TaxTMI 
TaxTMI 
2017 (9) TMI 2058
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....extent prejudicial to the Appellant, is bad in law, contrary to the facts and circumstances of the case and liable to be quashed. 2. The learned AO/DRP erred on facts and in law in not appreciating the fact that the Appellant had prepared the Transfer Pricing ('TP') documentation bona fide and in good faith in compliance with the Income-tax Act,1961 ('the Act') and Income-tax Rules, 1962 ('the Rules') and in upholding the rejection of the TP documentation by the Joint Commissioner of Income-tax (Transfer Pricing) -II, Bangalore ('TPO'). 3. The learned AO/DRP erred in law and on facts in upholding the act of the learned TPO in considering secret data (i.e. collecting information, which was not available in the public domain) by exercising powers granted to him under section 133(6) of the Act. 4. The learned AO/DRP erred in law and on facts in (i) disregarding application of multiple year/ prior year data as used by the Appellant in the TP documentation, that was available as on the date of preparing the TP documentation and (ii) holding that only current year (i.e. financial year 2007-08) data for comparable companies should be used....
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....RP erred in holding that continuance of tax holiday under section 10A is only restricted to a case of amalgamation or a demerger. 8. (a) That on the facts and circumstances of the case, the learned Assessing Officer and the learned DRP erred denying deduction under section 10A of the Act in respect of Titanium STPI Unit. (b) That the learned Assessing Officer and the learned DRP failed to appreciate that Titanium unit is a newly established undertaking and has received STPI approval and hence is eligible for deduction under section 10A of the Act. (c) That the learned Assessing Officer and the learned DRP erred in holding that since the Titanium unit is an extension of UB Plaza unit no deduction could be allowed under section IDA of the Act to Titanium unit as UB Plaza unit itself is not eligible for deduction under section 10A of the Act. (d) That the learned Assessing Officer and the learned DRP failed to appreciate the fact that Titanium unit is a new unit in its entirety and fulfills all the conditions prescribed for claiming deduction under section 10A of the Act. (e) That the learned Assessing Officer and the learned DRP failed to ....
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....At the very outset, it was submitted by ld. DR of revenue that the order of DRP in respect of TP issue is very cryptic and in this regard, our attention was drawn to para no. 9.1 and 9.2 of the directions of DRP available on page no. 13 of DRP directions. She submitted that in view of this, the TP matter should be restored back to the file of DRP for passing a speaking and reasoned order. The ld. AR of assessee raised various arguments and filed written submissions also but in our considered opinion, the order of a quasi judicial authority should be a speaking and reasoned order and in the absence of a speaking and reasoned order of DRP, we feel it proper to restore the matter back to the file of DRP for fresh decision by way of a speaking and reasoned order and therefore, various arguments and written submissions of ld. AR of assessee do not require any consideration at the present stage in respect of the TP issue involved in the present appeal. We set aside the assessment order on TP issue and restore the TP matter back to the file of DRP for fresh decision by way of a speaking and reasoned order. 3. Regarding the issue in respect of deduction u/s. 10A as per the ground nos. 7....
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....esent year. Following this tribunal order for Assessment Year 2007-08, we decide this issue in favour of the assessee and accordingly, ground no. 7 of assessee's appeal is allowed. 6. Regarding ground no. 8 of assessee's appeal, it was submitted by ld. AR of assessee that the AO discussed this issue on page no. 8 of the assessment order. He pointed out that as per the AO, the Titanium Unit of the assessee company is extension of UB Plaza Unit and since deduction u/s. 10A was disallowed by AO in respect of UB Plaza Unit, he disallowed the claim of deduction u/s. 10A in respect of Titanium Unit also. He submitted that in view of the tribunal order in Assessment Year 2007-08 as per which the assessee is eligible for deduction u/s. 10A in respect of UB Plaza Unit, deduction should be allowed for Titanium Unit also. He also submitted that in para 12.5 of the assessment order, it is also an objection of the AO that the assessee company had not been able to establish that the Titanium Unit is a separate unit by furnishing a Asset Schedule of the Titanium Unit to establish that it fulfills the provisions of section 10A(2) of the I.T. Act, 1961 along with a separate approval from the Sof....
