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TMI Blog2018 (12) TMI 1660X X X X Extracts X X X X X X X X Extracts X X X X ..... export of services made to AE is eligible for deduction. Ld.. CIT (A) ought to have allowed deduction as claimed by the appellant. It be so held now. 2. Ld.. CIT (A) erred in law and on facts in confirming action of AO in not allowing deduction u/s 10B on adjustment to Arm's Length Price (ALP) of export of services to AE since no convertible foreign exchange relating to increased profit is brought to India. Ld.. CIT (A) ought to have appreciated that the deduction u/s 10B was correctly worked out in the ratio of Export turnover to Total turnover as provided in the Act in compliance with the provisions of sec. 10B (3) of the Act. It be so held now. 3. Ld.. CIT (A) erred in law and on facts confirming reliance placed by AO on proviso to sec. 92C (4) for rejecting deduction claimed u/s 10B of the Act. Both the lower authorities erred in not appreciating the legal position that proviso to sec. 92C (4) is applicable only where income is enhanced by AO determining ALP and not to voluntary adjustment made by the appellant. Ld.. CIT (A) ought to have deleted disallowance. It be so held now. 4. Ld.. CIT (A) erred in law and on facts in wrongly distinguishing ratio of decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... untarily on account of transaction made with its associated enterprises by the provisions of Section 92C of the Act. However, the AO was of the view that the assessee cannot claim deduction u/s 10B of the Act in respect of adjustment made in the international transaction by the assessee voluntarily for Rs. 63,14,578/-. On confrontation to the assessee, it was submitted that the adjustment was not made in the transfer pricing by the AO rather it was voluntarily made by the assessee. Therefore, the provisions of Section 92C(4) of the Act cannot be applied while working out the deduction u/s 10B of the Act. The assessee in support of his claim relied on the order of ITAT Banglore in the case of I Gate Global Solutions Ltd. vs. ACIT reported in 112 TTJ 1002. However, the AO disagreed with the contention of the assessee and held that the decision of ITAT had not considered the legislature intention for claiming the deduction u/s 10B of the Act. The AO further observed that the bills raised by the assessee to its associated enterprises do not take into account voluntarily adjustment made by the assessee as there was no export of the services. Similarly, there was no forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tual agreement procedure under an agreement entered Into under section 90or section 90Afor avoidance of double taxation, the assessee shall make a secondary adjustment Provided that nothing contained in this section shall apply, if,- i) the amount of primary adjustment made in any previous year does not exceed one crore rupees; and ii) the primary adjustment is made in respect of an assessment year commencing on or before the 1st day ofApril,2016 (2) Where, as a result of primary adjustment to the transfer price, there is an increase in the total income or reduction in the loss, as the case may be, of the assessee, the excess money which is available with its associated enterprise, if not repatriated to India within the time as may be prescribed, shall be deemed to be an advance made by the assessee to such associated enterprise and the interest on such advance shall be computed in such manner as may be prescribed (3) For the purposes of this section, - i) ''associated enterprise" shall have the meaning assigned to it in sub-section(1)and sub section (2) of section 92A; ii) "arm's length price" shall have the meaning as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d.. CIT (A) ought to have appreciated that the deduction u/s 108 was correctly worked out in the ratio of Export turnover to Total turnover as provided in the Act in compliance with the provisions of sec. 10B (3) of the Act. It be so held now. 3. Ld.. CIT (A) erred in taw and on facts confirming reliance placed by AO on proviso to sec. 92C (4) for rejecting deduction Claimed u/s10B, of the Act. Both the lower authorities erred in not appreciating the legal position that proviso to sec. 92C(4) is applicable only where income is enhanced by AO determining ALP and not to voluntary adjustment made by the appellant. Ld.. CIT (A) ought to have deleted disallowance. It be so held now. 4. Ld.. CIT (A) erred in law and on facts in wrongly distinguishing ratio of decision of Hon'ble Bangalore Tribunal squarely applicable to the fact of the case. Ld..CIT (A) ought to have allowed deduction as claimed by the appellant following decision of higher judicial authority on identical facts. It be so held now. 5. Levy of interest u/s 234B & 234/C of the act is not justified. 6. Initiation of penalty u/s 271(1)(c) of the Act is not justified. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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