TaxTMI 
TaxTMI 
2018 (10) TMI 1350
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.... income of Rs. 5,07,700 after claiming deduction u/s 10B of the I.T.Act amounting to Rs. 1,85,34,036. During the course of assessment proceedings, the case was referred to the Transfer Pricing Officer (TPO) for determination of Arms Length Price (ALP) of the IT enabled transactions undertaken by the assessee with its AE. The TPO vide its order dated 28.01.2015 had made a transfer pricing adjustment of Rs. 4,12,31,390. On receipt of the TPO's order, draft assessment order u/s 144C of the I.T.Act was passed on 26.02.2015. In the draft assessment order, the taxable income was re-computed at Rs. 6,02,73,126 by making the following additions:- (i) Transfer pricing adjustment of Rs. 4,12,31,390 as per TPO's order; and (ii) Disallowance of deduction u/s 10B of the I.T.Act amounting to Rs. 1,85,34,036. 3. Against the draft assessment order, the assessee filed objections before the Dispute Resolution Panel (DRP) u/s 144C(2B) of the I.T.Act. The DRP vide its directions dated 23.11.2015 disposed off the assessee's application / objections filed before it. The DRP confirmed the disallowance u/s 10B of the I.T.Act and the arm's length price was redetermined at Rs. 4,62,38,575 instead of Rs....
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....I.T,Act ought to have been granted. Alternatively it was submitted that the assessee was entitled to deduction u/s 10A of the I.T.Act, which is pari materia with section 10B of the I.T.Act. The DRP, however, rejected the objections of the assessee on this issue. 5.2 Before us the assessee submitted that similar issue was adjudicated by the Tribunal in assessee's own case for assessment year 2010-2011 in ITA No.146/Coch/2015 (order dated 07.09.2018). The learned AR submitted that the Tribunal restored the alternative claim of the assessee u/s 10A of the I.T.Act to the A.O. for fresh consideration. It was stated by the learned AR that the Tribunal for assessment year 2010-2011 (supra) has restored the issue to the A.O. after giving specific direction and same direction may be given in this assessment year also. 5.3 The learned Departmental Representative, on the other hand, relied on the assessment order and the directions of the DRP. 5.4 We have heard the rival submissions and perused the material on record. In the following judicial pronouncements, it was held that section 10A of the I.T.Act is pari materia with section 10B of the I.T.Act. (i) M/s.US Technology International P....
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.... the AO / TPO excluded the forward premium from the operating profits of the assessee. 6.1 The assessee submitted detailed objections before the DRP vide submissions dated 20.11.2015 as to why forward premium amounting to Rs. 19,07,688 should be considered as operating in nature. The DRP, however, failed to consider the contention of the assessee and did not give any direction in respect of consideration of forward contract premium as operating in nature. 6.2 Aggrieved, the assessee has raised this issue before the Tribunal. The contentions raised before the Tribunal are as follows:- (i) The assessee is a captive unit earning foreign exchange revenue only from its parent entity; (ii) In order to protect the company from foreign exchange fluctuations, the company has opted for a forward contract and hedges a part of its receivables against losses arising due to foreign exchange fluctuation; (iii) The difference between spot rate (rate of foreign currency on the date on which the assessee has entered into contract with the bank) and the forward rate (rate agreed with the bank) is accounted by the assessee as forward premium in its books of accounts over the period of contract....
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.... course of the business to hedge against fluctuations in foreign currency exchange rate and gains from such contract has to be considered while computing the PLI in the international transaction with the AE. It is ordered accordingly. 6.2 In the result, the additional ground raised is allowed for statistical purposes." 6.5 In view of the above order of the Tribunal in assessee's own case, we deem it appropriate to restore this issue to the files of the TPO. The TPO shall adhere to the directions issued by the Tribunal in assessee's own case for assessment year 2010-2011, in this case also. It is ordered accordingly. 6.6 In the result, ground No.4.9 is allowed for statistical purposes. (iii) AO / TPO has erroneously taken the following companies as comparable, viz., ICRA Online Limited, Acropetal Technologies, Accentia Technologies Limited, and Jeevan Scientific Technologies Limited. 7. The TPO had included the above four companies as comparable companies. The assessee had objected to the inclusion of the above said companies as comparable. The objections raised before the TPO and the DRP is reproduced below for ready reference:- Companies identified by the TPO Contention....