TMI Blog2012 (11) TMI 1118X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act. In view of international transactions the assessee had with Associated Enterprises (AE), the case was referred to the Transfer Pricing Officer (TPO) under section 92CA for determination of the arms length price (ALP) after obtaining the approval of the CIT. The Addl. Director of Income Tax (TP)-II, Bangalore by order under section 92CA of the Act dt.20.3.2008 proposed Transfer Pricing adjustment of ₹ 1,98,87,095 on the issue of interest chargeable on advances made to the assessee's associated enterprises. In view of the transfer pricing adjustment, the assessee was granted an opportunity to reply to the proposed adjustment. The assessee company filed objections thereto by letter dt.24.3.2008. The Assessing Officer did not accept the assessee's objections to the TP adjustment and completed the assessment making an addition of ₹ 1,98,87,095 to the total income having regard to the ALP so determined. The Assessing Officer accordingly passed the order of assessment under section 143(3) of the Act on 29.12.2008. 3. Aggrieved by the order of the assessment for Assessment Year 2005-06 dt.29.12.2008 the assessee went in appeal before the CIT (Appeals) who dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diaries out of commercial expediency from out of surplus funds available with it and in accordance with the principles and ratio laid out by the Hon'ble Apex Court in the case of S.A. Builders Ltd. v. CIT (Appeals) [2007] 288 ITR 1/158 Taxman 74. The learned counsel for the assessee contends that the transfer pricing adjustment made by the TPO at 12% rate of interest based on LIBOR and sustained by the learned CIT (Appeals) at 9%, as the reasonable rate of interest under the CUP method, was based on surmises and was not based on the transfer pricing requirement of computing the arms length interest based on any comparable uncontrolled transaction as was directed by appellate orders in earlier years in the assessee's own case. The learned counsel for the assessee contended that the interest disallowance sustained in the learned CIT (Appeals)'s order is not an arms length rate determined in comparable uncontrolled transaction and therefore prayed that it be set aside in conformity with the Tribunal's findings in the assessee's own case for earlier years and placed on record a copy of the decision of the co-ordinate bench of the Tribunal in the assessee's own c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith retrospective effect from 1.4.2002. In view of this ground not being pressed, it is rendered infructuous and accordingly dismissed. 7.1 The grounds of appeal at S.Nos.8 9 are as under : Miscellaneous Income not considered as part income eligible under Section 10A: 8. The learned authorities below erred in holding that 'other income' of ₹ 65,550 has to be reduced while computing deduction under section 10A. 9. The learned authorities below ought to have appreciated that the said income directly emerged from the business of the section 10A units and hence qualified for deduction under section 10A of the Act. 7.2 The learned counsel for the assessee submits that the learned CIT(A) erred in holding that other income amounting to ₹ 65,500 has to be reduced while computing the deduction under section 10A of the Act as the said income directly emerged from the business of the 10A units and hence would qualify for deduction under section 10A of the Act. 7.3 The learned Departmental Representative relied on the finding on this issue in the orders of the authorities below. 7.4 We have heard both parties and have carefully perused and consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received on export of computer software manufactured by the assessee and that the EXIM Policy cannot overrule the Income Tax Act which is a separate code in itself. The learned CIT (Appeals) noted that the assessee itself had accepted that on this issue, the claim for deduction under section 10A was held against the assessee by the decisions of co-ordinate benches of this Tribunal for Assessment Years 2001-02 and 2002-03 wherein it upheld the learned CIT (Appeals)'s finding that the assessee was not eligible for deduction under section 10A on deemed exports thereby rejecting the assessee's claim. 8.3 The learned Departmental Representative supported the orders of the Assessing Officer and pointed out that the ITAT in the assessee's own case for Assessment Years 2004-05 in ITA No.1042/Bang/2007 and 2007-08 in ITA No.972/Bang/2011 dt.15.6.2002 had held the issue in favour of Revenue and against the assessee and sought dismissal of assessee's grounds on this issue. 