TaxTMI 
TaxTMI 
2020 (11) TMI 36
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....ollowing grounds of appeal: I. Disallowance of Taxes paid overseas to the local/ state provincial authorities ("State Taxes") - Rs. 21,73,23,854 1.1 On facts and in circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) (hereinafter referred to as "the Id. CIT(A)") erred in disallowing deduction of Rs. 21,73,23,854 being "State Taxes" paid overseas on the ground that the payment of "State Taxes" cannot be allowed under the provisions of section 40(a)(ii) of the Income tax Act, 1961 ("the Act") 1.2 Without prejudice to the above, the id. CIT (A) erred in law in not adjudicating that the "State Taxes" paid in the USA, as eligible for the double taxation relief under the provisions of section 90 or 91 of the Act if it is held that the payment of State Taxes is not allowable as deduction. 2. Advertisement expenditure 2.1 On facts and in circumstances of the case and in law, the Id. CIT (A) erred in treating the advertisement expenditure incurred by the Appellant in respect of experience certainly campaign amounting to Rs. 1,36,46,187 crore as an intangible asset instead of treating it as revenue expenditure. ....
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....n accordance with the provisions of Section 92CA(1) of the Act. 4.2.4 The transfer pricing adjustments are contrary to the principles laid down by the Hon'ble Mumbai Tribunal in the Appellant's own case for the A.Y. 2005-06 (DCIT vs. Tata Consultancy Services Limited) and therefore are required to be quashed and deleted. Further, on facts and circumstances of the case and in law, the Ld. CIT (A) erred in not following the principles so laid down and concluding that the above Mumbai Tribunal decision is inconclusive 5. Provision of software consultancy services 5.1 Re-characterization of international transaction The Id. CIT(A) erred in law and on facts of the case in not accepting the Appellant as the tested party even though the international transaction during the year under reference was provision of services by the Appellant to its AEs. 5.2 Disregarding the legally binding agreements between the Appellant and its AEs The Id. CIT(A) erred in law and on facts, in disregarding the contractual terms of the legally binding agreement/s between the Appellant and the AE(s). 5.3 Rejection of the functional and econom....
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....h the lease guarantee was provided. 8. The Appellant submits that each ground of appeal is without prejudice to one another. 9. The Appellant craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal. 2. Assessee vide its application dated 10.0.2020 has raised following additional grounds of appeal. "On facts and circumstances of the case and in law, the education cess paid by the appellant during AY 2011-12 being not covered by definition of tax under section 40(a)(ii) of the IT Act shall be allowed as a deduction from its income. 3. The revenue in its appeal in ITA No. 1207/Mum/2018 has raised following grounds of appeal: 1. On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in allowing software expenses amounting to Rs. 88,64,96,865/- u/s 40(a)(i) of the Act, on account of non-deduction of TDS u/s 195 of the Act. 2. On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in allowing the disallowance made by the AO u/s 14A of the Act without appreciating the fact that R....
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....ned by TPO. 11. On the facts and in circumstance of the case and in law, the Ld CIT(A) has erred in following the decision of AY 2009-10 wherein it was held to work out margin (OP/OC) of AE including cost incurred on (offshore) transaction assigned to TCS as against the decision of the TPO of adding margin only on cost incurred by the AE (excluding cost incurred by TCS) though it was held by CIT(A) himself in para 19.5 of order for AY 2009-10 that AE's are engaged in marketing and distribution liable to be compensated for limited function. 12. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in following the decision of AY 2009-10 and in rejecting comparables on the ground that third party cost is not excluded in comparables cases. 13. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in following the decision of AY 2009-10 and in directing to charge guarantee commission on amount excluding approximately 58% of the revenue from offshore activities carried out by TCS though it was integral part of total contract amount of AE. 14. On the facts and circumstances of the case and in law, the....
