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of <h1>Court affirms adjustment under Section 10A, rejects data line cost deduction, and clarifies Assessing Officer's discretion.</h1> <h3>The Commissioner of Income Tax Versus Capgemini India Ltd.</h3> The Commissioner of Income Tax Versus Capgemini India Ltd. - TMI Issues:1. Adjustment under Section 10A of the Income Tax Act, 19612. Deduction of data line cost from export turnover3. Recomputation of transfer pricing adjustmentAnalysis:1. Adjustment under Section 10A: The appeal questioned the Tribunal's order regarding the adjustment contemplated by Section 10A of the Income Tax Act, 1961. The first ground related to adjusting the loss of one unit against the profit of another unit after allowing deduction under Section 10A. The Division Bench's judgment in a previous case was cited, agreeing that the adjustment should be made in favor of the assessee. The Court concluded that this issue was adequately addressed by the Division Bench and did not constitute a substantial question of law.2. Deduction of data line cost from export turnover: The second issue involved the deduction of data line cost from export turnover. The Tribunal found that the expenses were not incurred in relation to exports but for software development within India. The Tribunal's decision was based on factual findings and legal precedents, concluding that the Assessing Officer's insistence on deduction was unjustified. The Court upheld the Tribunal's decision, stating that no substantial question of law arose from this issue.3. Recomputation of transfer pricing adjustment: The last issue pertained to the Tribunal directing the Assessing Officer to recompute the transfer pricing adjustment. The Court clarified that the Tribunal's prima facie observations did not bind the Assessing Officer in the fresh computation. Both sides were allowed to present contentions, and the Assessing Officer was instructed to decide the issue strictly in accordance with the law. The Court dismissed the appeal, stating that no substantial question of law was involved in this matter.
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