TaxTMI 
TaxTMI 
2020 (7) TMI 98
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....General 1.1 On the facts and in the circumstances of the case and in law, the learned CIT has legally erred in assuming jurisdiction under Section 263 of the Act. The learned CIT has failed to appreciate that the assessment order under Section 143(3) r.w.s 144C(13) passed by the Assessing Officer (AO) was neither erroneous nor prejudicial to the interest of the revenue. The learned CIT further failed to appreciate that the assessment order passed by the AO was pursuant to the directions of the Dispute Resolution Panel-2, Mumbai and hence, was with valid jurisdiction. 1.2 On the facts and in the circumstances of the case and in law, the learned CIT has legally erred in setting aside the assessment order passed by the AO and directing him to withdraw the deduction claimed by the Appellant under Section 10A and 10B of the Act. The learned CIT failed to appreciate that the issue involved is debatable or has been examined by the AO. 2. Without prejudice to the above, on the facts and circumstances of the case and in law, the CIT erred in not allowing deduction under Section 10A and 10B of the Act on suo-moto Transfer Pricing (`TP') adjustments. 3. On the facts and in t....
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.... the assessee was selected for scrutiny assessment u/s 143(2) of the Act. As the assessee had during the year entered into international transactions with its Associate Enterprises (AEs), therefore, a reference u/s 92C(1) of the Act was made to the Addl. CIT(Transfer Pricing)-II(4), Mumbai (hereinafter referred to as "TPO"), for determining the arm's length price ("ALP") of such transactions. The TPO passed an order u/s 92CA(3), dated 30.01.2013, wherein he proposed a Transfer Pricing adjustment of Rs. 15558,48,96,677/-. After receiving the order passed by the TPO u/s 92CA(3) of the Act, dated 30.01.2013, the A.O passed a draft assessment order u/s 143(3) r.w.s 144C(1) of the Act, dated 28.03.2013, wherein he proposed to assess the income of the assessee at Rs. 15109,77,64,680/- (after setting off the B/forward losses). Since the assessee company during the year had suffered an overall loss, therefore, the A.O in the draft assessment order had inter alia proposed to disallow the assessee's claim for deductions u/ss. 10A and 10B of the Act. Aggrieved, the assessee filed objections with the Dispute Resolution Panel-2, Mumbai. 3. The DRP vide its directions u/s 144C(5), dated 21.01....
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....0A was irregular ab initio. On the basis of his aforesaid observation, the CIT recomputed the deduction admissible u/s 10B i.e after exclusion of the deemed income, and observed that after excluding the amount of deemed mark up there was a loss of (Rs. 4,34,17,343/-) in the hands of the eligible unit. Resultantly, the CIT concluded that the A.O while framing the assessment had vide his order passed u/s. u/s 143(3) r.w.s 144C(13), dated 27.02.2015 wrongly allowed the deduction u/s 10A of Rs. 15,14,1483/-, as claimed by the assessee. On a similar footing, it was observed by the CIT that the assessee company had added an amount of Rs. 35,61,05,259/- towards deemed mark up of 10% of the transactions with the related overseas parties. In the backdrop of the aforesaid fact, the CIT held a conviction that the addition on account of deemed mark up was made by the assessee in order to bring the international transactions within arm's length price. Observing, that as per 'provisio' to Sec. 92C(4) of the Act, the aforesaid addition made by the assessee would not qualify for deduction u/s 10B of the Act, the CIT was of the view that inclusion of the said deemed mark up for computing the deduct....
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....the TPO"; and (v). that the allowing of the assessee's claim for deductions u/ss. 10A and 10B was supported by the judgment of the Hon'ble High Court of Karnataka in the case of CIT Vs. I-Gate Global Solutions Ltd. (ITA No. 452/2008), dated 17.06.2014, and the orders of the Tribunal viz. Sumtotal Systems India Pvt. Ltd. Vs. DCIT (ITA No. 255/Hyd/20015); dated 23.09.2016 and Austin Medical Solutions Pvt. Ltd. Vs. ITO [IT(TP) A. No. 542/Bang/2012), dated 17.07.2016. However, the CIT did not find favor with the submissions of the assessee and directed the A.O to withdraw the aforesaid deductions in light of the observations recorded in the order passed u/s 263 of the Act. 6. Aggrieved, the assessee has challenged the order passed by the CIT in appeal before us. The ld. Authorised Representative (for short "A.R") for the assessee at the very outset of hearing of the appeal submitted that the CIT had wrongly assumed jurisdiction and revised the order u/s 263 of the Act. It was submitted by the ld. A.R that the CIT had misconceived the scope and gamut of the 'proviso' to Sec. 92C(4) of the Act. It was submitted by him that the 'proviso' to sub-section (4) contemplated denial of the tax-....
