07% Hanung Toys Textiles Ltd. 20.45% Jaipuria Silk Mills Pvt. Ltd. 28.23% Kariwala Industries Ltd. 26.65% Sharadha Terry Products Ltd. 37.01% Silktex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion ₹ 1,65,66,037 Operating Income Rs.66,47,41,249 Expenses debited to P L Account Rs.63,09,58,946 Less: Provision for leave pay ₹ 19,24,541 Loss on Sale of investment ₹ 14,74,211 Operating Expense Rs.62,75,60,194 Operating Profit ₹ 3,71,81,055 OP/TC 5.92% Thus, the ld TPO computed the OP/TC @ 5.92%, on an entity level basis. 9. Taking the base of PLI @ 5.92%, an entity level basis, the ld TPO computed the Arm s Length Price. The arithmetic mean of the Profit Level indicators is taken as the arm's length margin. Based on this, the arm's length price of the software development services segment rendered by the taxpayer to its AE was computed as under: Average PLI of Comparable ( see para 6 of this order) 25.23% Table 2 Operating Cost ( see table 1 above) Rs.62,75,60,194 Arm's Length ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer s contention in such respect is not acceptable and whereas in respect of Eastern Silk Ind. Ltd., it has merely rejected the same on account of turnover without differentiating the same on account of any dissimilarity in Function, Asset or Risk borne by such comparable. Hence, ld CIT(A) noted that both the comparables rejected by the TPO had been wrongly rejected and same needs to be considered while computing the margin of the comparables. As regards the selection of the comparables, selected by TPO, the ld CIT(A) noted that the TPO had selected comparables, whose product profile doesn't match with that of the assessee or the chosen comparable doesn't have export activity or has major related party transaction. Therefore, ld CIT(A) rejected the following companies: i) Grabal Alok Impex Ltd. ... ..Embroidered Fabric, Laces ii) Welspun India Ltd. ... Terry Towels, Bed linen products iii) Sharadha Terry Products Ltd. ... Terry Towels, Blanket iv) Hanung Toys and Textiles Ltd. ... Stuffed Toys, Curtains, Cushions v) Kariwala industries Ltd. ................. Industrial Garments vi) Jaipuria Silk Mills Pvt. Ltd. .......... Uses local yarn and as such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain filters. The TPO did not examine data which was very much part of the audited accounts of the said company. Since the assessee is also engaged in sales manufacturing of silk fabric segmental results available, it is functionally comparable and as the rejection by the TPO/ AO is not at all justified. Hence the company should be considered as comparable of the assessee and the segmental result as disclosed in the audited accounts should be considered for determination of Mean Price of the comparable. The Ld. CIT(A) in his wisdom has observed that TPO/ AO had rejected this comparable due to high turnover and assets this party is not comparable without appreciating the fact that the functions of the company has not been disputed by TPO/AO. Since functions are similar to that to the assessee, this comparable company cannot be rejected. Moreover, in A.Y. 2010-11, this comparable having similar turnover and comparable assets TPO himself has selected this comparable. Moreover, in such respect following Courts have held that turnover cannot be criteria rejecting comparable. a) Chrys capital Investment Advisors (India) Private Ltd. vs. DCIT(2015) 376 ITR 183(Del) b) Tata M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Counsel objected the seven comparable selected by the ld TPO. The ld TPO selected the seven comparable companies to compute the PLI and arm s length price. The TPO in its order has selected following comparable and respective operating margins is as follows: 1. Grabal Alok Impex Ltd. (merged) 37.07% 2. Hanung Toys and Textiles Ltd. 20.45% 3. Jaipuria Silk Mills Pvt. Ltd. 28.23% 4. Kariwala industries Ltd. 26.65% 5. Sharadha Terry Products Ltd. 37.01% 6. Silktex Ltd. 13.65% 7. Welspun India Ltd. 13.55% Average 25.23% The aforesaid comparable as selected by TPO without providing any opportunity to object to such selections and such consideration of such comparable without disclosing the function, asset and risk employed by such compara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction and not otherwise. 