8.4 We have heard both parties and have carefully perused and considered the material on record. We are not convinced with the submission of the assessee and find that the co-ordinate bench of this Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view that the same tax which is collected is subsequently remitted to the Government. The DRP concurred with and confirmed the Assessing Officer's finding. 9.3 The learned Departmental Representative supported the finding of the authorities below and pointed out that this Tribunal in the assessee's own case for Assessment Year 2004-05 in ITA No.1042/Bang/2007 (supra) had dismissed the assessee's ground on the very same issue and that this finding was followed by the Tribunal in the assessee's own case for Assessment Year 2007-08 in ITA No.972/Bang/2011 (supra). He, therefore, prayed that the assessee's ground be dismissed. 9.4 We have heard both parties and have carefully perused and considered the material on record. We find that the co-ordinate bench of this Tribunal had occasion to consider the same issue in the assessee's own case for Assessment Years 2001-02 and 2002-03 wherein it was held that the Assessing Officer was justified in not including the foreign taxes in export turnover. The Tribunal further held that once this sum is not included in 'export turnover', then the same cannot be included in the 'total turnover'. The said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer. It was submitted by the learned counsel for the assessee that a similar issue was considered by the co-ordinate bench of the Tribunal for Assessment Year in ITA No.1072/Bang/ 2007 (supra) which was held in favour of the assessee which was followed by the co-ordinate bench of the Tribunal in the assessee's own case for Assessment Year 2007-08 in ITA No.972/Bang/2011 dt.15.6.2012. It is contended that the ground be accepted and relief be accordingly granted. 10.3 The learned Departmental Representative supported the orders of the authorities below. 10.4 We have heard both parties and have carefully perused and considered the material on record. We have perused the order of the co-ordinate bench of the Tribunal in the assessee's own case for Assessment Year 2004-05 in ITA No.1072/Bang/07 (supra) and find that the discussions are at para 24 onwards and the relevant findings are at para 24.2 to para 24.3 which are extracted hereunder : 24.2. We have carefully considered the argument put-forth by the Ld. A.R. and also the reasoning of the Ld. AO and the Ld. CIT(A) in their respective orders. The Hon'ble Tribunal, for the AYs 2001-02 and 02-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 70 and 71 of the Act for which there was no prohibition. It was submitted that the Assessing Officer disallowed the set off claim made by the assessee on the ground that it was not in the spirit and meaning of section 10A for if the losses incurred by a particular unit in the first few years are allowed for set off with other profits and the profits earned by that unit in the subsequent years are allowed as a deduction, in continuance of ten years, then the deduction allowed under section 10A would exceed the net profit earned by such unit in this period. It was submitted that the Assessing Officer referring to section 10A(6) of the Act, allowed carry forward of the losses of the undertakings for set off in accordance with section 72 of the Act with the caution that the total income in the year of set off shall reduce to that extent and section 10A deduction also would reduce equally. The learned counsel for the assessee submitted that when reliance was placed on the Tribunal orders in the assessee's own case for earlier assessment years that the issue was covered in favour of the assessee, the Assessing Officer stated that this issue is still under dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g in which there is a loss. This is the basis of not setting off of losses of 10A units against the profit of 10A units for computing deduction u/s 10A. This is in view of the decision of the Third Member in the case of Navin Bharat Industries Ltd. v. DCIT 90 ITD 1. In view of the judgment of the jurisdictional High Court in the case of Himmatsingh (supra), the assessing officer will set off brought forward losses of the units for which the assessee has disclosed positive income for the purpose of claiming deduction u/s 10A . 