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....ubmitted by the ld. A.R that the matter was squarely covered by the aforesaid order passed by the Tribunal in the assessee's own case. 7. Per contra, the ld. Departmental representative (for short 'D.R') relied on the order passed by the CIT u/s 263 of the Act. Further, drawing support from the orders of the Tribunal in the case of viz. (i). Agiligys I.T Services India Pvt. Ltd.; and (ii). Deloitte Consulting India Pvt. Ltd vs. ITO [ITA No. 157/Mum/2012) ,as had been relied upon by the CIT in his order passed u/s 263 of the Act, it was submitted by the ld. D.R that the 'proviso' to sub-section (4) of Sec. 92C was clearly triggered in the backdrop of the fact pattern of the case under consideration. 8. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record, as well as the judicial pronouncements relied upon by them. The limited issue involved in the present appeal is as to whether the CIT in exercise of his revisional jurisdiction u/s 263 was justified in law and the facts of the case in withdrawing the assessee's claim of deductions u/ss. 10A and 10B of the Act, to the extent the same wer....
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....e case of CIT Vs. I-Gate Global Solutions Ltd. (ITA No. 452/2008), dated 17.06.2014. In the said case, it was observed by the Hon'ble High Court that the A.O was in error in relying on Sec. 92C(4) to a case where the Arm's Length Price was determined by the assessee, whereas the said provision applied to a case where the Arm's Length Price was determined by the A.O. It was observed by the High Court, as under:. "6 In so far as substantial question of law No. 4 is concerned, the error committed by the Assessing Officer was relying on Section 92C(4) to a case where Arm's Length Price was determined by the assessee, whereas the said provision applies to a case where Arm's Length Price was determined by the Assessing authority, that mistake has been corrected by the tribunal, set aside the order passed by the Commissioner as well as the assessing authority." As such, the Hon'ble High Court vide its aforesaid order had concluded that the 'proviso' of Sec. 92C(4) would though be applicable in a case where the ALP was determined by the A.O, but the same cannot be extended to determination of the same by the assessee. Apart from that, we find that a similar view had been taken by the IT....
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....slodging the view taken by the A.O as regards the entitlement of the assessee towards deductions u/ss. 10A and 10B of the Act. 9. Resultantly, the order passed by the CIT u/s 263 of the Act is 'set aside' and that passed by the A.O u/s 143(3) r.w.s 144C(13), dated 27.02.2015 to the extent relatable to the issue under consideration is restored. 10. The appeal filed by the assessee is allowed. ITA No. 2299/MUM/2018 A.Y 2011-12 11. We shall now advert to the appeal of the for A.Y 2011-12, wherein the impugned order has been assailed before us on the following grounds:. "1. General 1.1 On the facts and in the circumstances of the case and in law, the learned CIT has legally erred in assuming jurisdiction under Section 263 of the Act. The learned CIT has failed to appreciate that the assessment order under Section 143(3) r.w.s 144C(13) passed by the Assessing Officer ('AO') was neither erroneous nor prejudicial to the interest of the revenue. The learned CIT further failed to appreciate that the assessment order passed by the AO was pursuant to the directions of the Dispute Resolution Panel-2, Mumbai and hence, was with valid jurisdiction. 1.2 On the facts and At ....
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....see had during the year entered into international transactions with its Associate Enterprises (AEs), therefore a reference u/s 92C(1) of the Act was made to the JCIT(Transfer Pricing)-4(1), Mumbai (hereinafter referred to as "TPO"), for determining the arm's length price ("ALP") of such transactions. The TPO passed an order u/s 92CA(3), dated 30.01.2015, wherein he proposed a Transfer Pricing adjustment of Rs. 231,97,25,209/-. After receiving the order passed by the TPO u/s 92CA(3) of the Act, dated 30.01.2013, the A.O passed a draft assessment order u/s 143(3) r.w.s 144C(1) of the Act, dated 02.03.2015, wherein he proposed an addition of Rs. 288,51,96,019/-. Since the assessee company during the year had suffered an overall loss, therefore, the A.O in the draft assessment order inter alia proposed to disallow the assessee's claim for deduction u/s 10B of the Act. Aggrieved, the assessee filed objections with the Dispute Resolution Panel-2, Mumbai. 13. The DRP vide its directions u/s 144C(5), dated 29.12.2015 disposed off the objections of the assessee. Observing, that the Hon'ble High Court of Bombay in the case of CIT Vs. Schmetz India (P) Ltd. (2012) 254 CTR 504 (Bom), had hel....
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..../-. It was thus noticed by the CIT, that the A.O while framing the assessment had vide his order passed u/s 143(3) r.w.s 144C(13), dated 26.02.2016 allowed an excess deduction u/s 10B of Rs. 39,73,71,366/- [Rs. 145,90,88,649/- (deduction u/s 10B allowed by the A.O) {minus} Rs. 106,17,17,283/- (deduction u/s 10B which as per the CIT was allowable to the assessee)]. 15. In the backdrop of his aforesaid observations, the CIT holding a prima facie view that the order passed by the A.O was erroneous in so far it was prejudicial to the interest of the revenue, issued a 'Show cause' notice (for short 'SCN') to the assessee u/s 263 of the Act, wherein it was called upon to explain as to why the assessment order passed by the A.O u/s 143(3) r.w.s 144C(13), dated 26.02.2016 may not be revised for withdrawing the excess deduction u/s 10B of Rs. 39,73,71,366/- that was wrongly allowed by the A.O. In reply, the assessee objected to the proposed withdrawal of deduction u/s 10B which was allowed by the A.O u/s. 10B of the Act, on multiple grounds viz. (i). that as the issue as regards the proposed denial of deduction u/s 10B by the A.O, vide his draft assessment order u/s 143(3) r.w.s 144C(1) of....