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....41,04,81,573/-, Corporate guarantee of Rs. 38,47,16,761/- and Interest on over valuation of equity shares of subsidiaries of Rs. 1,71,08,999/-, thereby suggested adjustment of Rs. 1213.93 Crore in its report dated 27.01.2014. The Assessing Officer on receipt of report of TPO passed the draft assessment order under section 143(3) r.w.s. 144C(3). The Assessing Officer while passing the draft assessment order also made various addition/disallowance on corporate tax issues. The copy of draft assessment order was served upon the assessee. The assessee instead of filing objection before the Dispute Resolution Panel (DRP), exercised its option for filing appeal before the ld. CIT(A). The ld. CIT(A) after considering the facts and the submission placed by assessee passed the impugned order dated 24.11.2017 granting partial relief to the assessee. Thereby, aggrieved further the assessee has filed its appeal, similarly the revenue has also filed its cross appeal by raising various grounds of appeal, which we have recorded above. 5. The assessee vide its application dated 10.01.2020 also raised additional ground of appeal which, we have also referred above. In the application for raising a....
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....d even at the stage of mining and so a cess levied on the basis of profit of mine would not be deductable even though the assessee may not be selling the Ore in the State. The ld. DR further submits that the Hon'ble Rajasthan High Court in Case of Chambal Fertilizers (supra) has not considered the decision of Hon'ble Supreme Court in case of Simith Kline & French India Ltd. [(85 Taxman 683 (SC)] in context of disallowance of surtax under section 40(a)(ii) of the Act. The Hon'ble Supreme Court held that surtax was not allowable under section 40(a)(ii). The ld. DR submits that Hon'ble Supreme Court also affirmed the decision of Hon'ble Bombay High Court in Lubrizol India Ltd. (54 Taxman 363 (Bom). The ld DR further submits that Bombay High Court has not considered the decision of Supreme Court in Smith Kline and French (supra) and thus, the decision of Bombay High Court in Sesa Goa Ltd in perincuriam to that extent. 8. In the rejoinder submission, the ld.AR of the assessee submits that this issue about the deduction of education cess is no more res-Integra as has been settled by Hon'ble jurisdictional High Court in case of Sesa Goa (supra). The decision of Hon'ble jurisdictional H....
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....han High Court in Chambal Fertilizers (supra) held that Education Cess is allowable deduction. We instead of going further in various submissions of the parties are of the view that after the binding decision of jurisdictional high Court in Sesa Goa Ltd (supra), the issue of deduction of education cess in no more res-integra. Therefore, considering the binding decision of Hon'ble jurisdictional High Court and the fact that no new facts are necessary to be brought on record for considering the additional ground of appeal on merit. Thus, the additional ground of appeal is admitted. 10. Further considering the fact that the assessee has raised additional ground of appeal for the first time before this Tribunal, therefore, this issue is restored back to the file of Assessing Officer to consider it on merit in accordance with the decision of Hon'ble Bombay High Court in Sesa Goa Ltd. (supra) and allow appropriate relief/deduction with regard to Education Cess to the assessee in accordance with law. We are also in agreement with the submissions of the ld AR for the assessee that the income tax is chargeable at the rate specified in Part-I of First Schedule and such tax shall be increa....
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....ect of the State taxes paid overseas, the assessee is not eligible to claim relief under section 90 or 91 of the Act, it will not be covered under section 40(a)(ii) of the Act. On a perusal of provisions of sub-section (43) of section 2 of the Act, it becomes clear that the term "tax" has been defined to mean any tax paid under the provisions of the Act. Section 40(a)(ii) of the Act says that any rate or taxes levied on the profits or gain in any business or profession would not be allowable as deduction. Explanation-1 to section 40(a)(ii) of the Act inserted by the Finance Act, 2006, w.e.f. 1st April 2006, further clarifies that any sum eligible for relief of tax either under section 90 or 91 of the Act would not be allowable as deduction under section 40(a)(ii) of the Act. It is the say of the assessee that the tax eligible for relief under section 90 of the Act are only those taxes which are levied by Federal / Central Government and not by any local authority of State, City or County. Thus, it is ineligible for any relief under section 90 of the Act. The aforesaid submissions of leaned Sr. Counsel for the assessee, prima facie, is acceptable if one has to strictly go by the mea....