16.5. Respectfully following the decisions of the Hon'ble Tribunal referred supra, we direct the assessing officer to set off brought forward losses of the units for which the assessee has disclosed positive income for the purpose of claiming deduction u/s 10A. This decision of the Tribunal was followed by a co-ordinate bench of the Bangalore ITAT in the assessee's own case for Assessment Year 2007-08 in ITA No.972/Bang/2011 dt.15.6.2012. Respectfully following the decision of the co-ordinate bench of the Tribunal in the assessee's own case for Assessment Years 2004-05 and 2007-08 (supra) on this issue, we direct the Assessing Officer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax return filed in India. It is submitted that in view of this, the entire foreign tax payments is eligible for credit as per the provisions of the respective Double Tax Avoidance Agreements (DTAA), the decision of the Hon'ble Apex Court in Union of India v. Azadi Bachao Andolan [2003] 263 ITR 706/132 Taxman 373 and as per the appellate orders in the assessee's own case for earlier years. According to the Assessing Officer, foreign tax credit is to be allowed only in respect of profits of those units in respect of which the deduction u/s.10A is not granted. The Assessing Officer held that foreign tax corresponding to profits taxed both in India and respective foreign countries is to be allowed as credit. Accordingly, the Assessing Officer allowed credit of ₹ 55,08,08,274. The learned CIT (Appeals) concurred with the view of the Assessing Officer and rejected the assessee's objection. 12.3 The learned Departmental Representative supported the orders of the authorities below. 12.4 We have heard both parties and have carefully perused and considered the material on record. We find that a similar issue was considered by this Tribunal in ITA No.1072/Bang/2007 (s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal (supra) was followed by a co-ordinate bench of this Tribunal in the assessee's own case Assessment Year 2007-08 in ITA No.972/Bang/2011 (supra). Respectfully following the decisions of the Tribunal in the aforesaid order (supra), we restore the matter to the file of the CIT(A) for reconsideration in accordance with the directions contained therein. 13.1 The grounds raised at S.No.21 is as under : Deduction under Section 80IB 21. The learned authorities below erred in concluding that purchase and sales of monitors constituted trading activity, although such monitors are an integral part of computers sold and no separate consideration was realized for the sale of monitors. 13.2 It is submitted by the learned counsel for the assessee that the assessee sold computers manufactured from its industrial undertaking at Pondichery and that monitors were an integral part of the computers manufactured therein. It is submitted that the assessee claimed deduction u/s. 80 IB on the profits on sale of monitors and printers procured from outside which were sold along with the computers manufactured by it at its Pondichery undertaking. The learned counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sales can take place in two ways as mentioned by the AR, either the amount is included in the sales invoice and warranties provided or the item is sold and separate amount is charged for annual maintenance charges. The assessing officer in his order has mentioned that entire control and management of post sales and service is rendered by Wipro Infotech. If the amount is included in the sales invoice and warranty is provided, then the purchaser has no option. No separate amount is charged for warranty and the amount charged is for the sale of the product manufacture by the industrial undertaking. Annual maintenance contract is a service contract for the maintenance of the electronic instrument. If it is not charged in the sales bill, then sales tax or excise cannot be charged on these amounts. When the assessee is deriving income from the service contract, then it cannot be said that it is deriving income from the industrial undertaking. The deduction u/s 80-IB commences from the year in which the industrial undertaking begins to manufacture or produce articles or things. Hence, the intention of the Legislature is quite clear that the deduction should be allowed to an industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on no longer required. It was submitted that this sum of ₹ 88,64,984 is also eligible profit for claiming deduction u/s. 80 IB and reliance was placed on the decision of the Hon'ble Madras High Court in the case of VBC Industries Ltd. v. DCIT reported in 293 ITR 475 (SIC). The Assessing Officer, however, was of the view and held that deduction u/s. 80 IB was not allowable on 'Other income' and excluded the same while computing the deduction u/s. 80 IB of the Act. It is submitted by the learned counsel for the assessee that the learned CIT (Appeals) concurred with the view of the Assessing Officer stating that profits from allied activities which do not have any first degree nexus are not profits derived from the industrial undertaking. In this regard, the learned CIT (Appeals) was of the view that since no details of provision for expenses made in earlier years has been given this item of other income was to be excluded in computing deduction under section 80IA of the Act. 14.3 The learned Departmental Representative on his part supported the orders of the authorities below and prayed for confirmation of the same. 14.4 We have heard both parties and have