TaxTMI 
TaxTMI 
2026 (6) TMI 1024
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....e case. 2. Whether in the facts and circumstances of the case Ld CIT(A) is correct in accepting the Assessee's contention regarding inclusion of Tata Elxsi Ltd, without considering the fact that assessee itself had rejected this company in it TP Study Report (Annexure 3 Page 43) considering it functionally different than assessee?" 3. The Ld. CIT(A) has erred in allowing Assessee's claim of deduction of Rs.37,07,40,112/- u/s 10AA of the Act in respect of three undertakings without appreciating the fact that the these units were formed by splitting up and reconstructing of the existing business as provided in section 10AA(4)(ii) of the I.T. Act, 1961. 4. The Ld. CIT(A) erred on the facts and circumstances of the case in directing to deleting the disallowance of Rs. 79,32,582/- and the consequent reduction made in the deduction' allowable u/s. 10A on account of DTM and onsite software development income without considering the facts that the assessee did not exercise control and supervision over the onsite work carried out at the clients premises and also onsite work carried out at the clients' premises was not referable to any STPs? ....
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....his regard, following facts are submitted: "Note on deduction u/s 10AA in respect of units of erstwhile iGATE Computer Systems Limited As submitted earlier, iGATE Computer Systems Limited (ICSL) is amalgamated with the assessee company w.e.f. 1st April, 2012. In case of ICSL, deduction u/s. 10A/10AA was denied during the course of assessment proceedings for earlier years. For A.Y. 2014-15, deduction u/s 10AA is claimed in respect of three undertakings of the erstwhile ICSL as under: Srl. No Unit Initial Year Year of deduction Profit for the year u/s 10AA 1 Noida SEZ-10AA Unit (ND SEZ and BP SEZ) 2009-10 Sixth 26,96,96,640 2 GNSEZ - 10AA Unit 2011-12 Fourth 7,76,59,851 3 PUSEZ 10AA Unit 2012-13 Third 5,18,12,148 Total 39,91,68,639 For A.Y. 2009-10, Pune ITAT has decided the matter in favour of ICSL and deduction u/s 10A/10AA as claimed by ICSL has been allowed. Similarly, in the appellate order for A.Y. 2012-13, the CIT(A) has allowed the deduction u/s 10A/10AA in respect of all the eligible units of ICSL, including the above three undertakings. ICSL ha....
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....company had concealed particulars of its income for A.Y. 2014-15. 4.1 Thus, AO has not specified how the impugned units were farmed by splitting up and reconstruction. AO has merely relied on earlier years order. 4.2 Ld. CIT(A) has deleted the addition by following the decision of ITAT Pune in assessee's own case for A.Y 2012-13. 4.3 Ld. DR has not brought to our notice any contrary findings and has not distinguished the decision of ITAT on facts. In the facts and circumstances of the case we uphold the order of Ld. CIT(A) on this issue. Accordingly, ground No. 3 of the revenue is dismissed. Ground No. 4-Deputation of Technical Manpower (DTM) : 5. The AO has recorded following facts regarding Deputation of Technical Manpower (DTM). H.5 The on-site offshore employee's strength was given by the assessee company as under: S. No. Particulars Offshore Onsite Total A Average number of employees 24665 330 24995 B Of the above nontechnical / support employees 981 130 1111 C Employees rendering ITES 3227 14 3241 D Employees rendering software development services 20457 186 20643 H....
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.... from the 100% onsite/DTM project executed from SEZ units. H.10 On the basis of above discussions Rs. 79,32,582/- is proposed to be reduced from the amount of deduction u/s. 10AA in the computation as per Annexure. Thus, the eligible profits for deduction u/s. 10AA will reduce by Rs. 79,32,582/-. Accordingly, penalty proceedings u/s. 271(1)(c) of the Act is proposed to be initiated separately in the case as the Company had concealed particulars of its income. 5.1 Ld. AR relied on the ITAT order for A.Y 2011-12 in assessee's own case. However for A.Y 2011-12 ITAT has relied on ITAT order in assessee's own case for A.Y 2007-08 in IT(TP) No. 286/BANG/2013. 5.2 It is observed that for A.Y 2007-08 assessee has filed copies of the agreements to establish the direct nexus between the onsite development of computer software with the development of software from eligible under takings. Based on those facts after anylizing the relevant agreement ITAT concluded that there was a direct link between the eligible under takings and the onsite development of computer software or onsite development services. 5.3 Ld. DR has accepted that the issue is covered against department. Ld.....
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....challenged by the revenue before the Supreme Court by fling SLP but the SLP was dismissed. 10. In the light of the above, we hold that no substantial question of law arises from the order of the Tribunal. The appeal is devoid of merit and is accordingly, dismissed. " Unquote. 6.4 The ITAT Pune Bench in the case of Kumar Properties and Real Estate (P.) Ltd. Vs DCIT, [2021] 128 taxmann.com 364 (Pune - Trib.) has held as under : Quote, "Having heard the rival submissions gone through the relevant material on record, it is found as an admitted position that the assessee, in fact, did not earn any exempt income from the investment made in Marigold Properties during the year under consideration. The Hon'ble Delhi High Court in Cheminvest Ltd. v. CIT [2015] 61 taxmann.com 118/234 Taxman 761/378 ITR 33 has held that if there is no exempt income, there can be no question of making any disallowance u/s 14A of the Act. Similar view has been taken by the Hon'ble Delhi High Court in CIT v. Holcim India (P.) Ltd. [2015] 57 taxmann.com 28. More recently the Hon'ble jurisdictional High Court in Pr. CIT v. Kohinoor Projects (P.) Ltd. [2021] 276 Taxman 180/[2020] 121....