13. Mr. S. Jhajharia, the ld Counsel for the assessee, further submitted that Ld.TPO selected seven comparable companies and out of these seven companies (so selected by the ld TPO), the ld CIT(A) rejected the six comparable companies. The ld Counsel defended the order passed by the ld CIT(A), so far six comparable companies rejected by the ld CIT(A) are concerned. However, ld CIT(A) accepted one comparable company, by name, M/s Silktex Ltd. The assessee does not agree with this comparable, so accepted by the ld CIT(A) because this company is not functionally comparable and there are a lot of dissimilarity. The ld Counsel submitted the details of M/s Silktex Ltd as follows: 2) Silktex Ltd Nature Amount Pg No Volume I Geographical segmental information not provided - - - Import filter of RM not applied nor it is available - - - Asset Base 23.47 Cr Pg 163 Volume I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e attributable solely to the sales to unrelated entities. It has also been pointed out that an entity level, the margin cost is at 5.92% (OP margin) whereas assessee determined the margin on sales at 22.96% based on arbitrary allocation of expenses to unrelated entities. Therefore, the ld. CIT(A) was wrong in considering the PLI as OP/Sales without considering the fact that such sales includes sales to the AE and is accordingly vitiated. The ld. DR therefore pointed out that if these expenses, like fair exhibition expenses etc are eliminated, similar expenses as is incurred by the comparable companies should also needs to be added back to determine the arm s length operating profit so as to ensure functional comparability on a like to like basis. However, after considering the submissions of the counsel for the assessee, the ld DR for the revenue, so far assessment year 2008-09 is concerned, accepted the two comparable companies, viz: Zenith exports and Eastern Silk Ind Ltd. as selected by the assessee. However, for A.Y. 2009-10, ld DR objected about the Eastern Silk Ind Ltd, and submitted to the Bench that this company has high related party transactions, therefore, the said co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ternational transaction undertaken by the assessee and not its foreign AE. The assessee can resort to the CUP method only by showing that the price charged by it from its AE was favourably comparable to the price charged by some other comparable company(ies) in uncontrolled transaction(s). The ld. AR has brought no material on record to show the price charged in a comparable uncontrolled situation. We, therefore, hold that the view canvassed before the DRP for the first time in resorting to the CUP method is devoid of merits and as such, the most appropriate method in the facts and circumstances of the instant case is TNMM, which was originally adopted by the assessee and also approved by the TPO. 9. To sum up the above discussion, we hold that the assessee was not right in working out its PLI by also considering projected profits for the three subsequent years; no deduction on account of foreign exchange fluctuations can be allowed in the facts and circumstances of the instant case; and the revenue sharing formula as put forth by the assessee as relevant under the CUP method for determining the ALP, is not correct. 16. In respect of section 10A company s issue, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee who is eligible for the benefit of deduction section 10A/10B or any other section of Chapter-VIA of the Act. Section 92(1) clearly provides that any income arising from an international transaction is required to be computed having regard to its arm's length price. There is no provision exempting the computation of total income arising from an international transaction having regard to its ALP, in the case of an assessee entitled to deduction u/s 80IC or any other such relevant provision. Section 92C dealing with computation of ALP clearly provides that the ALP in relation to an international transaction shall be determined by one of the methods given in this provision. This section also does not immune an international transaction from the computation of its ALP when income is otherwise eligible for deduction. On the contrary, we find that sub-section (4) of section 92C plainly stipulates that where an ALP is determined, the AO may compute the total income of the assessee having regard to the ALP so determined. This shows that the total income of an assessee entering into an international transaction, is required to be necessarily computed having regard to its ALP withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Bench order in the case of Aztech Software and Technology Services Ltd. vs. ACIT (2007) 107 ITD 141 (SB) (Bangalore) in which similar issue has been decided by the Special Bench by holding that availability of exemption u/s 10A to the assessee is no bar to applicability of sections 92C and 92CA. Similar view has been taken by Pune Bench of the Tribunal in the case of ACIT vs. MSS India (P) Ltd. (2009) 123 TTJ 657 (Pune) and several other orders. The reliance of the ld. AR on the order of the Mumbai Bench of the Tribunal in the case of DCIT vs. Tata Consultants Services Ltd. (ITA No. 7513/M/2010) dated 4.11.2015, in our considered opinion is misconceived, because, in that case, the Tribunal primarily found that the AO erred in not himself examining the issue of TP and failed to apply his mind to the TP report filed by the assessee. The last sentence in para 54 of the order upholding the assessee's contention that no TP adjustment can be made where the