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....n is allowable to assessee u/s. 10A for Titanium Unit also on this basis that this unit is expansion of UB Plaza Unit. Ground no. 8 is partly allowed. 8. Regarding ground no. 9, it was agreed by both sides that ground no. 9(C) is covered in favour of the assessee by the judgment of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Tata Elxsi Ltd. as reported in 349 ITR 98 and it was agreed by ld. AR of assessee that if the issue involved in ground no. 9(C) is decided in favour of the assessee then remaining part of ground no. 9 is not pressed. 9. We have considered the rival submissions and we hold that the expenses reduced by the AO from export turnover should be reduced from total turnover for the purpose of computing deduction allowable to assessee u/s. 10A because this was held by Hon'ble Karnataka High Court in the case of CIT Vs. Tata Elxsi Ltd. (supra) that total turnover is sum of total of export turnover and domestic turnover and therefore, if any amount is reduced from export turnover then the total turnover also gets reduced by the same amount automatically. Accordingly ground no. 9(C) is allowed and the remaining part of ground no. 9 is rejected as not ....
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....l is required while determining the Arm's Length Price of the international transactions of the Appellant, but for an adjustment towards differences in the working capital position between the Appellant and the entrepreneurial comparable companies. 4. That the learned AO and the learned Panel erred both in facts and law in confirming the action of the learned TPO of making an adjustment to the transfer price of the Appellant by Rs.132,271,085 holding that the international transactions do not satisfy the arm's length principle envisaged under the Act and in doing so grossly erred in: 4.1. Upholding the act of the learned TPO of collecting selective information of the companies by exercising power granted to him under section 133(6) of the Act, that was not available to the Appellant in the public domain and relying on the same for comparability purposes in denial of natural justice to be observed in the assessment proceedings. 4.2. Disregarding application of multiple year/ prior year data as used by the Appellant in the TP documentation and holding that current year (i.e. Financial Year 2005-06) data for comparable companies should be used despit....
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....l Services Ltd. ought to be excluded from the list of comparables to the Appellant's information technology enabled services segment as its related party transactions to sales in FY 2005-06 are in excess of 15%. Other than Transfer Pricing Related 5. That the learned AO erred in not allowing deduction under section 10A of the Act of the entire profits of the undertaking registered with the Software Technology Park of India. 6. That on the facts and in the circumstances of the case, the learned AO erred in reducing the telecommunication expenses of Rs 52,267,275 from 'export turnover' while computing deduction under section 10A of the Act as 'expenditure attributable to delivery of software outside India' under Explanation 2(iv) to Section 10A of the Act. 7. That on the facts and in the circumstances of the case. the learned AO erred in considering the insurance expenses of Rs 5,925,140, which comprises of staff medical insurance and insurance on fixed assets, as 'expenditure attributable to delivery of software outside India' under Explanation 2(iv) to Section 10A of the Act and reducing the same from 'export turnover&....
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....e involved in the present appeal. We set aside the assessment order on TP issue and restore the TP matter back to the file of DRP for fresh decision by way of a speaking and reasoned order. 14. Regarding corporate tax issues raised by the assessee as per ground nos. 5 to 12, it was submitted that in these grounds, only two aspects of the dispute in respect of allowability of deduction u/s. 10A of the I.T. Act, 1961 are involved. 15. The first aspect as per ground nos. 5 to 10 is covered in favour of the assessee by the judgment of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Tata Elxsi Ltd.(supra) as per which, it was held that total turnover is sum of total of export turnover and domestic turnover and therefore, if any amount is reduced from export turnover then the total turnover also gets reduced by the same amount automatically and if this aspect is decided in favour of the assessee then the remaining aspects are not pressed by the assessee. 16. Regarding ground no. 11, it was submitted that this issue is covered in favour of the assessee by the judgment of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Yokogawa India Ltd. as reported in 3....