car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturing activity at the industrial undertaking at Baddi, H.P. for the purposes of computing the deduction u/s.80 IC of the Act. 15.2 We have heard both the learned counsel for the assessee and the learned Departmental Representative on the point. On careful perusal and consideration of the material on record, we find that the assessee company had not filed any details before the learned CIT (Appeals) in the course of appellate proceedings leading to him upholding the Assessing Officer's action in the matter. Further, it is seen that there are no details of this issue on record. In this view of the matter, we hold that the learned CIT (Appeals)'s action in sustaining the Assessing Officer's action in excluding 'Misc. Income' of ₹ 4,21,374 from the income of the undertaking at Baddi, H.P. for the purposes of computing the eligible deduction under section 80IC of the Act is in order. The assessee's ground is accordingly dismissed. 16.1 Interest under section 234B. In the ground raised at S.Nos.24 25, the assessee has denied its liability to be charged interest under section 234B of the Act. It was contended by the learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansfer pricing adjustments are as under : 2. That the learned CIT (Appeals) erred in reducing the rate of interest on interest free loans advanced by the assessee to its AEs in USA, UK and Japan from 12% p.a. to 9% p.a., comparing the said commercial loans with comparatively risk free deposits made by individuals with the Banks and the Government particularly when the three AEs aforesaid had admittedly been reporting losses and were, therefore, high risk-bearing business entities. 3. That the learned CIT (Appeals) erred in not considering the TPO's argument of risk factor involved in the loan transactions under consideration when the TPO mentioned the risk factor of the loans with reference to CRISIL risk ratings. 4. That the learned CIT (Appeals) erred in not considering the fact that the BPLRs (Benchmarking Prime Lending Rates) as per the RBI's report on Trend and Progress of banking in India 2004-05 (discussed in para 1.16 of TPO's report) together with an upward adjustment for the higher risks involved in this case, justifies the rate of 12% adopted by the TPO. 5. The learned CIT (Appeals) erred in rejecting the computation of the monthly inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as considered by the co-ordinate bench of the Tribunal in assessee's own case for Assessment Year 2004-05 in ITA No.1072/Bang/2007. The co-ordinate bench in paras 7.1 and 7.2 thereof had given its finding which are as under : 7.1. We find that an identical issue was considered by the Hon'ble Tribunal in ITA No: 624 1178/Bang/2007 dated: 31-10-08 for the AY 2003-04 in the assessee's own case. The Hon'ble Tribunal while confirming the finding of the Ld. CIT(A) had quoted the same and the relevant portion of which is reproduced as under: 6.4 .TP adjustment is possible only in cases where comparable uncontrolled transactions entered into between two enterprises are established. Unless such an uncontrolled transaction is identified, no ALP adjustment is possible. . . 7.2. Respectfully following the said decision, we confirm the order of the learned CIT(A) on this count. This decision was followed by a co-ordinate bench of the Tribunal in the assessee's own case for Assessment Year 2007-08 in ITA No.972/Bang/2011 (supra). Since the issue of adjustment for rate of interest chargeable in respect of interest free advances given by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 195 of the Act for acquiring any software even assuming that it has partaken the character of goods and failure to do so attracted the provisions of section 40(a)(ia) of the Act. 23.3 It is contended by the learned counsel for the assessee that this issue is squarely covered in favour of the assessee by the orders of the Tribunal in its own case inearlier years viz., for Assessment Year 2004-05 in ITA No.1072/Bang/2007 and Assessment Year 2007-08 in ITA No.972/Bang/2011 dt.15.6.2012 which followed the orders of the Tribunal on this issue for Assessment Years 2001-02 and 2002-03 in ITA Nos.426, 427, 468 469/Bang/2006. It is submitted by the learned counsel for the assessee that following these orders of the Tribunal (supra), the learned CIT (Appeals) allowed the assessee's claim on this issue. 23.4 We have heard both parties and have perused and carefully considered the material on record. We find from a perusal of the order of the co-ordinate bench of the Tribunal in the assessee's own case for Assessment Year 2004-05 in ITA No.1072/Bang/2007 (supra) at para 8.2 thereof that this issue has been held in favour of the assessee following the earlier decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45A in no way altered the force of the decision of the Hon'ble Supreme Court in 24 ITR 481 relied upon by the appellant. 