TaxTMI 
TaxTMI 
2015 (7) TMI 769
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....the appellant form part of the income derived from the industrial undertaking qualifying for exemption under section 80IB(10) and view to the contrary as has been taken by the "CIT(Appeals)" is wholly erroneous. 2. BECAUSE such "duty drawback" (as received by the appellant) was in the nature of cash assistance forming part of the income derived from industrial undertaking as per clause iii(c) of section 28 of the Act read with Circular No.564 dated 5.7.1990 and Circular No.571 dated 1.8.1990 issued by CBDT, and accordingly the same should have been considered as part of eligible profit, for computing deduction under section 80IB(10) of the Act." 3. It was agreed by both the sides that this issue is identical to the issue raised by the assessee in its appeal for assessment year 2009-2010 in I.T.A. No.804/Lkw/2013, which was heard on 17/06/2015 and this issue can be decided on similar line. 4. We have considered the rival submissions. We find that in the appeal of the assessee for assessment year 2009-2010 in I.T.A. No.804/Lkw/2013, the issue regarding allowability of deduction u/s 80IB out of Duty Drawback has been decided by us against the assessee by following the judgmen....
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....ly for statistical purposes. 9. Now we take up the Revenue's appeal i.e. I.T.A. No.629/Lkw/2013 for assessment year 2007-08. In this appeal, the Revenue has raised the following grounds: "1. That the Ld. CIT(A) has erred in law and on facts in allowing the relief of Rs. 1,00,47,551/- on account of transfer pricing adjustment without appreciating the full facts of the case. 2. That the Ld. CIT(A) has erred in law and on facts in failing to appreciate that the method adopted by the TPO was the most appropriate method in the case of the assessee company. 3. The order of the CIT(A), Kanpur being erroneous, unjust and bad in law be vacated and the order of the AO be restored." 10. Learned D. R. of the Revenue supported the assessment order whereas learned A. R. of the assessee supported the order of learned CIT(A). He also submitted that the copy of order dated 28/10/2011 passed by TPO u/s 92CA(3) of the Act for next year is available on pages 203 to 206 of the paper book and in that year, the TPO has considered the same comparables which are considered by learned CIT(A) in the present year as noted by him on page No. 4 of his order that there is only one difference in th....
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....come of the assessee will be called for if the income of the comparables is after excluding the same. In the present case, the calculation of the PLI of the comparables companies is based on the audited financial results for financial year 2006-07 and a clear finding is given by learned CIT(A) in Para 4.2.3 of his order that he has verified these calculations and the balance sheet of each of these companies and they are part of the records and also in public domain. The relevant paras of the order of CIT(A) are Para No. 4.2 to 4.2.3, which are reproduced below for the sake of ready reference:- "4.2 Discussion and Decision I have considered the facts and circumstances of the case and the submissions of the appellant. In the sequence for the computation of arms length price, the first step involves the identification of the "most appropriate method". In the instant Asstt. Year "Resale Price method" has been the adopted by the appellant as the "most appropriate method" and the same has also been accepted by the TPO, which is legally incorrect. According to the provisions of the Sec 92 to 92CA of the Income Tax Act, 1961 read with Rules 10B to 10E, "Resale price method" only appl....
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....r an item of income which is unrelated to the ordinary activities of a company. Further, in the cash-flow statements prepared as per AS-3 of the ICAI and certified by the Statutory Auditory and accepted in the AGM of the company, the export entitlements are duly incorporated in the cash-flow from operating activities, which further strengthens my view about the export entitlements being an integral part of the operating profits. Thus, it is imperative to include the figures of export entitlements while calculating the operating profits of a company. In this view of the matter, the PLI of the appellant company as well as of the other comparable companies should be computed after including the export entitlements available. 4.2.3 On perusal of the resultant PLIs (keeping in mind the discussion above), it is observed that the Average PLI (OP/TC) of the comparable companies is 7% as compared to 3.67 of the appellant company which comes within 5% tolerance as stipulated in the Income Tax Act, 1961.1 have verified these calculations from the Balance sheet of each of these companies and they are part of the records and also in Public domain. Since difference between the PLI is within t....
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....have relegated the assessee/respondent to the stage of the Assessing Officer/Transfer Pricing Officer by observing "the AO/TPO may reverify the above calculations and if found to be correct, give relief to the assessee as directed above." 16. Learned A.R. of the assessee submitted that when CIT(A) has given a finding that he has verified the calculations from the balance sheet of each of the comparables and they are part of the record and also in public domain and therefore, no adjustment is called for but this direction of CIT(A) is not proper that the AO/TPO may reverify these calculations and if found correct, give relief to the assessee as directed above. He submitted that this direction of CIT(A) amounts to setting aside the matter which is not within the powers of CIT(A). 17. Learned D. R. of the Revenue supported the order of learned CIT(A). 18. We have considered the rival submissions. We find that in Para 4.2.3 of his order, as reproduced above, learned CIT(A) has deleted the adjustment of Rs. 1,00,47,451/- after giving a categorical finding that he has verified the calculations from the balance sheet of each of the comparables and they are part of the record and ....