TaxTMI 
TaxTMI 
2017 (3) TMI 1381
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....f the appellant on the premise that the international transactions (i.e. IT enabled services) rendered by the Appellant to its Associated Enterprises ('AEs') were not at arm's length; 2. erred in proceeding to determine the arm's length price without complying with the conditions laid down in section 92C(3) and also failing to serve a proper show cause notice to this effect and hence entire transfer pricing adjustment proposed is bad in law. Use of contemporaneous data 3. erred in determining the arm's length price using data for financial year ('FY') 2007-08 only and in undertaking a new search after the specified date i.e. 30 September 2008, disregarding the fact that 5 comparables from the Appellants set were accepted and hence a new search was not warranted. Comparable companies selected by the Appellant 4. erred in rejecting comparables selected by the Appellant under the Transactional Net Margin Method ('TNMM') in its transfer pricing study report without providing adequate opportunity to the appellant to submit rebuttals as to why the comparable companies should not be rejected. Additional comparables identified by the Learned TPO 5. erred in....
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....Without prejudice to ground no. 12, the appellant wishes to submit that no adjustment should be made to the total income of the appellant, if the variation between transfix price and arm's length price is within the range of +/- 5%. B. Corporate Tax Ground Deduction under Section 10A 16. erred in disallowing the deduction of Rs. 6,70,56,096/- as claimed under section 10A of the Act. Not followed Appellate order in own case 17. erred in not following the order of the Income Tax Appellate Tribunal in the Appellant's own case for the A Y 2006-07 in ITA No. 8772/Mum/2010 which has been relied upon by the Appellant. Exclusion of Miscellaneous Income while computing deduction under Section 10A of the Act. 18 erred in excluding the Miscellaneous Income amounting to Rs. 2,47,374/- from the eligible profits while computing deduction under section 10A of the Act. Interest 19. erred in computing the interest under Section 234B of the Act. Penalty Proceeding. 20. erred in initiating the penalty proceedings under section 271(1)(C). The Appellant craves Ieave to add, alter, amend or delete the above grounds of appeal at or before the time of hearing of the appeal ....
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.... adopting an inconsistent approach." BRIEF BACKGROUND : 1. The assessee company, viz Willis Processing Service (India) Private Limited (Formerly known as Trinity Computer Processing (India) Private Limited) is an Indian company which was incorporated on 12.05.1992 as an Export Oriented Unit (EOU) under the Software Technology Park of India Scheme (STP1) of the Government of India. The Assessee is a 99.99% subsidiary of Willis Europe BV, a company incorporated in Netherlands. That during the year under consideration, viz. A.Y 2008-09, the assessee provided IT enabled services ('ITES') to its Associate Enterprises ('AE') in various countries. The ITES services provided by the assessee company included processing of insurance claims, premiums and data processing. 2. The assessee company had filed its return of income for A.Y. 2008-09 as on 29/09/2008 declaring an income of Rs. 1,48,60,850/- under the normal provisions of the 'Act', and Rs. 6,79,18,437/- under the provisions of section 115JB. The assessee alongwith its return of income had filed an Audit Report in 'Form 3CEB', reporting therein the particulars of its international transactions with its AE. The ....
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....lant at 12.50%. The TPO however rejected the economic analysis carried out by the assessee and conducted a fresh economic analysis. The TPO considered single year financial data for AY 2008-09 as available at the time of TP assessment for the analysis and obtained certain information which was not available in public domain from some companies and used the same for judging comparability with the Appellant. The TPO rejected 2 companies out of 7 comparables selected in the TP report, for the reason that they as per him were found to be functionally different than the assessee company. The TPO thereafter carried out a fresh search and after finally including certain comparables (which included certain common comparables), therein came up with a set of 22 comparables, the arithmetic mean PLI of which worked out at 25.75%, as under :- S.No. Name of the Comparable Single year cost plus ratio % 1 Aditya Birla Minacs Worldwide Limited (earlier Transworks Information Services Ltd) (0.55) 2 Accentia Technologies Limited. 44.50 3 Asit C. Mehta Financial Services Limited 8.55 4 BNR Udyog Ltd. (Seg) 39.22 5 Caliber Point Business Solutions Limi....