15.1 On going through the orders of the authorities below on the above issue, we do not finding anything wrong in the directions given by the CIT (Appeals) and therefore we refuse to interfere with the order of the CIT (Appeals). Assessee cannot be aggrieved by the direction given in the order of the CIT (Appeals). Accordingly, these grounds are dismissed. Respectfully following the decision of the co-ordinate bench of this Tribunal in the assessee's own case in ITA Nos.881, 882, 895 and 896/Bang/2003 (supra), we uphold the direction of the learned CIT (Appeals) therein to recast the trading and profit and loss account by including Modvat credit in opening stock, purchases, consumption and closing stock. Accordingly, this ground raised by revenue is dismissed. 25.1 The grounds of appeal at S.No.9 is as under : 9. The learned CIT (Appeals) erred in vacating the allocation of corporate expenses made by the Assessing Officer to 10A units forming part of the Wipro Technologies Division in the ratio of turnover of various business units. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;s own case for Assessment Year 2007-08 in ITA No.972/Bang/2011 dt.15.6.2012. 25.4 We have heard both parties and have perused and carefully considered the material on record. We find that the decision of the co-ordinate bench of the Tribunal has in the assessee's own case in ITA No.1072/Bang/2007 for Assessment Year 2004-05 (supra) has followed its earlier order in ITA No.651/Bang/94 for Assessment Year 1997-98 and in ITA Nos.426, 427, 468 469/Bang/2006 dt.3.5.2008. The relevant findings are extracted hereunder : 11.4. We have carefully considered the submissions of both the parties. We have also perused the decisions of the Hon'ble Tribunal on which the assessee company has placed strong reliance. The order of the Hon'ble Tribunal for the AY 97-98 in assessee's own case in ITA No:651/B/94 has decided the issue in favour of the assessee and relevant findings of the Tribunal is reproduced as under: 27.14. In view of these entire facts of the case and, in the absence of any specific finds by the authorities below that the expenditure is incurred for the various units claiming exemption/deduction in an artificial way of allocating the expenses and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incomes namely interest, scrap sales, rent, profit on sale of fixed assets and profit on account of fluctuation in exchange rate aggregating to ₹ 6,56,25,658 for arriving at the profits to STP undertakings. He ought to have appreciated that the source of a particular income on which exemption is sought must directly relate to the running of the STP undertaking yielding profits. He ought to have appreciated that the decision of ITAT in the case of the assessee relied on by him has not become final and the appeal of the Revenue against the order of the ITAT filed before the High Court is pending. Further, the CIT (Appeals) erred in not applying the decision of Hon'ble Supreme Court in the case of Liberty India Vs. CIT (317 ITR 218). 26.2 The learned Departmental Representative reiterating the grounds of appeal contended that the learned CIT (Appeals) erred in directing the Assessing Officer to exclude income from interest, scrap sales, rent, profit on sale of fixed assets and profit on account of fluctuation in exchange rate, aggregating ₹ 6,86,25,658 for arriving at profit of STPI undertaking following the decision of the ITAT since the department has not accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 in para 12.5 thereof, the bench followed its earlier order wherein it was held as under : 12.5. We have carefully considered the rival submissions and also perused the decisions on which reliance has been placed by either party. (1) In respect of Scrap sale amount, we find that the Hon'ble Tribunal in its decision for the AYs 2001-02 02-03 in the assessee company's own case in ITA Nos:426,427,468 469/B/2006, following its earlier decision for the AYs 98-99 99-00 and extensively reproducing its reasoning, has concluded that, it is clear that the sale of scrap reduced the quantum of expenditure debited for that purpose. On that basis, the amount received from the sale of scrap cannot be excluded for the purpose of computing deduction u/s 10A. (2) In respect of exclusion of exchange rate fluctuation, the Hon'ble Tribunal in its decision referred supra has observed: 11.3. It is seen that the Tribunal for the asst. year 2000-01, following its order for the asst. years 1998-99 and 1999-2000, held that foreign exchange gain due to fluctuation in the rate of rupee is to be included in the profit of the undertaking and is to be considered as elig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not held that such income does not belong to the undertaking to which section 10A is applicable . In para 12.8 of the said order for Assessment Year 2004-05, we find that the Tribunal has held that rent is not to be excluded while computing the eligible deduction under section 10A of the Act. These findings have been followed by a co-ordinate bench of the Tribunal in the assessee's own case for Assessment Year 2007-08 in ITA No.972/Bang/2011 dt.15.6.2012. In view of the finding in the decisions of the co-ordinate bench of the Tribunal (supra) and respectfully following the same, we are of the considered view that the said decision holds good for this assessment year also with regard to interest income, exchange rate fluctuation, income from sale of scrap and rent receipts. 