TaxTMI 
TaxTMI 
2018 (10) TMI 1781
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....e Technology Parks ("STP") Scheme. The assessee provides services including software development, technical support services, post sales maintenance, trouble shooting etc. (referred to as 'technology support services' for brevity) to July US and is remunerated on a cost-plus 15% basis pursuant to a 'Services agreement' with July US. 3. For the AY 2011-12, the assessee filed its return of income on 30.11.2011 declaring income of Rs. 34,91 ,482/- under the normal provisions of the Act, after claiming relief of Rs. 5,94,46,935/-under section 10A of the Income-tax Act, 1961 ('the Act'). The case of the assessee was selected for scrutiny. Since the assessee had entered into international transactions with its associated enterprise ('AE'), July US, a reference was made by the Assessing Officer ('AO') to the Transfer Pricing Officer ('TPO') under section 92CA(3) of the Act. Notices were issued by the AO and the TPO on various occasions and the assessee duly responded to the same from time to time. 4. The TPO passed an order under section 92CA(3) of the Act dated 21.01.2015 rejecting the TP study undertaken by the assessee. In the said order, t....
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.... Rs. 200 crore should be excluded from the list of comparables identified by the TPO. (ii) The DRP held that Operating profit margins of the assessee and comparable companies should be computed after considering foreign exchange gain / loss as operating in nature. (iii) The DRP held that negative working capital adjustment should not be undertaken since the Appellant was a captive service provider bearing minimal risks. b. Corporate tax issues - The DRP held that the AO should compute relief under section 10A of the Act by: (i) Considering export proceeds received within 12 months of the date of the invoice, for the purpose of relief. (ii) Excluding expenses incurred in foreign currency both from the export turnover and the total turnover. c. The DRP held that revised TPO order should be considered by the AO while passing the assessment order. 9. Pursuant to these directions, the AO passed the final assessment order under section 143(3) read with section 144C of the Act dated 31.12.2015. However, the AO passed the said order without giving effect to the order of the DRP. Noticing that the AO had not given effect to the directions of the DRP, the assessee filed a....
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....10A, the travelling, conveyance and communication charges are to be reduced from both the export and total turnover, the Hon'ble DRP erred in not specifically directing that it was incorrect to reduce the travelling, conveyance and communication charges from the export turnover. On the above and such other grounds as may be urged at the time of hearing your appellant prays your Honour to consider the facts and circumstances of the case and render justice." 11. The revenue, aggrieved by the relief allowed by the DRP, has preferred appeal before the Tribunal on the grounds of appeal as follows:- "1. The directions of the Dispute Resolution Panel are opposed to law and facts of the case. 2. Whether the DRP is right in deleting the addition made by the AO on belated export receipts of Rs. 12,44,01,708/- keeping in view of the RBI's circular as against the provisions envisaged in section 10A of the Act. 3. The Hon'ble DRP erred in directing the AO to reduce the expenses both from the Export Turnover as well as Total Turnover when there is no provision in section 10A which requires the said expenses to be reduced from the Total turnover? 4. The Hon'ble DRP erre....
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....he case of Software Paradigms Infotech (P.) Ltd. v. ACIT [2018] 89 taxmann.com 339 (Bang. Trib.) wherein on an identical objection, the Tribunal quashed the final order of assessment. 14. The ld. DR, however, while not disputing the factual position as pointed out by the ld. Counsel for the assessee, submitted that fair order of assessment cannot be quashed, but at best it can be set aside directing the AO to pass the final order of assessment in conformity with the DRP's directions. In this regard the learned DR relied on a decision of the ITAT Delhi in the case of H & M Hennes & Mauritz India (P) Ltd. Vs. ACIT (2012) 25 Taxmann.com 510 (Del) wherein the Hon'ble Delhi Bench of ITAT remanded the issue back to AO to reconsider issue of transfer pricing in accordance with law. 15. We have considered the rival submissions. We find that on identical facts, this Tribunal in the case of Software (supra) has quashed the final order of assessment observing as follows:- "3.3.1 We have heard the rival contention of both parties in the matter and perused and carefully considered the material on record. The undisputed facts on record, as brought out by the discussions above, is that the AO....