AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 725
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....ent was an International Transaction entered with its AE and the same required Transfer pricing (T.P.) study. However, while computing the total income, the assessee disallowed the above said amount of Rs. 4.83 crores, i.e., while arriving the total income the above said amount was not claimed as deduction. Accordingly, the assessee contended that it had not claimed the above said amount of Rs. 4.83 crores and hence no T.P. adjustment/study is required in respect of this transaction. The Transfer pricing officer also did not examine this claim, since the assessee had informed him that it has suo-motu disallowed the payment made by it to its AE in relation to reimbursement of onsite managers' salary and expenses. 3. The AO noticed that the assessee had disallowed identical claim made in the immediately preceding year also suo motu and the AO, in that year, had taken the view that the amount so disallowed cannot be considered as part of the income exempt u/s 10A of the Act. Accordingly, by following the decision taken in that year, the AO held that the assessee is not entitled for deduction under section 10A of the Act in respect of the suo-motu disallowance of reimbursement of expe....
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....at the proviso to sec. 92C(4) bars allowing deduction u/s 10A of the Act on the amount of income enhanced by the AO on account of determination of Arms Length Price. In this regard, the ld. AR placed reliance on the decision of Bangalore Bench of the Tribunal rendered in the case of I Gate Global Solutions Ltd. vs Assistant Commissioner Of Income (2007) 112 TTJ Bang 1002, wherein the Tribunal has held that the amount disallowed by the assessee on its own after ascertaining Arm's Length Price (ALP) cannot be considered to be a case of enhancement of income within the meaning of proviso to Section 92C(4) of the Act and hence the assessee would be entitled to exempt u/s 10A of the Act in respect of income declared in the return of income. The ld. AR further submitted that the TPO has also not suggested any adjustment and hence proviso to section 92C(4) will not apply to the suo motu disallowance made by the assessee. 8. The ld. DR, on the contrary, submitted that the identical disallowance made on its own by the assessee was held to be not eligible for deduction u/s 10A of the Act by the Tribunal in AY 2006-07. The Ld D.R further submitted that the assessee has preferred appeal befor....
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.... made by the assessee does not relate to sales and hence the question of bringing the foreign exchange into India does not arise. 11. With regard to the disallowance made u/s 14A of the Act, the Ld A.R reiterated the submissions that the assessee did not incur any expenditure in earning the dividend income and hence no expenditure needs to be disallowed u/s 14A of the Act. On the contrary, the ld D.R submitted that the Ld CIT(A) has only set aside the matter to the file of the AO. 12. We have heard rival submissions and perused the record. We notice that the assessee had disallowed identical claim made in AY 2006- 07 and the same was also held to be not eligible for deduction u/s 10A by the assessing officer on the reasoning that the income pertaining to suo motu disallowance made by the assessee does not bear the character of income having nexus with the software development activity carried on by the assessee. The Tribunal has further noticed that the finding of the Ld CIT(A) that the income arising out of the adjustment is not derived by the undertaking from the Export has not been controverted by the assessee. The Tribunal has further noticed that the assessee has not complie....
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....llowed to claim deduction u/s 10B of the Act, will go against the legislative intention. We, therefore, decline to interfere with the finding of the lower authorities. In our considered opinion, the assessee is not entitled for deduction u/s 10B of the Act in respect of the addition of Rs. 4,09,54,804/- suo moto made by the assessee as per Form 3CEB. The cases relied upon by the assessee have not considered the relevant provisions of the Act with legislative intent and are therefore distinguished from peculiar facts and modus operandi of the case in hand... In the instant case, the assessee has determined the reimbursements at ALP in form no. 3CEB, whereas in M/s Agilisys IT services India Pvt Ltd, the ALP of sale receipts was determined at higher figure than that reported and hence due adjustments were made. In respect of the adjustments made due to the TP study was held to be not eligible for deduction u/s 10B of the Act by the Tribunal for the reasons stated therein. In effect, the sale price adjustment has not resulted in receipt of foreign exchange. 14. In the instant case also, the assessee has not generated any foreign exchange out of the suo-motu disallowance made by it.....