2022 (7) TMI 784

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....als)-28 in an appeal pending before it against assessment order dated 31.08.2016 passed u/s. 143(3) of the Income Tax Act 1961 (herein after referred as the Act) by ITO, Ward-16(3), New Delhi. 2. The facts in brief are assessee is a company engaged in the business of export of data processing services and registered as Special Economic Zone unit. It filed return of income for the assessment year 2014-15 declaring export turn over of Rs. 10,53,51,894/-. The case of assessee was taken up for scrutiny and notice u/s. 43(2) followed by notice u/s. 42(1) was issued by the Ld. AO who by impugned assessment dated 31.08.2016 recalculated the book profits to Rs. 2,37,31,799/- and raised demand of Rs. 3,38,330/- while considering the deduction u/s....

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....tion under section 10AA of the Act and including the same as income under the head 'other sources' without appreciating the fact that multiple judicial precedents have held that interest on deposits should be included as part of eligible profits for the purpose of computation of deduction under section 10A (erstwhile section 10AA of the Act) of the Act. 6. The learned CIT(A) has erred in dismissing the ground of the Appellant that the method for computation of deduction under section 10AA of the Act adopted by the learned AO is erroneous. The Appellant craves leave to add, supplement, amend, delete or otherwise modify any of the grounds stated hereinabove at the time of hearing." 4. Heard and perused the record.....

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....ter on record it can be observed that Ld. CIT(A) has given finding of an admitted fact of close connection between the assessee company and its associate enterprises. The Ld. CIT(A) has also observed that transaction between the assessee and its associate have been arranged in such a manner that the transactions have produced the assessee more than ordinary profits which might be expected to arise in such eligible business. On these two assumed admitted facts the Ld. CIT(A) has upheld the order of Ld. AO. 6.1. The Tribunal is of the considered opinion that there can be no assumption of an arrangement as an admitted fact. It is a matter of fact and initial burden is on the Revenue to indicate from some reliable evidence that the course of....

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....esult of the Transfer Pricing assessment can at best be taken as an indicator for the Assessing Officer to investigate as to whether or not there exists any arrangement which has resulted in more than ordinary profits qua the requirements of section 10A(7) r.w.s. 80-IA(10) of the Act. Even if it is accepted that the difference between the operating margins of the assessee and the comparables show existence of more than the ordinary profits in the hands of the assessee, so however, it was still imperative for the Assessing Officer to establish on the basis of substantive evidence and corroborative material that qua section 10A r.w.s. 80-IA(10) of the Act, the course of business between the assessee and the associated enterprises is so arrang....