TMI Blog2019 (9) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... bsence of same and following the rule of consistency we find no merit in the orders of TPO/Assessing Officer and the same is reversed. Deduction allowed u/s 10A/10B of two units operated by assessee - whether the said deduction is to be allowed before adjustment of brought forward losses / depreciation or after it - HELD THAT:- The issue to be covered in favour of assessee by the decision of Hon ble Bombay High Court in Hindustan Unilever Ltd. Vs. DCIT [ 2010 (4) TMI 206 - BOMBAY HIGH COURT] . Revenue has failed to controvert the said reliance placed upon by the CIT(A). Accordingly, we hold that the issue stands covered in favour of assessee by the decision of Hon ble Bombay High Court in Hindustan Unilever Ltd. Vs. DCIT(supra). The ground of appeal No.1 raised by Revenue is thus, dismissed. Deduction on account of write off of obsolete stock - HELD THAT:- Where the evidences are available and the assessee has written off the obsolete stock, then the claim of assessee merits to be allowed. Consequently, we dismiss the ground of appeal No.2 raised by Revenue. The grounds of appeal raised by Revenue are thus, dismissed. - ITA No. 376/PUN/2014, ITA No. 2975/PUN/2017 - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the filters to cherry pick comparables; 2.4 erroneously computing the operating margins of chosen comparable companies while making adjustment to the international transaction of the appellant; 2.5 not allowing economic adjustments in accordance with the provisions of Rule 10B of the Rules to account for difference between international transactions and the alleged comparable uncontrolled transactions selected by the learned TPO; 2.6 rejecting the use of multiple year data i.e. contemporaneous data in the transfer pricing study report maintained as per Section 92D of the Act read with Rule 10D of the Rules used for determining the arm's-length price of the international transactions of the Appellant pertaining to provision of software development services to its AE; 2.7 not allowing the variation/reduction of 5 percent from the arithmetic mean while determining the arm's length price as envisaged under the proviso to Section 92C(2) of the Act 2.8 failing to appreciate that the Appellant was claiming tax exemption under Section 10A of the Act and accordingly had no intention to shift profits outside India by manipulating the prices charged in its inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24,958, as the difference between tax liability as per normal provisions of the Act and MAT, both liabilities calculated before applying surcharge and education cess in its return of income for AY 2009-10, instead of ₹ 9,318,878 as a difference between tax liability as per normal provisions of the Act and as per MAT (inclusive of surcharge and education cess). 5. The Revenue in ITA No.2975/PUN/2017 has raised the following grounds of appeal:- 1. On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred in allowing the deduction u/s 10A 10B of the Income Tax, Act, 1961 before setting off brought forward business loss and depreciation loss in violation of Express provisions of Circular No.7/2013 issued by the CBDT as well as Hon'ble Supreme Court decision in the case of Himatsingka Seide Ltd (48 Taxman.com 357). 2. On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred in allowing the provision of obsolete stock under the normal provisions of the Income Tax Act, 1961. 3. For this and such other reasons as may be urged at the time of heari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst which the assessee filed objections before the Dispute Resolution Panel (DRP). Consequent to the order of DRP, the Assessing Officer passed final assessment order making transfer pricing adjustment of ₹ 2.51 crores, against which the assessee has filed an appeal before us. 9. First of all, we take up the issue of transfer pricing adjustment in the segment of provision of software development services by the assessee to its associated enterprises. The assessee had applied TNMM method and had taken net profit / total cost as its PLI and had selected certain concerns as comparables, which were objected to by the Assessing Officer. The TPO finally selected 9 concerns as comparables as accepted in earlier year and benchmarked the international transactions undertaken by assessee. The learned Authorized Representative for the assessee pointed out that before the Tribunal in assessment year 2008-09, similar issue arose and the Tribunal has decided inclusion / exclusion of some comparables. We proceed to decide the issue raised in this regard by referring to the arguments of assessee in respect of each of the comparables. 10. The assessee is aggrieved by inclusion of conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his regard is deleted. 14. Now, coming to the next issue raised i.e. in respect of payment of managerial fees. 15. Brief facts relating to the issue are that the assessee had entered into Management Service Agreement with Renishaw Plc in 2006. Under the said agreement, the associated enterprise provided business support and management support services to the assessee, which the assessee claimed enhanced its operational efficiency and also standardized its internal processes. The assessee had furnished documentary evidence in this regard providing details of personnel rendering the services, number of man hours spent, total cost incurred in rendering such services and also explanation was given vis- -vis work done. The invoices received from associated enterprise were also furnished before the authorities below. However, the TPO held that in fact no services were received by assessee and also observed that services were routine in nature and were neither asked for nor given by associated enterprise and the TPO benchmarked the said transaction at Nil and made an upward adjustment of ₹ 2.18 crores. 16. The learned Authorized Representative for the assessee pointed out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to take into cognizance those documents / evidences and we find no merit in the same. In any case, the said agreement between the parties is in force w.e.f. 01.04.2006 and in none of the earlier years any addition has been made by the TPO/Assessing Officer. In the absence of same and following the rule of consistency we find no merit in the orders of TPO/Assessing Officer and the same is reversed. The ground of appeal No.3 raised by assessee is thus, allowed. The grounds of appeal raised by assessee are thus, allowed. 20. Now, coming to the appeal of Revenue, which is against separate order passed under section 143(3) r.w.s. 147 of the Act. 21. The first ground of appeal raised by Revenue is against deduction allowed under section 10A/10B of the Act in respect of two units operated by assessee. The question which arises is whether the said deduction is to be allowed before adjustment of brought forward losses / depreciation or after it. The CIT(A) vide para 7.3.2 has held the issue to be covered in favour of assessee by the decision of Hon ble Bombay High Court in Hindustan Unilever Ltd. Vs. DCIT (2010) 191 Taxman 119 (Bom). The learned Departmental Representative for the R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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