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....is ground of appeal is allowed similar directions. 16. Ground No.2 of assessee's appeal relates to Advertisement Expenses. The ld. AR of the assessee submits that expenses incurred in respect of advertisement in newspaper/ Magazine in respect Experience Certainty Campaign which is routinely incurred for the ongoing business and not in the nature of Brand Building. The ld. AR of the assessee further submits that this issue is covered in favour of assessee in assessee's own case for A.Y. 2009-10 in ITA No. 5317/Mum/2016. 17. On the other hand, the ld. DR for the revenue supported the order of lower authorities. 18. We have considered the submission of both the parties and perused the order of lower authority and the decision of Tribunal in earlier years. We have noted that on identical grounds of appeal, the co-ordinate bench of Tribunal in assessee's own case for A.Y. 2009-10 passed the following order: 23. We have considered rival submissions and perused the material on record. We have also carefully examined the case laws cited before us. On a detailed analysis of facts on record, we have noted that the reasoning of the Assessing Officer that the expenditure was ....
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....n after providing reasonable opportunity of being heard to the assessee. We make it clear, our aforesaid direction is only with regard to the experience certainty expenditure of Rs. 5.28 crore. The decision of learned Commissioner (Appeals) on this issue is modified to this extent only. 19. Considering the decision of Tribunal in appeal for AY 2009-10 on similar grounds of appeal, wherein neither variations in facts nor any contrary law is brought to our notice, hence, this ground of appeal is allowed similar directions. In the result this ground of appeal is allowed for statistical purpose. 20. Ground No.3 relates to foreign tax credit in respect of income pertaining to section 10A/10AA eligible units in India. The ld. AR of the assessee submits that foreign tax credit should also be provided for taxes paid in overseas jurisdiction, in respect of section 10A/10AA eligible income in India, as per the tax credit provisions of respective DTAA. Even under MAT computation, the assessee should be allowed full credit for taxes paid overseas in respect of 10A/10AA income. The ld. AR of the assessee further submits that this issue is covered in favour of assessee in assessee's own ca....
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.... would only be applicable under Indo-US DTAA and would not be applicable to other DTAA countries and non-DTAA countries. On a careful reading of the decision of the Hon'ble Karnataka High Court in Wipro Ltd. (supra), it is noted, while dealing with identical issue the Hon'ble Court held that in the cases covered under section 90(1)(a)(ii) of the Act, it is not the case of income being subjected to tax or the assessee has paid tax on the income. The provision applies to a case where the income of the assessee is eligible to tax under the Act as well as in the corresponding law in force in the other country. The Court observed, though, income tax is chargeable under the Act, it is open to the Parliament to grant exemption under the Act from payment of tax for any specified period, normally, to incentivize the assessee the to carry on manufacturing activities or providing services. The Court thereafter referring to the treaty provisions with USA held that it is not the requirement of law that the assessee before he claims credit under the Indo-US convention or under the provision of the Act must pay tax in India on such income. The Court observed, as per the embargo placed in....
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....ue. 25. On the contrary the ld. DR for the revenue submitted that though similar grounds of appeal was decided by Tribunal in AY 2005-06, which was followed in AY 2009-10. The ld DR further submits that Explanation 4 to section 9(1)(vi) is only clarificatory in nature and the definition of the term Royalty emanates from Explanation-2 of section 9(1)(vi). 26. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities and the order of the Tribunal in earlier years. We have noted that ld CIT(A) while granting relief to the assessee followed the order of AY 2005-06 in ITA No. 7513/Mum/2010 dated 23.03.2017 (including order in MA order in order dated 23.03.2017). We have further seen that again in appeal for AY 2009-10 in ITA No. 5713/Mum/2016, the Tribunal on similar issues after detailed discussions passed the following order; "15. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. Undisputedly, in the year under consideration, the assessee has claimed deduction on account of expenditure incurred towards purchase of software products a....