assessee enjoys benefit of deduction u/s 10A or 80HHE, etc., is only obiter dicta inasmuch as the addition was found to be not sustainable on the other main grounds as discussed in the body of the order. On the contrary, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such determination a reasonable accurate adjustment can be made to eliminate the material effects of any such differences. Rule 10B(2) of Income Tax Rules, provides the comparability of the transaction with uncontrolled transaction which has to be judged with reference to specific characteristics of the property transferred or services provided; FAR analysis; contractual terms; conditions prevailing in the markets, that is, economic conditions in which respective parties transact or operate including geographical locations, size etc. Thus, comparison of attributes of the transaction is carried which would affect conditions in Arm s length dealing. Rule 10B (3) specifically provides as under:- An uncontrolled transaction shall be comparable to an international transaction or a specified domestic transaction ifnone of the differences, if any, between the transactions being compared, or between the enterprises entering into such transactions are likely to materially affect the price or cost charged or paid in, or the profit arising from, such transactions in the open market; or reasonably accurate adjustments can be made to eliminate the material effects of such differences . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.116 Timing issues can pose particular problems for tax administrations when evaluating whether a taxpayer is following a business strategy that distinguishes it from potential comparables. Some business strategies, such as those involving market penetration or expansion of market share, involve reductions in the taxpayer's current profits in anticipation of increased future profits. If in the future those increased profits fail to materialize because the purported business strategy was not actually followed by the taxpayer, the appropriate transfer pricing outcome would likely require a transfer pricing adjustment. However legal constraints may prevent re-examination of earlier tax years by the tax administrations. At least in part for this reason, tax administrations may wish to subject the issue of business strategies to particular scrutiny. 1.117 When evaluating whether a taxpayer was following a business strategy that temporarily decreased profits in return for higher long-run profits, several factors should be considered. Tax administrations should examine the conduct of the parties to determine if it is consistent with the purported business strategy. For e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness strategy is being pursued. In the end, however, the most important consideration is whether the strategy in question could plausibly be expected to prove profitable within the foreseeable future (while recognising that the strategy might fail), and that a party operating at arm's length would have been prepared to sacrifice profitability for a similar period under such economic circumstances and competitive conditions. Thus, business strategies, market penetration, increase or save its market share are relevant and material factors determining prices and profit and PLI. All these factors have to be taken into consideration while eliminating the material effects which warrants some kind of reasonable accurate adjustments. 19. We note that the assessee has agitated the impugned addition of ₹ 12,31,02,132/- to the transaction made by the assessee with it's Associate Enterprise (AE) under section 92A of the Act, across territorial border of India. The assessee has not disputed the fact that the transaction is international transaction as defined u/s 92B of the Act nor the fact that the transacting parties are it's Associate Enterprise (AE) under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thus added the sum of ₹ 12,31,02,132/- being the derived adjustment of Arm's Length Price (ALP) on transaction with Associate Enterprises (AEs). We note that the assessee had selected 2(two) companies as comparables and such comparables dealing in the same product line as that of the assessee, were considered and the result of such comparables were compared with that of the assessee. The comparables and their financial data as was mentioned in the transfer pricing document (TPR), which is as follows: Particular Zenith Exports Eastern Silk Ind. Ltd. Sales turnover 239.53 510.03 Total income 239.53 510.03 Purchase 44.65 346.73 Stock adjustment (0.96) (89.92) Raw materials 116.71 104.73 MFG. Expenses 29.23 50.71 Other manufacturing expenses 18.63 33. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved that TPO/ AO had rejected (his comparable due to high turnover and assets, this party is not comparable without appreciating the fact that the functions of the company has not been disputed by TPO/AO. Since functions are similar to that to the assessee, this comparable cannot be rejected. Moreover, in A.Y. 2010-11 this comparable having similar turnover and comparable assets TPO himself has selected this comparable. Moreover, the coordinate Bench of ITAT Bangalore in the case of Microchip technology (India) Pvt Ltd (2018) 81 Taxmann.com 389, held that turnover cannot be criteria for rejecting comparable. As regards segmental results being available, the comparable could not have been rejected by the AO/TPO, and for which reliance is placed on judgment of the coordinate Bench in the case of DCIT v. Landis + Gyr Ld. (2017) 86 taxmann.com 109. Based on this rationale, we accept this comparable company. ii). Eastern Silk Ind. Ltd. Nature Amount Paper book Pg. No Volume of Paper book Turnover 510.03 cr Pg 127 Volume I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion was drawn to page no. 61 of the paper book wherein we note that the related party transaction of this company comes to only ₹ 41.94 cr. which is approximately 9% of the turnover, (the turnover of this company is ₹ 481 cr). Therefore, the basis of the TPO to reject this comparable cannot be accepted and we agree with the Ld. CIT(A) that this company should be accepted for AY 2008-09. Coming to AY 2009-10, the TPO has made no discussion of any of the comparables. He has simply gone by the search he has made and has not considered the TP Study of the assessee, wherein the assessee has taken M/s. Eastern Silk Ltd. as a comparable case. The Ld. DR drew our attention to the fact that the said company had RPT transaction of 82.90 cr. which is amount 16.25% of its turnover of ₹ 510 cr. and, therefore, he contended that this company should be excluded following RPT filter. However, the Ld. AR of the assessee contended before us that for AY 2010-11, the ld TPO in his order dated 30.01.2014, has considered, the Eastern Silk Ind Ltd. and has accepted as a comparable, taking into account same facts and circumstances, which were prevailing in A.Y.2008-09 2009-10. In suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Welspun India Ltd. ... Terry Towels, Bed linen products iii) Sharadha Terry Products Ltd. ... Terry Towels, Blanket iv) Hanung Toys and Textiles Ltd. ... Stuffed Toys, Curtains, Cushions v) Kariwala industries Ltd. ................. Industrial Garments vi) Jaipuria Silk Mills Pvt. Ltd. .......... Uses local yarn and as such product mix doesn't concur with the assessee We decline to interfere in the order of CIT(A) in respect of rejection of six comparable companies, noted above with product profile. However, we note that ld CIT(A) accepted, the Silktex Ltd. as comparable company. The details and particulars of this company is given below for ready reference: 2) Silktex Ltd Nature Amount Paper book Pg No. Volume I of paper book Geographical segmental information not provided - - - Import filter of RM not applied nor it is available - - - Asset Base 23.47 Cr Pg 163 Volume I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.Y. 2008-09 at ₹ 7,65,00,000/- and for A.Y. 2009-10 at ₹ 12,31,02,132/-. 23. Now we deal with our concise ground No.2 which reads as under: (2) Revenue s Ground No.3 and 4 are in respect of allocation of cost between the Associate Enterprise (AE) and Non-AE transactions and the non- consideration of entity level margin by the CIT(A) and consideration of transactional margin only. At the outset itself, the Ld. Counsel for the assessee, brought to our notice that this issue is covered in the assessee s own case in ITA No.201/Kol/2012, for AY 2007-08, order dated 12.05.2017, wherein the same issue arose and the Tribunal was pleased to accept the contention of the assessee and has held as under: 18. We have considered the rival submissions and we are of the view that order of CIT(A) does not call for any interference. Section 92F(ii) lays down that 'arm's length price means a price which is applied or proposed to be applied in a transaction between persons other than associated enterprises, in uncontrolled conditions. Sec.92(v) defines transaction to include an arrangement, undertaking or action in concert,- ( A) whether or not su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal transaction can only be compared with uncontrolled transaction and not otherwise. This view was also followed in following decisions as well: ( a) DCIT v. Starlite (2010) 40 SOT 401 (Mum) ( b) Decision of Delhi Tribunal in the case of Avishek Auto Ltd. v. DClT, Delhi, Circle - 1 (1 ) in ITA No. 1433/Del/2009 for A.Y 2004-05 order dt. 12.11.2010 ) the Hon'ble Tribunal while affirming the aforesaid judgment of Mumbai Tribunal in the case Of UCB India (F) Ltd. v. ACIT (supra) observed at page 8.2 of such order as : It has not been disputed that provisions of chapter X of sec. 92C deal with international transaction only and not with transaction which . have no international cross border element at all. Therefore, the