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TMI Blog2015 (7) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... decision rendered by the Bangalore bench of Tribunal in the case of I Gate Global Solutions (2007 (11) TMI 444 - ITAT BANGALORE ). Hence, for the additional reasons discussed supra and also by following the decision rendered by the Tribunal in AY 2006-07 on identical issue, we are of the view that the Ld CIT(A) was justified in confirming the order of the AO in rejecting the claim for deduction u/s 10A of the Act in respect of suo-motu disallowance made by the assessee. - Decided against assessee. Disallowance u/s 14A of the Act - Held that:- We notice that the ld CIT(A) had only set aside the issue to the file of the AO for fresh consideration in the light of decision rendered in the case of Godrej & Boyce mfg. Co. Ltd (2010 (8) TMI 77 - BOMBAY HIGH COURT) by the Hon’ble Bombay High Court. Hence, we do not find any infirmity in the decision of Ld CIT(A) on this issue.- Decided against assessee. - I.T.A. No.157/Mum/2012 - - - Dated:- 15-7-2015 - S/Shri B.R.Baskaran and Amit Shukla, JJ. For the Petitioner : S/Shri Madhur Agrawal And Ketan Ved For the Respondent : S/Shri N K Chand and Premanand J ORDER PER B.R. BASKARAN (AM) The appeal filed by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income u/s 14A of the Act. 5. In the appellate proceedings, the ld. CIT (A) upheld the rejection of claim u/s 10A of the Act in respect of expenditure disallowed by the assessee suo motu. The ld. CIT (A), however, set aside the matter relating to the disallowance to be made u/s 14A of the Act to the AO. Aggrieved, by the order of Ld. CIT(A), the Revenue has filed this appeal before us. 6. The ld. Counsel appearing for the assessee fairly admitted that the issue relating to denial of deduction u/s 10A of the Act in respect of suomotu disallowance of expenditure was considered by the Tribunal in the immediately preceding year, i.e. AY 2006-07, and the same decided against the assessee by the Mumbai Bench of the Tribunal reported as Deloitte Consulting India (P) Ltd. vs. Dy. CIT (2012) 150 TTJ 824 (Mum.) (Trib.). He further submitted that the assessee had filed Miscellaneous Application against the order of the Tribunal passed for assessment year 2006-07, but it was also dismissed by the Tribunal. The Ld. AR, however, contended that any amount disallowed while computing the income from business would also be eligible for deduction u/s 10A of the Act, as the amount so disallowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the disallowance u/s 36(1)(iv) of the Act is required to be made due to the legal fiction created in the statute, whereas in the instant case, the assessee itself has disallowed the expenditure, which otherwise is allowable at ALP after carrying out transfer pricing study. Thus, the suomotu disallowance made by the assessee cannot be equated with the amount disallowed as per the statutory provisions. The ld. DR further submitted that the assessee, in its Transfer Pricing Study furnished in form No.3CEB, has claimed that the reimbursement of expenditure was at ALP. The Ld D.R submitted that the assessee had suo motu disallowed the same in the computation of income under the impression that the ALP shall be determined at NIL value, in which case, the disallowance that is required to be made would not be eligible for deduction u/s 10A of the Act as per the proviso to section 92C(4) of the Act. 9. The ld. DR placed reliance on the decision of Mumbai Bench of the Tribunal in the case of M/s Agilisys IT Services India Pvt Ltd V/s ITO in ITA No.2113/Mum/2011 (AY-2003-04) dated 29.4.2015, wherein suo motu disallowance made by the assessee was held to be not eligible for deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee actually contradicts its stand taken by it in the financial statements as well as in the report furnished in Form 3CEB. 13. Though the decision rendered in the case of M/s Agilisys IT services India Pvt Ltd pertained to suo-motu disallowance made in respect of sale receipts, the Tribunal has confirmed the rejection of deduction u/s 10B of the Act only on the reasoning that the conditions prescribed under that section has not been complied with in respect of addition made suo-motu in respect of sale receipts. In the above said case, the assessee s sale price was seen under priced while making Transfer pricing study and accordingly the income was enhanced. The assessee had claimed deduction u/s 10B of the Act on the said enhancement made through T.P study, which was rejected by the Tribunal. The following observations made by the Tribunal are relevant here:- 15. Coming to the conduct of the assessee, there is no doubt that the assessee has suo moto made transfer pricing adjustment. At this point assuming that there is no enhancement by the TPO and the assessee is allowed the benefit of section 10B of the Act then, every tax payer will first under price its sale with ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be called as income generated out of software development activity. Thus, in our view, the ratio of the decision rendered in the case of Agilisys IT services India Pvt Ltd can be applied in the facts of the present case also. Even otherwise it is not a case of disallowance that is required to be made under the statutory provisions due to legal fiction. We notice that the Tribunal, while disposing of the identical issue in AY 2006-07, has taken into account the decision rendered by the Bangalore bench of Tribunal in the case of I Gate Global Solutions (supra). Hence, for the additional reasons discussed supra and also by following the decision rendered by the Tribunal in AY 2006-07 on identical issue, we are of the view that the Ld CIT(A) was justified in confirming the order of the AO in rejecting the claim for deduction u/s 10A of the Act in respect of suo-motu disallowance made by the assessee. 15. The next issue relates to the disallowance made u/s 14A of the Act. We notice that the ld CIT(A) had only set aside the issue to the file of the AO for fresh consideration in the light of decision rendered in the case of Godrej Boyce mfg. Co. Ltd (328 ITR 81) by the Hon ble Bom ..... 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