TaxTMI 
TaxTMI 
2013 (11) TMI 7
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.... the assessee filed its return of income on 29-11-2006 declaring total income of Rs. 16,37,87,600/- after claiming deduction u/s 10A of the Act. During the assessment proceedings, the Assessing Officer noticing that the assessee had entered into international transaction referred the matter to the Addl. CIT (Transfer Pricing) for determination of ALP of the International Transaction. In pursuance to the transfer pricing adjustment made by the TPO, the Assessing Officer made a draft assessment order incorporating the transfer pricing adjustment made by the TPO as well as proposing some other disallowances. Against the draft assessment order, the assessee raised objections before the Dispute Resolution Panel (DRP). In compliance with the dire....
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.... 'adjusted profits for the purpose of section 10A'. As the total disallowance of Rs. 19,48,02,907/- was already considered for computing the overall taxable income before allowable deduction under Chapter III and Chapter VIA of the Act. Therefore the additions made in the above mentioned STPI Units have resulted in arriving at higher adjusted profits of the undertaking thereby resulting in excess deduction u/s 10A of the Act. 3. Though the assessee objected to the proposed action of the CIT in revising the assessment order in the context of the issues raised in the show cause notice, the CIT however rejected the contention of the assessee and held that the consultancy charges of Rs. 12,48,79,067/- incurred in foreign currency relating to....
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....represented actually the software development charges paid to the foreign subsidiaries of the appellant for the services rendered by them and not technical service charges. ii) Having noticed that the said amount of Rs. 12,48,02,907/- constituted a part of 19,48,02,907/-which was held by the Assessing Officer to be the business profit of the non-residents arising out of their business connection with India in terms of section 9(1)(i) of the Income tax Act, he ought to have held that the said amount could not be reduced from the export turnover. iii) He ought to have noticed that this amount of Rs. 12,48,02,907/- was not charged to the clients of the appellant and, as such, was not included in the export turnover and so could not be re....
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....iii) He ought to have realized that the stand taken by him goes contrary to the decision of the Hon'ble Bombay High Court in the case of CIT vs. M/s. Gem plus Jewellery India Ltd [330 ITR 175] and the ratio of the decision of the High Court in the case of CIT Vs. Allied Industries [229 CTR 462 (HP)] and of the Hyderabad Bench of the Tribunal in the case of Brigade Global Services Private Limited vs ITO, Ward-1(1), Hyderabad [143 ITD 59]. 4) The ld. CIT grossly erred in ignoring the established legal position that, when two views are possible, revisionary action under section 263 does not lie. 5) The Appellant craves leave to raise any other ground with the permission of the Bench." 4. Ground No.1 is general in nature and needs ....
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.... the assessee that the aforesaid amount of Rs. 12,48,70,967/- being the technical consultancy charges were not at all included in the export turnover by the assessee itself while computing the deduction u/s 10A of the Act. If it is really a fact then there cannot be any reduction of the said amount from the export turnover when the assessee has not at all included it in the export turnover while computing deduction u/s 10A of the Act. We therefore direct the Assessing Officer to verify this fact and if on verification it is found that the assessee has not included the said amount while computing the deduction u/s 10A then there is no question of reducing it from export turnover for the purpose of computing deduction u/s 10A of the Act. Even....
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.... the CIT on this issue. 11. We have considered rival submissions of the parties and perused the material on record. After perusing the facts and materials on record, we are of the view that the issue is squarely covered in favour of the assessee. The Hon'ble Bombay High Court while considering identical issue in case of CIT vs. Gem Plus Jewellery India Ltd. (supra) held that the additions made to the income of the assessee by virtue of disallowance made u/s 43B of the Act, amounts to increase in the business profit of the assessee and therefore assessee is entitled to claim exemption u/s 10A with regard to the addition made on account of statutory disallowance. Following aforesaid decision of the Hon'ble Bombay High Court, the co-ordinat....