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....y the TPO) to the returned income of the assessee company. 8. The A.O further excluded the 'Miscellaneous income' of Rs. 2,47,374/- included by the assessee for computing the profits eligible for claim of deduction u/s 10A, and not finding favor with the method adopted and the resultant claim of deduction of Rs. 6,70,56,096/- raised by the assessee u/s 10A, therein carried out the following disallowances/additions to the income of the assessee, as under:- Sr. No. Particulars Amount (in Rs.) 1 Transfer Pricing Adjustment Rs. 7,14,97,299 2 Disallowance of claim for deduction under section 10A of the Act Rs. 6,70,56,096 3 Restricted the claim u/s 10A of the Act by excluding miscellaneous income in computing profits derived from the business of the undertaking (on a without prejudice basis) Rs. 2,47,374 BEFORE THE DRP & A.O : 9. The assessee filed objections against the draft assessment order before the DRP, who after accepting the assesses contention as regards exclusion of 1 comparable chosen by the TPO, viz Infosys BPO Ltd, therein recasted the operating margin at 26.02% and resultantly while passing the assessment order u/s 143....
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....tion had referred to Page 1190 of the 'Chart', as well as the relevant pages of the 'Fact sheet'/'APB', as stood mentioned therein. It was submitted before us that the TPO had erred in failing to appreciate that unlike the assessee the aforesaid comparable had a very low employee cost, from where it could be safely gathered that it had outsourced a major portion of its work to third party vendors and hence was functionally different from the assessee company. The Ld. A.R distinguishing the glaring variance of the comparable as against the assessee company, had therein submitted that the said comparable outsourced a major portion of its work to third party vendors, which was evident from the fact that the personnel cost of the aforesaid comparable, viz. Coral hub Ltd., as a percentage of its turnover was only 2.93%, which was far lesser than the cost incurred with respect to provision of data digitization services which had been outsourced by the comparable. The details of employee cost and vendor payments for the current year and last 3 years of the said comparable and the assessee company as are found tabulated at Page 1178 of the 'Fact sheet' (for short 'AFS'), are reproduced as ....
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....at to fortify its contention that the aforesaid company, viz Coral Hub Limited (earlier known as Vishal Information Technology Limited) on account of its different business model, thus could not be taken as a comparable, reliance had been placed on the following orders of the coordinate benches of the Tribunal:- (i) ACIT vs M/s Hapag Llyod Global Services Pvt. Ltd- ITA No.8499/Mum/2010 [AY 2005-06] dated28 February 2013 (Mum) (ii). ACIT vs M/s Maersk Global Service Centre (India) Pvt.Ltd- ITA No.3774/Mum/2011 [AY 2005-06] dated 9 November 2011 (Mum) 66 DTR (Mum) (iii). United Health Group Information Vs. ACIT- ITA No. 6312/Del/2012 [AY 2008-09] dated 28 August 2014 (iv). M/s HSBC Electronic Data Processing India Ltd vs ACIT -ITA No.1624/Hyd/2010 [AY 2006-07] dated 26 June 2013 (Hyd) (v). M/s Stream International Services Pvt. Ltd vs ACIT [AY 2006-07] 141 ITD 492 (Mum) dated 11 January 2013. (vi). M/s Symphony Marketing Solutions India P. Ltd. 37 CCH 253 [AY 2008-09 (Bang) 14 August2013. (vii) PTC Software (India) Private Limited Vs DCIT [AY 2009-10] - ITA No.336/PN/2014 dated 31October 2014. (viii). ITO vs M/s Nextlinx India Pvt. Ltd -ITANo.454/Bang/2011 [AY....
