2011 (5) TMI 509 - ITAT, MUMBAI

Deduction under section 10A - Adjustment of loss of 10A unit against profit of other units - Held that:- Prior to assessment year 2001-02 when section 10A was an exemption provision, section 10(6) provided restriction on set off and carried forward of business loss and unabsorbed depreciation - However subsequently, section 10(6) was amended by Finance Act 2003 with effect from assessment year 2001-02 and such restriction was withdrawn which was consistent with the new scheme of section 10A which is a deduction provision and not exemption provision from assessment year 2001-02 - Therefore the loss from 10A unit has to be adjusted against taxable profits of other units after deduction under section 10A has been allowed in respect of each eligible unit - As in Hindustan Unilever Ltd. (2010 (4) TMI 206 - BOMBAY HIGH COURT) in which it was held that deduction has to be allowed in respect of three eligible units and loss of the fourth 10A unit has to be set off against the normal business income - allow the claim of the assessee.

Deduction of data line cost from export turnover - the data line cost being the telecommunication expenses have been excluded by the Assessing Officer from the export turnover - case of the assessee that the telecommunication expenses had been incurred in the business of software development at the software undertakings of the assessee in India- Held that:- Claim of assessee has not been controverted by the AO by placing any material on record. The expenses incurred on development of software in India cannot be considered as expenses attributable to the delivery of computer software outside India. Therefore such expenses cannot be excluded from the export turnover and in case these are excluded, these have to be excluded from total turnover also following the judgment Gem Plus Jewellery India Ltd. (2010 (6) TMI 65 - BOMBAY HIGH COURT) and Sak Soft Ltd. (2009 (3) TMI 243 - ITAT MADRAS-D) - hold that these expenses are not to be excluded from the export turnover.

Transfer pricing adjustment - Held that:- The computation filed by the assessee before us prima facie, shows that the price charged by the assessee was within 5 per cent variation of the mean ALP and in such a case, no addition is required to be made - Therefore direct the Assessing Officer to recomputed the TP adjustment after allowing the benefit of plus/minus 5 per cent variation from the mean ALP and make addition only, if the price charged by the assessee is beyond the 5 per cent variation allowed under law.