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....d for trading purpose. In other words, the software acquired by the assessee is a necessary ingredient of the package being developed and supplied to the client and the assessee is prohibited by agreement to sell the software independently and they can only be supplied as a part of the package. As per section 9(1)(vi) of the Act, income in the nature of royalty shall be deemed to accrue or arise in India even in respect of a non-resident where the royalty is payable in respect of any right, property or information used or services utilized for the purpose of a business or profession carried on by a person in India or for the purpose of making or earning any income from any source in India. Pertinently, the expression "royalty" as per section 9(1)(vi) of the Act in its initial form did not specifically define computer software. By virtue of Explanation-3 to section 9(1)(vi) of the Act inserted by Finance Act w.e.f. 1st April 2010, computer software was defined to mean any computer program recorded on any disc, tape, perforated media or other information storage device and includes any such program or any customized electronic data. The scope of the term "royalty" was further explain....
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....ping in view the decision of the Hon'ble Jurisdictional High Court in NGC Network India Pvt. Ltd. (supra). Further, assessee's contention that Explanatino-4 to section 9(1)(vi) of the Act cannot be brought into play while applying section 40(a)(i) of the Act as it only refers to Explanation-2 to section 9(1)(vi) of the Act for the definition of royalty also has to be examined keeping in view the ratio laid down in NGC Networks India Pvt. Ltd. (supra). In case, the payment made by the assessee does not fit into the definition of royalty as provided under the relevant tax treaty, the assessee certainly would get the benefit of the tax treaty and in that event the liability under section 195 of the Act cannot be fastened on the assessee. Since, all these issues have not been properly examined and deliberated upon by the Departmental Authorities; we are inclined to restore the issue to the Assessing Officer for fresh adjudication in terms with our observations hereinabove. The Assessing Officer must decide the issue after providing reasonable opportunity of being heard to the assessee." 27. Considering the decision of Tribunal in appeal for AY 2009-10, this ground of appeal is r....
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....(i) of Rs. 53,18,829/- (suo moto offered by assessee), under Rule 8D(2)(ii) of Rs. 14,391/- and Rule 8D(2)(iii) of Rs. 13,59,44,725/-. We have noted that the assessee furnished the working of suo moto disallowance of Rs. 53,18,829/-, which consist of Rs. 35,92,649/- (salary of the employee who is looking after investment functions) and Rs. 17,26,180/- (overhead expenses other than his salary). The AO has not examined the correctness of the claim of the assessee. No reason as to why the AO is not satisfied with the working of the assessee except recording that the expenses are very meager. The ld CIT(A) after considering the submissions and the material placed before him directed to delete the disallowance including the disallowance of Rule 8D(iii). The ld DR for the revenue failed to bring any material in our notice to take the other view, no contrary decision is also brought to our notice. Thus, we affirm the order of ld CIT(A). In the result this ground of appeal is dismissed. 31. Ground No. 4 in revenues appeal relates advertisement expenses. The ld DR for the revenue supported the order of the AO. The ld DR further submits that the assessee incurred advertisement expenses....
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....mission payment within the tax net. The factual finding recorded by learned Commissioner (Appeals) that the non-resident agents have rendered the services in their respective countries and do not have either any business connection in India or any PE in India has not been controverted by the Revenue. Further, the nature of payment viz. commission has also not been disputed by the Revenue. That being the case, since the commission paid to the non-resident agents is not chargeable to tax in India at their hands, there is no necessity for the assessee to withhold tax under section 195(1) of the Act on such payment. Accordingly, we uphold the decision of learned Commissioner (Appeals) on this issue." 37. Considering the decision of Tribunal in appeal for AY 2009-10 on identical grounds of appeal, wherein neither variations in facts nor any contrary law is brought to our notice, hence, we uphold the order of ld CIT(A) on this ground of appeal. In the result this ground of appeal is dismissed. 38. Ground No. 7, 8 & 9 relates to method of computation of deduction under section 10A. The ld. DR for the revenue supported the order of AO. The ld DR for the revenue further submits that l....