27.1 The grounds of appeal at S.No.11 is as under : 11. The CIT (Appeals) erred in directing the Assessing Officer to include in the 'export turnover' the realization of forex made after the expiry of six months from the end of the relevant financial year as per the details submitted by the assessee. He erred in observing that the competent authority is deemed to have approved delayed rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... communication link and other sales performance linked incentives and telecommunication expenses from total turnover for the purpose of computing deduction under section 10A was erroneous. 28.3 The assessee company had primarily two categories/methods for realizing its price (i) Time and Material Contracts, which means that the price realized is linked to the efforts for the computer software delivered and the tools and equipment used for the same; and (ii) Fixed Price Contracts, wherein the price realized is with reference to milestones for delivery of computer software. The assessee submitted that it realized in convertible foreign exchange for the export of computer software accounted under various heads viz., assets reimbursement, travel reimbursements, incentive awards and other reimbursements and deductions under section 10A, 10B and 10AA of the Act were computed by the assessee including the said amounts in the 'export turnover' of the undertakings. The assessee also received communication link reimbursements in convertible foreign exchange as a component in the realization of the sales price for the computer software exported. The assessee submitted to the author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re does not amount to expenses incurred in providing technical services outside India without appreciating that onsite software development amounts to providing technical services outside India and travel expenses incurred on employees sent for onsite software development are liable to be excluded from 'export turnover' for the purposes of computation of deduction under section 10A of the IT Act, 1961. 29.2 The learned Departmental Representative on his part supported the ground raised that expenses incurred in foreign currency for providing technical services outside India and travel expenses incurred on employees for on site software development are liable to be excluded from export turnover for the purpose of computation of the deduction under section 10A of the Act. 29.3 The learned counsel for the assessee submitted that the issue was of treatment of the expenditure incurred in foreign currency to be included in 'export turnover', since the assessee was in the business of computer software, was squarely covered in its favour by the decision of a co-ordinate bench of the Tribunal in the assessee's own case for Assessment Year 2004-05 in ITA No.1072/B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d positive income for the purposes of computing the deduction under section 10A of the Act. 31.1 The grounds of appeal at S.No.15 is as under : 15. The CIT (Appeals) erred in holding that the undertakings set up in Bangalore are eligible for deduction under section 10A. He has further erred in directing the Assessing Officer to compute and allow the deduction under section 10A for all the eligible units at Bangalore in software technology parks. The CIT (Appeals) erred in holding that the undertakings at Bangalore satisfy various conditions set by section 10A(2) on the ground that the units have been formed without spitting up or reconstruction of business already in existence and without transfer of old plant and machinery. He further erred in holding that the Assessing Officer has over looked specific requirement of section 10A(2). The CIT (Appeals) erred in relying on the decision of ITAT on this issue in the assessee's case for the Assessment Year 2004-05 without appreciating the fact that the said decision has not become final and the appeal of the Revenue against the order of the ITAT filed before the High Court is pending. 