2016 (7) TMI 54

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....eliminary objection that since the assessee appellant is a unit exempt from income tax under section 10A, the transfer pricing provisions cannot be invoked on the facts of this case. It is for this short reason alone that the impugned adjustments, according to the learned counsel, must stand quashed. He submits that as this issue is specifically raised in the grounds of appeal, and that in the event of this issue being decided in favour of the assessee nothing really survives for adjudication, he urges us to deal with this preliminary objection first. 3. The assessee before us is engaged in the provision of information tecnooggy enabled services and undertakes IT enabled back office medical transcription service exclusively for its AE. The....

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....provides that exemption under section 10A will not be available in respect of the arm's length price adjustments, learned counsel invites our attention to the CBDT circular no. 14 of 2001, which justifies such a treatment on the ground that "the amount represented by the adjustment would not actually have been received in India or would have actually gone out of the country". He emphasizes that the settled legal position is that the provisions of Section 10 provide a tax exemption, and not a tax deduction. In support of this proposition, our attention is invited to the judgment of Hon'ble jurisdictional High Court in the case of CIT Vs Kei Industries Ltd [(2014) 361 ITR 36 (Del)] and of Hon'ble Karnataka High Court in the case of CIT Vs Yok....

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....shes persons or things that are grouped together from others left out of the group, and (ii) the differentia must have a rational relation to the object ought to be achieved by the legislation in question. The transfer pricing provisions being applies to the situation in which income is exempt from tax, according to the learned counsel, does not fulfil the second criterion set out above, and, is, therefore, unconstitutional. We are thus urged to ignore the Special bench decision and, in the light of the above legal principles, hold that the transfer pricing provisions donot apply to the situation in which income computed as a result of the international transactions is exempt from tax. 5. Learned Departmental Representative, on the other h....

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.... us to question the wisdom of the higher judicial forums; we must follow these decisions, in letter and in spirit, as long as the issue is directly covered by the decisions of these forums. Their decisions will be put to test by the forums above them, and considered for concurrence, by the equivalent forums. A decision of the five Member bench cannot be examined by us, in a division bench, on merits. As for the binding nature of these judicial precedents, we may only refer to the observations of Hon'ble Supreme Court in the case of Ambika Prasad Mishra vs. State of UP AIR 1980 SC 1762 (p. 1764 of AIR 1980 SC), to the effect that "Every new discovery nor argumentative novelty cannot undo or compel reconsideration of a binding precedent... A ....