TaxTMI 
TaxTMI 
2018 (12) TMI 1660
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....it enhanced due to voluntary adjustment to ALP of export of services made to AE is eligible for deduction. Ld.. CIT (A) ought to have allowed deduction as claimed by the appellant. It be so held now. 2. Ld.. CIT (A) erred in law and on facts in confirming action of AO in not allowing deduction u/s 10B on adjustment to Arm's Length Price (ALP) of export of services to AE since no convertible foreign exchange relating to increased profit is brought to India. Ld.. CIT (A) ought to have appreciated that the deduction u/s 10B was correctly worked out in the ratio of Export turnover to Total turnover as provided in the Act in compliance with the provisions of sec. 10B (3) of the Act. It be so held now. 3. Ld.. CIT (A) erred in law and on facts confirming reliance placed by AO on proviso to sec. 92C (4) for rejecting deduction claimed u/s 10B of the Act. Both the lower authorities erred in not appreciating the legal position that proviso to sec. 92C (4) is applicable only where income is enhanced by AO determining ALP and not to voluntary adjustment made by the appellant. Ld.. CIT (A) ought to have deleted disallowance. It be so held now. 4. Ld.. CI....
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....275/- Rs. 5,57,633/- Book profit as per companies A/c Rs. 42,00,663/" 4.2 The assessee in its income tax return has adjusted Rs. 63,14,578/- voluntarily on account of transaction made with its associated enterprises by the provisions of Section 92C of the Act. However, the AO was of the view that the assessee cannot claim deduction u/s 10B of the Act in respect of adjustment made in the international transaction by the assessee voluntarily for Rs. 63,14,578/-. On confrontation to the assessee, it was submitted that the adjustment was not made in the transfer pricing by the AO rather it was voluntarily made by the assessee. Therefore, the provisions of Section 92C(4) of the Act cannot be applied while working out the deduction u/s 10B of the Act. The assessee in support of his claim relied on the order of ITAT Banglore in the case of I Gate Global Solutions Ltd. vs. ACIT reported in 112 TTJ 1002. However, the AO disagreed with the contention of the assessee and held that the decision of ITAT had not considered the legislature intention for claiming the deduction u/s 10B of the Act. The AO further observed tha....
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....he assessee; iii) is determined by an advance pricing agreement entered into by the assessee under section 92CC; iv) is made as per the safe harbour rules framed under section 92CB;or v) is arising as a result of resolution of an assessment by way of the mutual agreement procedure under an agreement entered Into under section 90or section 90Afor avoidance of double taxation, the assessee shall make a secondary adjustment Provided that nothing contained in this section shall apply, if,- i) the amount of primary adjustment made in any previous year does not exceed one crore rupees; and ii) the primary adjustment is made in respect of an assessment year commencing on or before the 1st day ofApril,2016 (2) Where, as a result of primary adjustment to the transfer price, there is an increase in the total income or reduction in the loss, as the case may be, of the assessee, the excess money which is available with its associated enterprise, if not repatriated to India within the time as may be prescribed, shall be deemed to be an advance made by the assessee to such associated enterprise and the inte....
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....gible fur deduction. Ld.. CIT (A) ought to have allowed deduction as claimed by the appellant. It be so held now. 2. ld.. CIT (A) erred in low and on/acts in confirming action of AO is not allowing deduction u/s 10B on adjustment to Arm's Length Price (ALP) of export of services to AE since no convertible foreign exchange relating to increased profit is brought to India, ld.. CIT (A) ought to have appreciated that the deduction u/s 108 was correctly worked out in the ratio of Export turnover to Total turnover as provided in the Act in compliance with the provisions of sec. 10B (3) of the Act. It be so held now. 3. Ld.. CIT (A) erred in taw and on facts confirming reliance placed by AO on proviso to sec. 92C (4) for rejecting deduction Claimed u/s10B, of the Act. Both the lower authorities erred in not appreciating the legal position that proviso to sec. 92C(4) is applicable only where income is enhanced by AO determining ALP and not to voluntary adjustment made by the appellant. Ld.. CIT (A) ought to have deleted disallowance. It be so held now. 4. Ld.. CIT (A) erred in law and on facts in wrongly distinguishing ratio of decision o....