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.... agreement with the claim of the assessee that the facts made available on record therein revealed that the aforesaid comparable, viz. Coral Hub Limited (earlier known as Vishal Information Technology Limited) had a very low employee cost, on the basis of which it could be safely gathered that it was into outsourcing of a major portion of its work to third party vendors, and hence was functionally different from the assessee company. We find that during the year under consideration, viz. A.Y. 2008-09, as against the personnel cost as a percentage of the total cost of 57.68% in the case of the assessee, in the case of the aforesaid comparable, viz Coral Hub the same stood reflected at 4.40%. That it was on account of the said substantially low personnel cost that the Hon'ble High Court of Delhi had in the case of : Rampgreen Solutions Pvt. Ltd. Vs. CIT (2015) 377 ITR 533 (Del), therein observing that as the expenditure on employment cost during the relevant period of the aforesaid comparable was a small fraction of the proportionate cost incurred by the assessee, for the reason that most of its work was outsourced to other vendors/service providers, had thus concluded that the same ....
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....ected as being functionally different, but then we are not impressed by the said contention of the Ld. A.R for the reason that except for the said hollow statement, neither the copy of the 'Annual report' of the said comparable had been placed on our record, nor our attention had been drawn to any such material from where we could safely concur with the said view of the assessee. Thus in light of the half hearted attempt on the part of the assessee, we decline to entertain the unsubstantiated objection so raised before us. That as regards the contention of the Ld. A.R that the aforesaid comparable was earning super normal profits and hence was liable to be excluded from the list of the comparables, for the very reason that such alike companies have a tendency to skew the results and thus cannot be considered as a representative of the industry, we find that the said issue had came up before the Tribunal in the assessees own appeal for A.Y. 2007-08, titled as Wills Proceesing Services (I) Pvt. Ltd. Vs. DCIT-2(3), Mumbai [ITA NO. 4429 & 4547(Mum) of 2012], wherein the Tribunal had held as under: "The factors for determining inclusion or exclusion of any case in the list of compara....
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....here has been no material shift in the facts involved in the case of the assessee for the year under consideration, as observed by us hereinabove, we are thus of the considered view that as the business model of the aforesaid comparable, viz. Coral Hub Limited (supra) is substantially different from that of the assessee, therefore the same cannot be accepted as a comparable and hence is directed to be excluded from the list of comparables. (B).CROSSDOMAIN SOLUTIONS PRIVATE LIMITED : (1). It was submitted by the Ld. A.R that the TPO/AO had erred in considering Crossdomain Solutions Private Limited as a comparable, without appreciating that the functional, asset and risk profile of the company was substantially different, and hence was not comparable to the assessee. That in order to drive home the aforesaid contention, reliance had been placed on Page 1190 of the 'Chart', as well as the relevant pages of the 'Fact sheet'/'APB' as stood mentioned therein. That it was averred by the Ld. A.R that the aforesaid comparable, viz. Crossdomain Solutions Private Limited being functionally different, therefore had wrongly been selected by the TPO as a comparable. That in support of the ....
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....value based quality services in payroll, HR Finance, accounting, administration and tax processes, etc., and hence cannot be considered as a comparable to the assessee company which is a routine BPO service provider. That in order to fortify the aforesaid contention, support was drawn from the cases of similarly placed assesses, where too the coordinate benches of the Tribunal had excluded the aforesaid comparable, viz. Crossdomain Solutions Private Limited on the basis that it was functionally different, as under: (i). DCIT Vs M/s Willis Processing Services (India) Limited - (ITA No. 2152/Mum/2014 [AY 2009-10] dated 10 October 2014.) (ii). Mindcrest (India) Pvt Ltd. Vs. DCIT (AY 2008-09- ITA No.7289/Mum/20 12; dated 12 December, 2014). (iii). M/s Symphony Marketing Solutions India P. Ltd. (37 CCH 253 [AY 2008-09] (Bang) 14 August2013) (iv). Market Tools Research Pvt. Vs DCIT. (37 CCH 605 [AY 2008-09] (1-lyd) dated 24 October 2013). That on the other hand the Ld. Departmental representative (for short 'D.R') had placed heavy reliance on the order of the TPO/AO and therein submitted that the lower authorities after thorough vetting the various factors, had as such rig....