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....,&12 in revenue's appeal relates to provisions of consultancy services. The ld DR for the revenue submits that the assessee provided consultancy services, develops and implements products for customers on all the matters covering implementation of computer software and hardware software system, management and data processing, information and data communication system. The assessee has several subsidiaries in India and abroad. The assessee has rendered software development, technical and consultancy services to its AE on the basis of specific request received from AEs. The assessee while making benchmarking considered itself as a tested party as limited risk bearing services provider, whereas the activities performed by the AEs are more complex in nature. The assessee adopted Transaction Net Margin Method (TNMM) as most appropriate method. The assessee had shown its profit level indicator (PLI) on the basis of operating profit/ operating cost (OP/OC) at 36.83%. The assessee selected 12 comparable companies with weighted average PLI of 12.13%. The assessee claimed margin earned from the AEs at 30.38% to net margin earned from both AEs and non-AEs. The TPO not accepted the PLI of the ....
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..... We have noted that the order of ld CIT(A) for AY 2009-10 has been affirmed by the Tribunal by passing the following order; "20. We have considered rival submissions and perused the material on record. We have also applied our mind to the decisions relied upon. From the grounds raised by the Revenue, the following three issues arise for consideration - (i) what should be the appropriate PLI; (ii) whether cost of outsourcing / sub-contracting to the TCS should be considered for computing the margin; and (iii) whether the alternative benchmarking furnished by the assessee by treating the AEs as tested party with comparables in the same geographical locations is acceptable. On a careful perusal of the facts on record as well as submissions of the learned Counsel for the parties in the course of hearing as well as in the written note, we are of the view that the decision of learned Commissioner (Appeals) on the aforesaid issues are unassailable. As regards the issue of appropriate PLI, we are of the view that considering the nature of activity performed by the assessee as well as the AEs, it cannot be said that the A.Es are not bearing any risk. Rather the facts on record rev....
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....ar lines by the Transfer Pricing Officer, hence, comparability condition fails. It is further relevant to observe, the alternative benchmarking furnished by the assessee before the Transfer Pricing Officer by considering the AEs in different geographic locations as tested parties with the comparables selected on the basis of the respective geographic locations furnished before the Transfer Pricing Officer were not properly considered. However, in course of appeal proceedings, the learned Commissioner (Appeals) examined them in detail and after a detailed analysis approved some comparables selected by the assessee and also added some new comparables. Whereas, the comparable selected by the Transfer Pricing Officer were not on the basis of any detailed search process. At least, no such analysis is either forthcoming from the order of the Transfer Pricing Officer or could be brought to our notice by learned Departmental Representative. On the contrary, on a thorough and careful reading of the impugned order of learned Commissioner (Appeals), we are of the view that learned Commissioner (Appeals) has taken pains to examine in detail the alternative benchmarking done by the ass....
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.... both the guarantee commissions were restricted to 0.5% per annum by following the decisions of Coordinate Bench and Bombay High Court in Everest Kanto Cylinder (2015) 58 taxmann.com 254 (Bom). The ld DR further submitted that the decision of Tribunal in AY 2009-10 and Bombay High Court in Everest Kanto Cylinder (Supra) is not acceptable to him as such rate is decided on the basis of facts for 2008-09, it cannot be taken as universal rate to be applied in all the cases and for subsequent years. Further the case law does not deal with the performance/ lease guarantee but deal with financial guarantee. 48. On the other hand the ld AR for the assessee submits that these grounds of appeal are covered by the decision of Tribunal in AY 2009-10, wherein the Tribunal followed the decision of Bombay High Court in Everest Kanto Cylinders (supra) and coordinate bench in WNS Global Services (P) ltd Vs ITO [2019] 103 taxmann.com 75 and directed the AO to charge guarantee commission @ 0.5% per annum for performance of lease as well as financial guarantee. The ld AR for the assessee further submits that the guarantee whether granted for performance or lease or financial lease are all effective....
