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Issues involved:
Challenging deletion of penalty u/s 271AA and directing AO to allow deduction u/s 80HHE based on adjusted book profits u/s 115JB for assessment years 2002-03 and 2003-04 respectively. I.T.A. No. 1126/Mds/2010 for the assessment year 2002-03: The assessee, engaged in exporting engineering design services, filed its return declaring income at Rs. Nil. Penalty u/s 271AA was imposed for non-maintenance of documents concerning international transactions. The CIT(A) deleted the penalty citing compliance with section 92D and upheld by the Transfer Pricing Officer. The Department appealed, arguing non-compliance with section 92D. The TPO's order confirmed arms-length pricing. The Tribunal upheld the CIT(A)'s decision, noting no fault in the assessment. I.T.A. No. 1127/Mds/2010 for the assessment year 2003-04: Similar to the previous year, the assessee filed its return declaring NIL income and claimed deduction u/s 80HHE. The CIT(A) allowed the deduction based on adjusted book profits u/s 115JB, citing precedents. The Department contested, claiming the decision was not final. The Tribunal upheld the CIT(A)'s decision, stating it was based on established precedents and no contrary evidence was presented. In both cases, the Tribunal dismissed the appeals of the Revenue, upholding the CIT(A)'s decisions.
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