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....e 'Fact sheet'/'APB' as stood mentioned therein. That it was submitted before us that the aforesaid comparable, viz. Eclerx Services Limited being functionally different, had therefore wrongly been selected by the TPO as a comparable. It was submitted by the Ld. A.R that the aforesaid comparable company, viz. Eclerx Services Limited was providing high end data analytics and customized process solution, and was a leading Indian provider of KPO services. The Ld. A.R in order to fortify his contention had referred to the relevant extracts of the 'Annual report' of the comparable, which clearly suggested that it was engaged into knowledge process outsourcing ('KPO'), CRM, data integration services etc. It was further submitted that in the absence of separate segmental, the said company was liable to be rejected as a comparable. That in order to fortify the aforesaid claim that the comparable, viz. Eclerx Services Limited was a KPO, reliance had been placed on the relevant extracts of the 'Annual report' (Page 785 & Page 789 of the 'APB') which did go to substantiate beyond any scope of doubt that the aforesaid comparable was a data analytics KPO service provider, specializing in two bu....
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....hat it was engaged in KPO service, and the department had accepted the said order of the DRP and had not carried the same in further appeal before the Tribunal. That the Ld. A.R by referring to the 'Fact sheet', had therein further submitted that in the assesse's own case for AY 2009-10, the DRP as well as the Tribunal had held that companies engaged in KPO services cannot be compared to the routine BPO services provided by the assessee company. Additionally, it was submitted that the ITAT in the assesses own case for AY 2010-11 in its recent order passed in ITA No. 1890/Mum/2015, dated. 09.12.2015 (Page 1135-1152 of 'APB'), had held that as the assessee is a routine BPO service provider, therefore it cannot be compared to high end KPO service providers such as Eclerx Service Limited. Thus in light of the aforesaid judicial precedents and consistent view of the Tribunal in the assesses own cases, it was submitted that the aforesaid comparable, viz. Eclerx Services Limited was liable to excluded from the list of the comparables. (3). That in order to support the contention that the aforesaid comparable, viz. Eclerx Services Limited was liable to be excluded from the list of the c....
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....€¢ PTC Software (India) Private Limited Vs DCIT [AY 2009-10] - ITA No. 336/PN/2014 dated 31 October 2014. • M/s Excellence Data Research Pvt. Ltd. [AY 2009-10] ITA No. 159/Hyd/2014 dated 31 July 2014 (Hyd) • M/s Berkadia Services India Private Ltd. [AY 2009-10] ITA NO. 1802/Hyd/2013 dated 19 September 2014 (Hyd) • Capital IQ Information System (India) Pvt Ltd [AY 2007-08] - ITA No. 1961/Hyd/2011 dated 23 November 2012 (Hyd) • HSBC Electronic Data Processing India P. Ltd. Vs. ACIT [AY 2007-08] - ITA No. 1826/Hyd/2011 dated 24 October 2014. • HSBC Electronic Data Processing India P. Ltd. Vs. ACIT [AY 2008-09] - ITA No. 1647/Hyd/2012 dated 24 October 2014. (3). That it was further submitted by the Ld. A.R that during the year, the aforesaid comparable company viz. Eclerx Services Limited had acquired UK based company,viz. Ignetica Travel Solutions Ltd., which thus had led to the acquisition of new customers. Thus in the backdrop of the aforesaid event, it was submitted that this kind of inorganic growth during the year had contributed to increased revenues to the said comparable, viz. Eclerx Services Limited, duri....
