2024 (11) TMI 1520

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....essment years 2015-2016 and 2016-2017. Since the facts of the case and the issue involved are same, we are deciding these two appeals together by way of this consolidated order. For the sake of brevity are taking note of the facts of AY 2015-16. 2. The facts of the case are like that the assessee is a private limited company filed its income tax return on 30th November, 2015 claiming deduction u/s. 10AA of the Income-tax Act, 1961 ("the Act"). Thereafter, the case of the assessee was selected for scrutiny and assessment u/s. 143(3) of the Act has been framed. During the course of assessment proceedings, the learned Assessing Officer [AO] denied the deduction u/s. 10AA and also made disallowance u/s. 14A r.w. rule 8D and framed the assessme....

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....ustment made to ALP pursuant to APA is eligible for deduction u/s 10AA, though on the same issue, Revenue appeal is pending before apex court. 2. That the Ld.CIT (A) has erred in facts and in law by stating that all the investments in mutual funds were made during the year and also redeemed during the year and there is no opening balance or closing balance of mutual funds investments in the balance sheet which does not mean that the assessee did not incur any expenditure with respect to exempt income. Ld. CIT (A) has erred in deleting the addition made as per section 14A." 5. At the outset, the learned Departmental Representative fairly agreed that the issues involved in the present case are squarely covered by the judgment of the co-o....

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....al income of the assessee is enhanced after computation of income under this sub-section." 18. On a reading of the above proviso to Section 92C(4) of the Act, it may be noted that the Act specifically denies claim of deduction under section 10AA of the Act on any adjustment made by the Transfer Pricing Officer under Section 92CA of the Act. Thus, the taxpayer is not eligible to claim the deduction under Section 10AA of the Act on the enhanced income on account of TP adjustment made by the TPO. However, on the contrary, increased income on account of voluntary transfer pricing adjustment or ALP adjustment pursuant to APA, made by the assessee would be eligible for claiming deduction under section 10AA of the Act. 19. The allowability o....

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....laim deduction under section 10AA in respect of voluntary transfer pricing adjustment made on scientific basis in the computation of income in respect of Gurgaon SEZ unit as same was not hit by proviso to section 92C(4) of the Act. 22. The ITAT Bangalore in case of IBM India Pvt Ltd (59 CCH 260) dated 31 July 2020, following the decision of Pune Tribunal in case of DAR AL Handasah Consultants (Shair & partners) India Pvt Ltd (2020) 203 TTJ 0218 (Pune), has held that deduction under section 10AA of the Act has to be allowed on incremental income arisen pursuant to APA as per modified return filed under section 92CD of the Act as same is not hit by proviso to section 92C(4) of the Act. 23. Accordingly, in light of the above judicial pre....