basis of making the adjustments on the enterprise level by taking 68.66 crores is not correct which should have been taken to sell to domestic parties, using Takata technology Takata raw material using foreign technology and foreign raw material. The segment that was to be looked at was international segment, i.e. domestic sale, using foreign technology and foreign raw material. As given by the appellant, the operating profit margin on AE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xport incentive and Forex fluctuation which should be considered as part of OR ( Operating Revenue). We note that the Revenue in A.Ys 2008-09 2009- l0 has contended that PLI (Profit Level Indicator) has been considered by the CIT(A) as OP/ Sales as against the PLI considered by the TPO as OP/OC. We note that the appellant has also been engaged in trading of yarn and as such the consideration of PLI as OP/OC may not reflect the true results. The PLI as shown by the appellant for the transaction with the AE are as follows : A.Y 2008-09 A.Y 2009-10 OP/OC = 20.04% 22.96% OP/Sales = 16.69% 18.67% Therefore, we confirm the assessee s PLI as OP/ Sales. We note that in the computation of PLI, operating profit is the difference between operating revenue and the operating cost. In the operating revenue the TPO had considered only the sales, ignoring the directly related sums such as export incentive, foreign exchange fluctuation, and since such items are form part of the operating revenue and accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction [or specified domestic transaction] shall be determined by any of the following methods, being the most appropriate method, having regard to the nature of transaction or class of transaction or class of associated persons or functions performed by such persons or such other relevant factors as the Board may prescribe, namely:- ( a) comparable uncontrolled price method; ( b) resale price method; ( c) cost plus method; ( d) profit split method; ( e) transactional net margin method; ( f) such other method as may be prescribed by the Board .. .. ( 4) Where an arm s length price is determined by the Assessing Officer under sub-section (3), the Assessing Officer may compute the total income of the assessee having regard to the arm s length price so determined: 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: Provided further that where the tota ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled by the Revenue on transfer pricing grounds ( in ITA No.1371 and 1372/Kol/2017), are dismissed. 28. Now, we deal with other grounds raised by the Revenue. The other grounds are given below for ready reference: Other Grounds raised by Revenue (1). Revenue s ground No.5 relates to grievance of the Revenue that companies eligible for claiming deduction u/s 10A of the Act, should continue to remain liable to pay Minimum Alternate Tax (MAT) u/s 115JB of the Act. (2).Ground No.1 raised by the Revenue in Assessment Year 2008-09 (in ITA No.1371/Kol/2017) and Ground No.10 raised by the Revenue in Assessment Year 2009-10 (in ITA No.1372/Kol/2017) relates to disallowance u/s 14A read with Rule 8D(2)(iii). (3).Ground No.2 raised by the Revenue in Assessment Year 2008-09 in ITA No.1371/Kol/2017 relates to disallowance of depreciation to the tune of ₹ 15,392/-. (4).Ground No.3 raised by the Revenue in Assessment Year 2008-09 in ITA No.1371/Kol/2017 relates to addition of ₹ 6,43,440/- on account of unexplained investment deleted by the ld. CIT(A) admitting additional evidence. 29. Revenue s ground No.5 relates to grievance of the Revenue that companies el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the Assessing Officer u/s 14A r.w.r 8D(2)(iii) we direct the Assessing Officer to compute the disallowance in line of the judgment of jurisdictional Tribunal in the case of REI Agro India reported in (2013) 144 ITD 141 (Kol) and therefore, Assessing Officer is directed to consider only those shares and investments in respect of dividend income has been earned during the year. That being so, we decline to interfere in the order passed by the ld. CIT(A), his order on this issue is hereby upheld and the grounds raised by the Revenue on this issue is dismissed. 31. Ground No.2 raised by the Revenue in Assessment Year 2008-09 in ITA No.1371/Kol/2017 relates to disallowance of depreciation to the tune of ₹ 15,392/-. We note that the assets on which the company has claimed the depreciation was being used by the Company for keeping records and books of accounts of the company. Therefore, the flat was being used for the purpose of business, hence, the depreciation should be allowed to the assessee company. We note that the same issue of depreciation has been allowed to the assessee in the preceding years hence, to maintain the rule of consistency such depreciation has to b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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