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....at it may be excluded from the list of the final comparables, thus could not be summarily accepted. (4). We have given a thoughtful consideration to the contention of the assessee that the TPO/AO had erred in considering the aforesaid comparable, viz. Eclerx Services Limited as a comparable, without appreciating the fact that the extraordinary event as that of acquisition of UK-based Ignetica Travel Solutions Limited ('ITS') on July 27, 2007 had taken place during the year, which as per the assessee, being an extraordinary item that had taken place during the year under consideration, therefore justified the exclusion of the aforesaid company as a comparable. We find that a perusal of the relevant extract of the 'Annual report' of the comparable (Page 796 of 'APB') relied upon by the assessee therein reads as under:- "Acquisition eClerx has acquired UK-based ignetica Travel Solutions Limited ('ITS') on July 27, 2007. This acquisition is consistent with the Company's strategy of looking for inorganic growth via 'bolt on' acquisition which fit well with the existing strengths of the company. ITS has provided the company with a set of 28 large customers, primarily in Europe, ....
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....Annual report' that the integration process of such acquisition was on track only in the month of March, 2008. Thus in the backdrop of the aforesaid facts, in the absence of any material which could go to justify that the aforesaid comparable had been rendered functionally different because of the aforesaid acquisition, we herein decline to accept the said contention of the assessee that on the said basis the said comparable is liable to be excluded. (5). We have heard the Ld. Representatives of both the parties, perused the orders of the lower authorities and the records made available before us. We have given a thoughtful consideration to the facts of the case and are of the considered view that though we find ourselves to be in agreement with the contention of the Ld. D.R and have not found favor with the contention of the assessee that as the aforesaid comparable had carried out an acquisition of a U.K based company, therefore simpliciter on the said count, without establishing that such acquisition had rendered the aforesaid comparable functionally different, could not be accepted as a factor for exclusion of the said comparable, but then we are of the considered view that ....
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.... with the fact that in the assesses own case for A.Y 2011-12 the exclusion by the DRP of the aforesaid comparable, viz. Eclerx Services Limited from the list of comparables had been accepted by the department, and last but not the least the 'Special bench' of the Tribunal in the case of Maersk Global Centres (India) Pvt. Ltd.(supra) had therein held that the aforesaid comparable, viz. Eclerx Services Limited which is a KPO cannot be compared as against the assessee which is providing BPO services, we thus finding no reason to take a different view and being of the considered view that the aforesaid comparable, viz. Eclerx Services Limited was functionally different from the assessee company, therefore hold that it cannot be accepted as a comparable and hence is directed to be excluded from the list of comparables. (D) MOLD-TEK TECHNOLOGIES LTD : (1). It was submitted by the Ld. A.R that the TPO/AO had erred in considering Mold-Tek Technologies Limited as a comparable, therein disregarding the very fact that the said company was engaged in high end knowledge process outsourcing (KPO) services, as in comparison to the assessee company which was engaged in providing routine IT e....
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....us in the backdrop of the aforesaid observations of the Tribunal, it was submitted that now when it was an established fact that the aforesaid comparable, viz. Mold-Tek Technologies Limited was also engaged in KPO business, therefore following the view taken by the Tribunal in assesses own case for the subsequent year, the said comparable was liable to be excluded from the final set of comparables. That in order to fortify its aforesaid contention, it was further submitted that the 'Special bench' of the Tribunal in the case of Maersk Global Centres (India) Pvt. Ltd. Vs. ACIT [A.Y: 2008-09] - 39 CCH 130 (Mum); dated. 07.03.2014, had specifically held that companies predominantly engaged in KPO services cannot be considered as a comparable to a company predominantly engaged in BPO activities (4). The assessee in further support of its contention that the aforesaid comparable, viz. Mold-Tek Technologies Limited was liable to be excluded from the list of the comparables, thus relied on a host of orders of the Tribunal in the case of similarly placed assesses, as under:- (i). Maersk Global Centres (India) Pvt Ltd Vs ACIT [AY 2008-09- 39 CCH 130 (Mum), dated 7March 2014] (ii). ....