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.... respect of goodwill. Accordingly Ground No. 7 raised by the revenue is dismissed. Ground No.8, FBT Paid in Australia 8. This issue has been decided by ITAT Pune in assessee's own case in ITA No. 1857 & 1935/Pun/2017, A.Y 2013-14 as under: Quote "16. Having heard both the sides and gone through the relevant material on record, it is seen that the Board, vide Circular No.8/2015, has opined that the prohibition for claiming deduction in respect of FBT does not apply in the computation of book profits u/s. 115JB and the same has to be allowed as deduction in such computation. We therefore countenance the view taken by the ld. CIT(A) on this score. The Department's ground No.8 is not allowed." Unquote. 8.1 Accordingly, we uphold the order of Ld. CIT(A) on this issue. In the result, ground No. 8 raised by the revenue is dismissed. Ground No. 9 9. The AO has disallowed an amount of Rs. 3,05,21,676/- paid to KPMG, EY regarding purchase of shares from Pan Asia, review of land related documents, delisting expenses. The AO treated these amounts as capital expenditure and hence disallowed. 9.1 The assessee contested only Rs. 3,10,170/- which were alleged to be delis....
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.... in its TP Report. b. erred in applying a filter of rejecting companies which followed a financial year other than April to March. c. applying a turnover filter for rejecting companies with a turnover of less than 1/10th and more than 10 times the Appellant's turnover disregarding the fact that the profitability of companies operating in the service industry is not dependent on its turnover and that margins of a risk mitigated service provider such as the Appellant are not dependent on scale or size of operations. d. Without prejudice to the above contention, erred in applying the turnover filter on the total software development services turnover of the Appellant instead of calculating 10 times higher & lower of the software development services turnover earned from the AEs. 5. In rejecting the comparable companies selected by the Appellant a. erred in disregarding the comparable companies selected by the Appellant for benchmarking the international transaction of provision of software development services, without appreciating the fact that the companies are functionally comparable to the activities undertaken by the Appellant. ....
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....xes paid in Japan for which credit under DTAA is not claimed 13. In respect of credit under DTAA for taxes paid in Japan: a) Not allowing credit under DTAA for certain taxes aggregating to Rs. 1,77,11,860/- paid in Japan. b) Without prejudice to above, alternatively, not allowing such taxes as deduction u/s 37(1) while computing total income. 14. In respect of amount of credit available under DTAA: Reducing the amount of credit available under DTAA by Rs. 2,30,27,348/- on account of proportion of deduction u/s 10AA. 15. In respect of brought forward MAT credit entitlement: Not allowing the set-off of brought forward MAT credit entitlement as claimed in the return of income of Rs. 40,80,70,704/-. C. General Ground 16. The Appellant craves leave to add to, withdraw or modify any of the grounds of objections at the time of hearing. Ground No. 1 to 8. 14. Ld. AR filed a note stating that Ground Nos. 1 to 8 raised by the assessee are not pressed as the TPO has passed the rectification order dated 25.04.2025 and after the rectification order the Ground Nos. 1 to 8 become infructuous. Assessee filed a l....
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....idered the facts of the case as well as the reply of the appellant. Sum total of submission is that an amount of Rs. 3 Crores out of Rs. 5,79,72,564/- disallowed by the AO relates to the head "Merger and reorganization expenses" that is already submitted in the disallowance by the appellant in its computation of income filed along with the return of Income. This is a case of double disallowance. There rest Rs. 2,79,72,564/- pertains to current year input credit and earlier year input credit written off. The AO is directed to verify the claim of double disallowance and the current year rates and taxes claim. However, before doing so, the AO will be entitled to verify the arithmetical accuracy of the claim. Subject to the above remarks, the ground is treated as allowed for statistical purposes". Unquote 17.1 Ld. AR during the hearing has submitted a written note on his pleading on this issue, which is reproduced here as under: Quote "Out of the above, INR 30,000,000 pertaining to merger and re-org expenses have already been disallowed by the assessee company which computing the deduction u/s 35DD of the Act, in its tax computation. As such, the only prior period expenses ....
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.... 3,300 23,900 27,200 Total 41,30,300 13,42,700 54,73,000 Equivalent INR 35,40,313 18.1 Assessee claimed an expenditure u/s 37 of the Act. This issue is covered in favour of the assessee by the decision of Coordinate Bench of ITAT in assessee's own case for A.Y 2013-14 (supra), the relevant portion of the same is extracted below: Quote "30. The first objection of the Department is that the ld. CIT(A) erred in directing the AO to allow deduction under section 37(1) of the Act in respect of the taxes paid in Japan, which is the first part of the foreign tax credit as discussed above. The ld. CIT(A) directed to allow deduction u/s. 37(1) in respect of Inhabitant tax, Enterprise tax etc., paid in Japan. Since such a deduction is in respect of taxes for which no benefit of foreign tax credit has been allowed in terms of section 90/91 of the Act, the same has been rightly allowed u/s. 37(1) of the Act in view of Explanation 1 to section 40(a)(ii) of the Act as discussed supra in the context of Fringe benefit tax paid in Australia. The grievance of the Revenue on this count is, ergo, repelled." Unquote 18.2 Respectfully foll....