TaxTMI 
TaxTMI 
2014 (4) TMI 1336
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.... of the case. 2. The learned Commissioner of Income-tax (Appeals) grossly erred in deleting the addition which had been made by the Assessing Officer after demonstrating that the profit shown from the eligible unit is more than normal profit. 3. The learned Commissioner of Income-tax (Appeals) grossly erred in deleting the addition made by the Assessing Officer when the assessee had not allocated any cost on account of remuneration paid to the directors to the unit eligible for deduction u/s 10A. 4. The learned Commissioner of Income-tax (Appeals) grossly erred in holding that the Assessing Officer ought to have asked the assessee "to benchmark with references to comparable cases, to arrive at the conclusion that ....
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....rounds of appeal during the course of the appellate proceedings before the Hon'ble Tribunal. 2. The assessee software company is engaged primarily in providing software products and services, especially in storage, virtualization, cloud computing and networking domain. The company has a corporate division and 3 other units - unit-l (whose eligibility for section 10A deduction had already expired), unit II (in respect of which 10A deduction was claimed during the impugned assessment year) and SEZ unit, which was almost non-operational during the year. It has maintained unit wise profit and loss accounts, which were furnished to the Assessing Officer during scrutiny proceedings. The Assessing Officer called for details of salary expend....
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....n behalf of assessee and having considered the same, the CIT(A) has granted the relief to the assessee. The same has been opposed before us on behalf of revenue, inter alia, submitted that the CIT(A) erred in deleting the addition which has been made by the Assessing Officer after demonstrating that the profit shown from the eligible unit is more than normal profit. The assessee has not allocated any cost on account of remuneration paid to the directors to the unit eligible for deduction u/s. 10A and ultimately requested to set aside the order of CIT(A). On the other hand, the learned Authorized Representative has supported the order of CIT(A). 4. After going through the rival submissions and material on record, we find that the assessee....
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.... profit level - The MAP profit level for transactions between India and USA authorities was decided at 17.50% for some earlier period. Assessee's earned profit is within close vicinity of the said profits. d) Safe-harbor norms - The profit level indicated therein was about 20% for the IT enabled services. Same level is now being laid down. 4.1 According to the Assessing Officer, the salary paid to the two key directors is less than the salary paid to other executives. Thereafter, he has drawn notional Profit & Loss Account by considering the typical salaries of other employees and proceeded to invoke provisions of 10A(7) r.w.s. 80IA(10). As per the said section 80IA(10), exercise of re-computation of profit is to be carried ....
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.... are not rearranged in anyway so that more than ordinary profits could be earned. 4.3 We find that the Hon'ble Karnataka High Court in the case of CIT & Another Vs. H.P. Global Soft Ltd. (2012) 342 ITR 263 (Kar), wherein, it was found that the profit margin as revealed by the assessee is a reasonable profit in comparison to other similar units. The Assessing Officer having failed to show that is it a course of business, so arranged as to result in inflated profit provisions of section 10I(9) could not be to reduce the deduction under the provisions of section 10A. We also found that ITAT Mumbai 'D' Bench in the case of ITO Vs. Novel Consumer Products (P) Ltd. (2006) 7 SOT 615 (Mumbai), wherein the Bench held that in the absence of any ef....