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....s, it was averred by the Ld. D.R that in light of the order of the Tribunal passed in the assesses own case for A.Y. 2007-08, wherein it had been held that even if there is an extraordinary event in the form of merger/demerger, it is only when it is shown that pursuant to such extraordinary event the comparable had become functionally different, and as such incomparable, that the same would render it liable to be excluded as a comparable. It was thus averred by the Ld. D.R that in light of the aforesaid facts, the contention of the assessee that the aforesaid comparable may be excluded from the list of the final comparables, thus could not be summarily accepted on the very face of it, as such. (6). That still further it was submitted by the assessee that as during the year under consideration the company had earned abnormally high profits (i.e. Operating profits/Operating cost of 106.82%), it was thus on the said count itself liable to be excluded from the list of comparables, as such like companies have a tendency to skew the results and cannot be considered as representative of the industry. Accordingly, it was submitted that this company should be rejected on account of being....
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.... compared to high end KPO service providers. We further find that the 'Special bench' of the Tribunal in the case of Maersk Global Centres (India) Pvt. Ltd. Vs. ACIT [A.Y: 2008-09] - 39 CCH 130 (Mum); dated. 07.03.2014, had specifically rejected the aforesaid comparable, viz. Mold-Tek Technologies Limited, on the basis that companies predominantly engaged in KPO services cannot be considered as a comparable to a company predominantly engaged in BPO activities. We are of the considered view that as the aforesaid comparable, viz. Mold-Tek Technologies Limited is a leading KPO in Engineering and Design Services, specializing in Civil, Structural and Mechanical Engineering Services, with a strong team of Skilled resources with world class resources and skill sets complemented by two subsidiaries in USA - CROSSROADS DETAILING, INC. Indianapolis, IN & RMM Global LLC Akron, OH, therefore the same being substantially functionally different from the assessee company which is a routine BPO service provider, therefore cannot be taken as a comparable. We find that the 'Special bench' of the Tribunal in the case of : Maersk Global Centres (India) Pvt. Ltd. Vs. ACIT [A.Y: 2008-09] - 39 CCH 130 (....
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....on, Billing & Coding and Software Development & implementation, but however no segmental information is provided in the said annual report. It was further submitted before us that the TPO had considered the profitability of the aforesaid comparable, viz. Accentia Technologies Ltd. at an overall entity level, which includes income from software development, which had led to an infeasible comparison. That in the backdrop of the aforesaid facts it was submitted that on the basis of such incomplete information, the aforesaid company could not have been considered as a comparable. That in support of the aforesaid contention reliance was placed on the following judgements: (i) Vodafone India Services P. Ltd. Vs DCIT. 36 CCH 550 [AY 2007-08] (Mum) dated 26 April .2013 (ii) Maersk Global Service Centres (India) Pvt. Ltd. [AY 2009-10] - ITA No.2594/Mum/2014 dated 16 January 2015 (iii). Stream International Services (AY 2007-8) (ITA No.8920/Müm/2011) dated 29 September 2014. (iv). Xchanging Technology Services India Private Limited (ITA No. -813/2015/ Del HC) [AY 2009-101 dated 20 October 2015. (v). Xchanging Technology Services India Private Limited (ITA No. 1897/Del/201....
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....ing for these two activities, it could not have been selected as functionally comparable to the assessee. That still further it was submitted that due to the aforesaid restructuring undertaken by the comparable, viz. Accentia Technologies Ltd., which as claimed by the assessee was an exceptional circumstance resulting in an exceptional year of performance, which had led to significant increase of the revenues of the said comparable from 28.72 crores in FY 2006-07 to 50.93 crores in FY 2007-08, i.e. an increase by 77.38%, it was therefore submitted that even on the count of the said exceptional event occasioned by the restructuring of the aforesaid comparable, the latter was liable to be excluded from the list of the comparables. The assessee in support of its aforesaid contention had relied on a host of judicial pronouncements. That on the other hand the Ld. Departmental representative (for short 'D.R') had placed heavy reliance on the order of the TPO/AO and therein submitted that the lower authorities after thorough vetting the various factors, had as such rightly selected the aforesaid company, viz. Accentia Technologies Ltd., as a comparable. The Ld. D.R further adverting to th....
