TMI Blog2020 (4) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... its (taxable units) and increase the profits of exempted unit, apparently, with the objective of claiming higher exemption - HELD THAT:- Considering the Revenue model of cost + mark-up adopted by the assessee, as rightly pointed out by the assesee, it will not gain anything by under booking expenses in the exempt unit, since the under-booking of expenses would result in corresponding reduction in Revenue also. In any case we noticed that the AO has asked the assessee to reallocate the common expenses only by entertaining surmises and conjectures and not based on any creditable defect noticed by him. Hence, we are of the view that there is no reason to interfere with the order passed by the ld CIT(A) on this issue. TP Adjustment - Select ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue urged by the Revenue relates to deletion of disallowance made by the AO u/s 10AA of the Act. 5. The facts relating to the same are that the assessee had claimed deduction u/s 10AA of the Act in respect of SEZ- Unit -1 The AO examined the manner of allocation of common expenses between the 3 units owned by the assessee. The AO was of the view that certain common expense have been booked under STPI unit where here no deduction u/s 10AA of the has been claimed, thereby reducing the profits of non-10AA units (taxable units) and increase the profits of exempted unit, apparently, with the objective of claiming higher exemption. Accordingly he asked the assessee to furnish revised allocation of expenses by allocating common expenses between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance made by the AO should be deleted. 7. The ld CIT(A) was convinced with the submissions made by the assessee. For the sake of convenience the operative portion of the order passed by the ld CIT(A) on this issue are extracted below :- Having considered the submissions,I have perused the Assessment record to find that the AU has examined this issue in para 6-6.6 on page 2-4 of the Asst order, wherein he has allocated the common charges based or the same ration as that of the direct costs allocated to the units. The AU has stated in the order that as most of the common expenses have been booked only in the STPI Unit and SEZ Unit - II (non-10AA units), it has resulted in skewed reorting of the individual unit's profits i.e., unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resulting in reduced mark up and taxable profits for the STPI unit. In view of the above, the reasons provided by the learned AO for making the adjustment does not stand correct in the present fact pattern of the Company given its cost plus mark-up operating model. In the light of the above, I have considered the facts once again, to find that as per the agreed facts the appellant is following a cost plus model to arrive at the revenue from each unit which in turn decides the surplus/profit. As per the facts, the appellant is engaged in providing IT enabled services in investment research support to Amba Holdings Inc., its parent company, through its three units viz., STPI Unit, SEZ Unit - SEZ Unit - II which operate under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Whether the CIT(A) was justified in fact and in law in seeking exact comparability, which searching for comparable companies of the assessee under TNMM whereas the requirement of law and international jurisprudence require seeking similar comparables companies? 2. Whether while seeking the exact comparability as mentioned above the CIT(A) was right in fact and in law in imposing condition beyond law whereas the requirement of law is to acknowledge only those differences that are likely to materially affect the margin. 3. Whether the CIT(A) was justified in fact and law in not acknowledge that determination of ALP by carrying out comparability analysis of the comparable companies is an art and not exact science as no two compani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excluding M/s. Infosys Ltd. on the basis of Turn over Filter, while the comparable is qualifying all the qualitative and quantitative filters applied by the TPO. 12. The ld AR submitted that the grounds urged by the Revenue relate to software development services, while the assessee is engaged in the business of providing IT enabled services. Further the comparables directed to be excluded by the ld CIT(A) are the following : 1) Universal Print Systems Ltd., ( Universal Print ) 2) TCS E Serve ( TCSE ) 3) BNR Udyog Ltd., ( BNR Udyog ) 4) Excel Infoways Ltd., ( Excel Infoways ) 5) E4e Healthcare Business Services Pvt. Ltd., ( e4e Healthcare ) 6) Infosys BPO Limited ( Infosys ) 7) Accentia technology Ltd., ( Accent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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