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.... April 2002, provision of guarantee to AEs has to be considered as an international transaction. Different Benches of the Tribunal have also expressed similar view on the issue. Therefore, we hold that the provision of guarantee to the AEs is an international transaction. In fact, the aforesaid view has been expressed by the Co-ordinate Bench in WNS Global Services Pvt. Ltd. (supra). Therefore, following the aforesaid decision of the Co- ordinate Bench and the decision of the Hon'ble Jurisdictional High Court in Everest Canto Cylinders Ltd. (supra), we direct the Assessing Officer to charge guarantee commission @ 0.5% per annum both on performance / lease guarantee as well as financial guarantee." 50. On the basis of aforesaid factual discussion and considering the decision of Tribunal in appeal for AY 2009-10 on identical grounds of appeal, wherein all the contentions has been considered by the Tribunal, while affirming the order of ld CIT(A). No variation in facts nor any contrary law is brought to our notice, hence, we uphold the order of ld CIT(A) on this ground of appeal. In the result the grounds of appeal raised by the assessee are dismissed and the ground of appeal r....
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....estored by Tribunal to the file of AO with the following order; "37. We have considered rival submissions and perused the material on record. We have also carefully gone through the case law cited before us. Notably, right from the stage of transfer pricing proceeding itself the assessee has taken a stand that loans and advances to the AEs are in the nature of quasi equity, hence, cannot be treated as loan simpliciter. It is relevant to observe, the transfer pricing adjustment made on account of interest is in respect of loans advanced to four overseas AEs. From the details available on record, it is noticed that major portion of loans advanced to TCS Ibero America, is for acquisition of downstream subsidiary and about 20% of the advance was for working capital. Money advanced to TCS FNS Pty. Ltd., Australia, was purely for acquisition of downstream subsidiary. Similarly, advance to TCS Asia Pacific Pty. Ltd., is for acquisition of downstream subsidiary. Only the advance made to TCS Morocco is for working capital requirement. It is further noted, major part of advances made to TCS Ibero America, TCS FNS Pty. Ltd. and TCS Morocco have been converted to equity subsequently. ....
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.... AEs. He should also examine the applicability of the ratio laid down in the case of DLF Hotel Holdings Ltd. (supra) and any other case laws which may be cited before him. The assessee must be afforded reasonable opportunity of being heard. Ground is allowed for statistical purposes. " 54. Considering the order of the Tribunal in AY 2009-10, the ground No. 6 in revenues appeal is restored to the file of AO with similar direction. No doubt the AO before passing the order afresh shall grant opportunity of hearing to the assessee. 55. Now adverting to the issues raised by the revenue in its appeal with regard to excessive valuation paid for shares of AE. The ld AR for the assessee vehemently submitted before us that the ld CIT(A) while granting relief to the assessee has followed the decision of jurisdiction High Court in Vodafone India Services (P) ltd Vs UOI [2014] 50 taxmann.com 300 (Bom.) wherein it was held that share subscription is a capital subscription is a capital account transaction, therefore, no transfer pricing adjustment is warranted on such transactions. We have noted that the ld CIT(A) in his order has relied on the order of Bombay High Court in Vodafon....
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....vity as well as laid out wholly and exclusively for the purposes of the business. Thus, we direct the AO to allow the interest on delayed payment of State tax or Federal Taxes being compensatory in nature. In the result these grounds of appeal are allowed. 60. Ground No. 3 in assessee's appeal relates to disallowance under section 40(a)(i) on account of expenditure on imported software. We have noted that this ground of appeal is identical to the ground No. 1 of appeal raised by revenue in AY 2010-11, which we have dismissed by following the order of Tribunal for AY 2009-10, therefore, following the principles of consistency this ground of appeal is allowed with similar directions. In the result this ground of appeal is allowed. 61. Additional grounds of appeal raised by the assessee vide application dated 10.01.2020, with regard to deduction of education cess, is also identical with the additional ground of appeal raised by assessee in appeal for AY 2010-11, which we have admitted and restored to the file of AO, therefore, following the principles of consistency this ground of appeal is also admitted and restored to the file of AO with similar directions. In the result th....