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....thus functionally different, and there was no separate segmental information available in this regard, and the said order of the DRP having not been further assailed by the department before the Tribunal had thus attained finality. We further find that as stands gathered from a perusal of the 'Annual report' and 'Profit & loss a/c' of the aforesaid comparable, the latter was generating income from three sources, i.e. Medical Transcription, Billing & Coding and Software development & implementation, but however no segmental information was available in the annual report. We are further persuaded to be in agreement with the assessee that the TPO had considered the profitability of the aforesaid comparable, viz. Accentia Technologies Ltd. at an overall entity level, which includes income from software development, which had led to an infeasible comparison in the hands of the assessee company. We are of the considered view that on the basis of such incomplete information, the aforesaid company could not have been considered as a comparable. We have given a thoughtful consideration to the facts of the case and are of the considerate view that in the backdrop of the aforesaid facts, it c....
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....the 'Act'. In so far as Ground of appeal No. 12 and 13 are concerned, the same relate to the adjustment for differences in working capital and risks assumed. Though the Tribunal has allowed such claim for A.Y(s).2006-07 and 2007-08, but the same are rendered academic in view of our earlier observations. Thus in light of our aforesaid observations, the 'Ground of appeal No(s).1 to 15' are allowed, which are to be considered in the backdrop of the concession of the Ld. A.R as recorded by us hereinabove, therein averring that the order of the AO/TPO is being assailed by him to the extent of inclusion of the aforementioned 5 comparables. Further, the relatable additional grounds of appeal raised by the assessee before us, marked as 'Ground of appeal No. 21 to 25 are also not adjudicated as the same were not pressed, and are accordingly dismissed. 11. The Ld. A.R further adverting to 'Ground of appeal No. 18' so raised before us, therein assailed the disallowance by the A.O of claim of deduction of Rs. 6,70,56,096/- which was raised by the assessee u/s 10A of the 'Act' in its return of income for the year under consideration. It was averred by the Ld. A.R that the A.O had erred in ex....
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....s were transferred from the SEEPZ unit to the Vikhroli unit, however the value of such assets was much less than 20% of the total asset base of the Vikhroli unit, which as observed by us hereinabove was formed in F.Y 1999-01 with new employees and new assets with no transfer of employees or assets from the SEEPZ unit to the Vikhroli unit till F.Y 2003-04. Though the Vikhroli Unit of the assessee satisfied all the prescribed conditions laid down u/s. 10A and the entire income generated by the assessee from export of services therefrom was eligible for deduction under Section 10A of the Act, however, the assessee as in the past, had on a conservative basis claimed a lower deduction under section 10A, by considering the proportionate profits relating to SEEPZ unit as taxable, based on the estimated number of employees relatable to the latter, even though the unit has been closed in the past years. The aforesaid methodology of allocating income and expenses between both the units had been followed consistently by the assessee company over the past years. It was thus in the backdrop of the aforesaid facts therein averred before us that in the absence of any particular method being speci....
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....tter to the file of the A.O for the limited purpose of determining the quantum of deduction so raised by the assessee u/s 10A in its return of income. That as regards the contention of the Ld. A.R that the A.O had erred in excluding the 'Miscellaneous income' of Rs. 2,47,374/- from the eligible profits for the purpose of computing deduction u/s 10A, we are of the considered view that the entitlement of an assessee towards claim of such deduction, as had clearly been spelt out in Sec. 10A(4), is restricted only as regards the 'Profits derived from export of articles or things or computer software', however, as neither from the orders of the lower authorities, nor from the records available before us it can be gathered as to what is the nature of 'Miscellaneous income' of Rs. 2,47,374/- , nor anything as regards the same had been submitted before us by either of the parties during the course of hearing of the appeal, we therefore keeping in view the fact that as the issue as regards determining the quantum of deduction u/s 10A, as claimed by the assessee in its return of income had been restored by us to the file of the A.O, therefore restore this issue also to the file of the A.O. T....