31.2 The learned Departmental Repre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case of DI(Exemptions) v. Escorts Cardiac Assistance Hospital society reported in 300 ITR 75 and Hon'ble Supreme Court in the case of Radhasoami Satsang v. CIT reported in 193 ITR 321 to substantiate its stand in confirming the finding of the Ld. CIT(A). In its concluding paragraph, it has been thus held that - 13.12. Hence, considering the rule of consistency, we also hold that the assessing officer was not justified in not allowing deduction u/s 10A. The Board vide Circular has explained the deduction will be permissible for ten years to the existing undertakings which were earlier allowed exemption u/s 10B, but that will be equally applicable for section 10A because both the sections are similar. Hence, we confirm the finding of the learned CIT(A) that the assessee is entitled deduction u/s 10A. 17.4. Considering the facts and circumstances of the issue and respectfully following the verdict of the Hon'ble Tribunal referred supra, we are of the considered view that the assessee company is entitled for deduction u/s 10A and, hence, we confirm the finding of the Ld. CIT(A) on this count. After careful consideration of the facts and circumstances of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of corporate overheads to various business units has already been considered by the Tribunal in the assessee's own case for A.Y. 2004-05 (supra) and earlier years and has deleted the addition made by the A.O. on this count. At para 20.3 on page 38 of the said order the Tribunal has held as under : 20.3 We have carefully considered their submissions. We have respectfully perused the decision of Hon'ble Tribunal referred supra. The Hon'ble Tribunal, after analyzing an identical issue exhaustively with reference to submissions of either party and also considering the reasoning of the Ld.CIT(A) in depth, has concluded, thus - 33.7 In respect of allocation of expenditure, we have perused the order of the learned CIT(A). The assessee himself has allocated the overheads and such allocation has been made on the basis of sales turnover. Once such an allocation has been made by the assessee, then it was the duty of the assessing officer to point out that why the allocation is not correct. The assessing officer has simply ignored the details filed by the assessee and made the allocation. Without pointing out any error in the allocation the assessing officer was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Department in the High Court. 33.3 The learned counsel for the assessee submitted that the assessee company had claimed deduction u/s.80 IC of the Act equal to 100% of the profits derived from its industrial undertaking at Baddi, Himachal Pradesh where toilet soaps are manufactured. It is submitted that the assessee runs each business unit/undertaking as an independent profit centre and that separate accounts are maintained for each. It was further submitted that since each unit has retained all such income and expenses pertaining to the business carried on by it and the transactions between the units are recorded at arms length basis, there is no need for allocation of expenses on Wipro Corporate to other business units. It is contended by the learned counsel for the assessee that this issue is covered in favour of the assessee by the decision of the co-ordinate bench of this Tribunal in ITA No.1072/Bang/2007 for Assessment Year 2004-05 in the assessee's own case wherein the Tribunal has deleted the allocation of corporate overheads to other units. This decision, it is submitted was followed by the decision of the Tribunal in ITA No.972/Bang/2011 for Assessment Year 2007- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in IRTC Nos.780 781/1998 dt.25.11.1999. He further contended that this issue of disallowance under section 14A of the Act was covered in favour of the assessee by the decision of the co-ordinate bench of this Tribunal in the assessee's own case for Assessment Year 2007-08 in ITA No.972/Bang/2011 (supra) and in view of this revenue's ground was liable to be dismissed. 34.4 We have heard both parties and have perused and carefully considered the material on record and the judicial decisions relied on. In this issue of disallowance u/s 14A, the co-ordinate bench of the tribunal recently in the case of Syndicate Bank v. Department of Income-tax in ITA Nos.589 590/Bang/2010 dt.31.5.2012 for the Assessment Years 2004-05 and 2005-06 had remitted the matter to the file of the Assessing Officer with a direction to follow the decision of the Hon'ble High Court of Bombay in the case of Godrej Boyce Mfg. Co. Ltd. (supra). The Hon'ble High Court in this case held that the provisions of rule 8D of the Rules which have been notified with effect from March 24, 2008, would apply with effect from assessment year 2008-09. Even prior to Assessment Year 2008-09, when rule 8D wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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