TaxTMI 
TaxTMI 
2015 (4) TMI 716
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....ot pass draft assessment order under section 144C read with section 143(3) of the Act. Counsel for the assessee fairly concedes that this issue is covered against the assessee by the decision of the co-ordinate Bench of this Tribunal in the case of Visual Graphics Computing Services (India) P. Ltd. v. Asst. CIT [2012] 15 ITR (Trib) 393 (Chennai). Respectfully following the above order of the coordinate Bench of this Tribunal, we dismiss grounds Nos. 2.1 to 2.4 of the assessee challenging the validity of draft assessment order under section 143(3) read with section 144C of the Act. 4. Grounds Nos. 3.1 to 3.2 are general grounds objecting to the restriction of deduction under section 10B of the Act. Grounds Nos. 3.3.1 to 3.3.9 are raised objecting to the action of the Assessing Officer in adjusting/restricting the claim of deduction under section 10B on the basis of the arm's length price determined by the Transfer Pricing Officer. 5. Counsel for the assessee submits that the arm's length price cannot be a basis to invoke section 10B(7) read with section 80-IA(10) of the Act as held by the co-ordinate Bench of this Tribunal in the cases of Tweezerman (India) P. Ltd. v. Addl....
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....section 92CA(3) dated October 29, 2010 and modification order dated February 24, 2011. The Assessing Officer was of the view that since the assessee has overstated its sales at Rs. 19,60,38,865 to claim excess deduction under section 10B of the Act as against the arm's length price of sales at Rs. 4,90,51,116 as determined by the Transfer Pricing Officer. Therefore, on the directions of the Dispute Resolution Panel, the Assessing Officer reduced the difference of Rs. 4,69,87,704 (19,60,38,865 âEUR" 14,90,51,116) from the total turnover, export turnover and the profit of undertaking in computing deduction under section 10B of the Act. The contention of the assessee was that the Assessing Officer has erred in reckoning the arithmetic mean of the margins reported by the comparable companies as against the actual profits earned by the assessee, as the profits eligible for deduction under section 10B of the Act. The contention of the assessee was that the Assessing Officer and the Dispute Resolution Panel erred in invoking provisions of section 10B(7) read with section 80-IA(10) of the Act without establishing that business transacted between the assessee and its associated en....
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....ome as stated in section 92. All the above stated sections provided in Chapter X of the Income-tax Act, 1961 belong to a separate code as such, enacted for the purpose of computing income from international transactions having regard to the arm's length price so as to confirm that there is no avoidance of tax by an assessee. Therefore, where in a case, the Transfer Pricing Officer suggests that the operating profit declared by an assessee is compatible to the arm's length price norms and no adjustment is necessary, the operation of all those provisions come to an end. If the Assessing Officer has to make any other adjustment towards computing deduction available under section 10A, the computation has to be made in the context of section 10A(7) read with section 80-IA(10). 25. It is clear that in a case of the transfer pricing assessment, it has got two segments. The first segment consists of rules and procedures for computing the income other than the income arising out of international transactions with associate enterprise. The second segment consists of rules and procedures in connection with....
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..... Most appropriate method is chosen either on profit basis method or price basis method. In the latter case, profits are not at all considered. In that method, profit is only a derivative of prices. When profits itself is not worked out, how it is justified to adopt the arm's length price profits to determine what is 'ordinary profits' for the purpose of section 10A(7) ? 29. In the facts and circumstances of the case, we hold that the Assessing Officer has erred in reducing Rs. 4,48,50,795 from the eligible profits of the assessee under section 10A. The said adjustment made by the assessing authority in computing the deduction under section 10A is accordingly, deleted 30. This issue is decided in favour of the assessee." 8. Respectfully following the above decision of the coordinate Bench of this Tribunal, we allow the grounds of appeal of the assessee on this issue. 9. The next issue in ground Nos. 3.4.1 to 3.4.3 of the assessee is as under : "3.4.1....
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....ch gain/loss cannot be reduced from the total turnover in computing the deduction under section 10B of the Act. 14. Heard both sides. Perused the orders of the lower authorities and the decisions relied on. In so far as grounds Nos. 3.5.1 to 3.5.5 are concerned, i.e. in respect of the foreign exchange gain, whether it should be taken as part of export turnover or not, we find that the hon'ble jurisdictional High Court in the case of CIT v. Pentasoft Technologies Ltd. [2012] 347 ITR 578 (Mad) has held that gains due to fluctuation in the foreign exchange is directly related to export sales of the assessee and therefore, it cannot be treated as other than part of profit from export. Similar view has been expressed by the hon'ble Bombay High Court in the case of CIT v. Gem Plus Jewellery India P. Ltd. [2011] 330 ITR 175 (Bom). Here in the case of the assessee the gain in foreign exchange is also in connection with the export sales, respectfully following the above decision of the hon'ble jurisdictional High Court, we hold that the foreign exchange gain has to be considered as part of the export turnover for the purpose of computing deduction under section 10B of the Act a....