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TMI Blog2021 (8) TMI 1095X X X X Extracts X X X X X X X X Extracts X X X X ..... regards ground No.1 in Revenue's appeal is that though the issue has been discussed, since it is appearing in ground No.15 and 16 of the assessee's appeal, the conclusions of the ITAT in its order dated 23.10.2019 also needs to be modified. 2. The ITAT vide its order dated 14.08.2020 in MP No.64/ Bang/2020 and MP No.65/Bang/2020, recalled the ITAT's order dated 23.10.2019, for the limited purpose of adjudication of TP issue, namely, assessee's prayer that exclusion of E-Zest Solutions Limited and Softsol India Limited. As regards the corporate tax issues are concerned, the Tribunal also recalled the ITAT's order dated 23.10.2019 for the limited purpose of adjudicating Ground Nos.15 and 16 of assessee's appeal and ground No.1 in Revenue's appeal. 3. We shall adjudicate the above issues recalled by the ITAT as under: TP Adjustment (Assessee's appeal in ITA No.1907/ Bang/2017) E-Zest Solutions Limited 4. The assessee had sought for exclusion of the above company from the list of comparables in ground No.11. The assessee submits that the Bangalore Bench of the Tribunal on identical facts in the case of GXS India Technology Centre (P.) Ltd. v. ITO reported in 62 taxmann.com 276 ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the services performed by this company are similar to the software development services performed by the assessee. From the details on record, we find that while the assessee is into software development services, this company i. e. e-Zest Solutions Ltd., is rendering product development services and high end technical services which come under the category of KPO services. It has been held by the coordinate bench of this Tribunal in the case of Capital I-Q Information Systems (India) (P) Ltd. (supra) that KPO services are not comparable to software development services and are therefore not comparable. Following the aforesaid decision of the coordinate bench of the Hyderabad Tribunal in the aforesaid case, we hold that this company, i.e., e-Zest Solutions Ltd. be omitted from the set of comparables for the period under consideration in the case on hand. The AO/TPO is accordingly directed". Following the order of the Co-ordinate Bench (supra), we direct the AO/TPO to exclude this company from the set of comparables." 4.3 In the light of above order of ITAT in the case of GXS India Technology Centre (P.) Ltd. (supra), since assessee in our case is into software development se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 :" 32. A reading of the first proviso to section 92C(4) of the Act would show that deduction 10A will not be allowed in respect of amount of income by which the total income of the assessee is enhanced after computation of income u/s. 92C(4) of the Act by the TPO which in turn is based on the Arm's Length Price computed by the Assessing Officer pursuant to order of TPO passed u/s.92CA(3) of the Act. Section 92CA(4) of the Act refers to the ALP determined by the AO. The first question that needs to be answered is as to, whether the price agreed under the MAP can be said to be the ALP determined by the AO. The MAP is a procedure agreed between the two countries under Double Taxation Avoidance Agreement (DTAA) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under mutual agreement procedure are to be given effect to and it reads thus: "44H. Action by the Competent Authority of India and procedure for giving effect to the decision under the agreement.-(1) Where a reference has been received from the competent authority of a country outside India under any agreement with that country with regard to any action taken by any income-tax authority in India, the Competent Authority in India shall call for and examine the relevant records with a view to give his response to the competent authority of the country outside India. (2) The Competent Authority in India shall endeavour to arrive at a resolution of the case in accordance with such agreement. (3) The resolution arrived at under mutual agreement procedure, in consultation with the competent authority of the country outside India, shall be communicated, wherever necessary, to the Chief Commissioner or the Director-General of Income-tax, as the case may be, in writing. (4) The effect to the resolution arrived at under mutual agreement procedure shall be given by the Assessing Officer within ninety days of receipt of the same by the Chief Commissioner or the Director-General of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his return of income; (ii) by the Assessing Officer has been accepted by the assessee or to the extent confirmed by the appellate forums under the Act; (iii) determined by an advance pricing agreement (iv) is made as per the safe harbour rules framed under section 92CB; or (v) is arising as a result of resolution of an assessment by way of the mutual agreement procedure under an agreement entered into under section 90 or section 90A for avoidance of double taxation, 36. The proviso to section 92CA(4) of the Act will apply only to adjustment to transfer pricing made by the AO which is enumerated in Sl.No.(ii) above and not to any other modes of determination of ALP. The decision of the Pune Bench of ITAT in the case of Dar Al Handasah Consultants (Shair & Partners) India Private Limited (supra) will be clearly applicable to the facts of the present case." Ground No.1 (Revenue's appeal in ITA No.1971/Bang/2017) 7. In the above ground, the Revenue contents that the CIT(A) has erred in directing the AO to calculate deduction u/s 10A of the I.T.Act by excluding the expenditure deducted from the export turnover also to be reduced from the total turnover. 7.1 After hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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