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2019 (4) TMI 219 - HC - Income TaxTP adjustment - scope of Mutually Agreed Procedure (MAP)for determining the tax between India firstly the MAP has been drawn after the consideration of relevant aspects giving rise to transfer pricing adjustment and secondly the CBDT in the later year agreed that such transfer pricing consideration in relation to US based transactions can be safely adopted for the purpose of the assessee s non-US based transactions. In the present year therefore it would be wholly inappropriate to allow the revenue to argue to the contrary. Exemption u/s 10A allowable prior to the setting off of brought forward losses and unabsorbed depreciation - HELD THAT - The issue stands covered against the Revenue by the decision of this Court in CIT Vs. Black & Veatch Consulting Pvt. Ltd. 2012 (4) TMI 450 - BOMBAY HIGH COURT Treatment to interest income as business income and consequently eligible for deduction under Section 10A - interest on tax refund - HELD THAT - Issue of interest on tax refund not to be treated as interest on deposits was not agitated by the Revenue before the Tribunal. Thus this issue not arising from the order of the Tribunal does not arise for our consideration. In any case we find that the impugned order of the Tribunal has followed its decision rendered in the Assessee s case reported for A.Y. 2004-05 2009 (6) TMI 677 - ITAT MUMBAI . Mr.Pinto is unable to point out any distinguishable features in the present Appeal which would warrant out taking a different view from that having been taken in the order passed by the Tribunal for the A.Y. 2004-05 . Moreover nothing has been shown to us which would indicate that the Tribunal s order for the A.Y. 2004-05 has not been accepted by the Revenue. - Revenue appeal dismissed.
Issues involved:
1. Whether brought forward losses and depreciation can be set off against 10A income. 2. Whether interest income derived from fixed deposits can be considered business income for the purpose of exemption under section 10A. Analysis: Issue 1: Brought forward losses and depreciation set off against 10A income The case involved a private limited company's appeal against the Income Tax Appellate Tribunal's judgment regarding the determination of Arm's Length Price for its transactions with international Associated Enterprises. The Tribunal applied parameters from a Mutually Agreed Procedure (MAP) for US-based transactions to determine the Arm's Length Price for non-US based transactions. The Department argued that the MAP is non-adjudicatory and cannot automatically project the outcome for non-US transactions under section 92C of the Income Tax Act. However, the company contended that the MAP was drawn after detailed consideration and no material difference existed between US and non-US transactions. The High Court noted the company's acceptance of the MAP outcome for non-US transactions in a later assessment year, indicating the transfer pricing consideration could be applied. The Court found it inappropriate for the revenue to argue otherwise in the present year. Issue 2: Interest income classification for exemption under section 10A The Revenue raised questions regarding the Tribunal's decision on interest income and exemption under section 10A. The Court referred to a previous appeal where the Tribunal held interest on deposits as business income eligible for deduction under section 10A. The Revenue did not challenge the classification of interest on tax refund before the Tribunal, and the Court found no reason to consider it. The Court also noted the Tribunal's decision for a previous assessment year and the lack of distinguishable features in the present case. The Court held that the issue did not give rise to any substantial question of law and dismissed the Revenue's appeal. In conclusion, the High Court dismissed the Income Tax Appeals, upholding the Tribunal's decisions on both issues. The Court found no reason to interfere with the Tribunal's judgment regarding the set off of brought forward losses and depreciation against 10A income and the classification of interest income for exemption under section 10A.
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