TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 360
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.... to restrict the deduction u/s 10A of the Act to the extent of Rs. 32,59,19,968/- representing the profits and gains from business. 2. Brief facts of the case are that the assessee-company filed its return of income for the relevant assessment year i.e. assessment year 2006-07 on 27-11-2006 declaring a total income of Rs. 6,07,56,914/-. During the assessment proceedings u/s 143(3), the AO noticed that the assessee has entered into international transactions with its associated enterprise. Therefore, reference was made to the Transfer Pricing Officer (TPO) u/s 92CA of the Act for determination of the arms' length price (ALP). The TPO determined the arms length adjustment of Rs. 25,32,39,254/-. In accordance with the said order of the TPO, t....
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.... the directions of the DRP of Rs. 11,35,16,498/- has been added to the income from business and profession and thereafter 10A deduction has been allowed. The CIT observed that u/s 92C(4) of the Act, no deduction u/s 10A or chapter VIA shall be allowed on the total income enhanced on account of adjustment to the ALP. He, therefore, came to the conclusion that the AO ought to have restricted the deduction u/s 10A to the extent of Rs. 32,59,19,968/- which represents the profits and gains from business of the eligible unit and therefore the order of the AO is erroneous as well as prejudicial to the interests of the Revenue. Accordingly, he revised the assessment order by cancelling the order passed u/s 143(3) of the Act and directed the AO to m....
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....er of the AO was not erroneous and prejudicial to the interests of the revenue and hence the jurisdiction u/s 263 could not have been invoked. In support of his contention, he placed reliance upon the decision of the Hon'ble Supreme Court in the case of Malabar Industrial Co.Ltd. vs. CIT (200) 243 ITR 83(SC). 6. Without prejudice to the above contention, the learned counsel for the assessee further submitted that the assessee was eligible for deduction u/s 10A with regard to the income earned by the STPI unit and all the relevant material was before the AO and after considering the same, the AO has taken one of the possible views and therefore the order cannot be said to be erroneous or prejudicial to the interests of the Revenue. He submi....
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....sts of the Revenue. As regards the decisions relied upon by the learned counsel for the assessee, the learned Departmental Representative submitted that they are distinguishable on facts. 8. Having heard both the parties and having considered the rival contentions as well as the material on record, we find that the assessment order is passed after the draft assessment order has been approved by the DRP by reducing the ALP adjustment. From the order of the DRP, we find that the DRP was only seized of the objections of the assessee with regard to the TP adjustment as well as the grant of lower deduction u/s 10A of the Act. The DRP has not considered the computation of part of deduction u/s 10A of the Act. Therefore, it cannot be said that th....
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.....144C provides that the DRP, in a case where any objection is received shall issue the directions, as it thinks fit, for the guidance of the AO to enable him to complete the assessment. Sub-sec.(8) provides that the DRP may confirm, reduce or enhance the variations proposed in the draft order so, however, shall not set aside any proposed variation or issue any direction under sub-section (5) for further enquiry and passing of the assessment order. Thus, it can be seen that only where variations are made to the returned 'income of the assessee', that the AO has to forward the draft assessment order to the assessee and the assessee shall accept the variations or file objections with the DRP and the DRP may confirm, reduce or enhance the varia....