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.... under section 10A was allowed to the assessee by Bombay High Court in AY 2005-06 in ITA No. 1778 of 2016 and by Tribunal in AY 2009-10. 65. We have considered the rival submissions of the parties and have gone through the orders of the lower authorities. We have also deliberated on the decision of Tribunal in AY 2005-06 and 2009-10. The assessee claimed deduction in respect of two units, (i) Chennai Sholinganallur STP and (ii) Delhi Noida I STP. The assessee claimed that its claim is duly supported by Audit Certificate and date of commencement of manufacture / production has been taken as the initial date and not the date of commencement of claim under section 10. the assessee relied on the CBDT vide Circular No. 1/2005 dated 06.01.2005, which clarifies that undertaking set up in Domestic Tariff area and deriving profit from export of computer software and which is subsequently converted in to export oriented unit (EOU) shall be eligible for a deduction under section10B for the remaining period of 10 consecutive years beginning with the assessment year relevant year relevant to the previous year in which undertaking begins to manufacture or produce computer software as a DTA....
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....ch the assessee was granted deduction under section 80HHE. Sub-section 5 of section 80 HHE of the Act, therefore, in the present case would have no applicability. We are fortified in our view by a division bench judge ent of Delhi High Court in the case of Commissioner Income Tax Vs. Damco Solutions Pvt. Ltd., reported in 200 Taxman page 26 in which it was observed as under:- "2. This stand of the Assessing Officer was repelled by the CIT (A) holding that the purpose of subsection (5) of section 80HHE was to avoid double benefit and that would not mean that if the assessee for a particular assessment year wanted relief only under section 10A of the Act that would be denied to the assessee. The only embargo was not to give relief under both the provisions." 7] Coming to the revenue's second objection to the assessee's claim of deduction under section 10A of the Act, we may recall, that the assessee had admittedly started manufacturing computer software for export prior to 1st April 2001, when section 10A was substituted by the Finance Act of 2000. It was under this amendment that the profit and gains derived by an undertaking from export of computer softwa....
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....nate Bench and the decision of the Hon'ble Jurisdictional High Court in assessee's own case as referred to above, we uphold the decision of learned Commissioner (Appeals) on the issue. This ground is dismissed. 66. Considering the decision of Bombay High Court in ITA No. 1778 of 2016 which was followed by Tribunal in AY 2009-10 as extracted above, thus, respectfully following the same, the grounds of raised by the revenue is dismissed. 67. Next grounds of appeal in revenue's appeal i.e., ground No. 3 to 6 which relates to disallowance under section 40 (a) (i) on account on non deduction of TDS on expenditure on commission to non-resident. We have noted that this ground of appeal is identical to the ground No. 5 to 6 of revenue's appeal for AY 2010-11, which we have dismissed on the basis of decision of Tribunal for AY 2009-10. Hence, following the principles of consistency these grounds of appeal are dismissed. 68. Next grounds of appeal in revenue's appeal i.e. ground No. 7 to 9 relates to method of computation of deduction under section 10A. We have noted that this ground of appeal is identical to the ground No. 7, 8 & 9 of revenue's appeal for AY 2010-11, which we h....
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....es of consistency these grounds of appeal are dismissed with similar observation. 73. Ground No. 17 & 18 in revenues appeal and ground No. 9.3 in assessee's appeal relates to provision of various guarantees. We have seen that these grounds of appeal are identical as ground No.13 to 16 in revenues appeal and 7.3 in assessee's appeal for AY 2010-11, which we have decided in earlier paras of this order. Thus, following the principles of consistency these grounds of appeal are by revenue is dismissed with similar observation and the ground in assessee's appeal is partly allowed. 74. Ground No. 16 in revenue's appeal relates to charging of guarantee fee on the entire amount. The ld. DR for the revenue supported the order of the AO/TPO. 75. On the other hand the ld. AR for the assessee for the performance guarantee submits that part of the activity was performed by the assessee itself while the remaining services were rendered by AE. If the performance guarantee is treated as chargeable services, the charges should be levied only on the component of services performed by the AE. With regard to lease guarantee, the ld. AR submits that part of the premises (40% during the year) wa....