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TMI Blog2017 (5) TMI 777X X X X Extracts X X X X X X X X Extracts X X X X ..... year as well as in subsequent years. Therefore, we find no reason to interfere with the order of the ld. CIT(A) on this issue in any of these two years which are before us by respectfully following the judgment of the Hon’ble Karnataka High Court rendered in the case of Sami Labs Ltd. (2010 (12) TMI 683 - Karnataka High Court ). Hence, we decline to interfere with the order of the ld. CIT(A) on this issue. Deduction u/s. 10A computation - Held that:- As the profits & gains u/s. 10A were not to be included in the income of the assessee at all, the question of setting off of loss of the assessee from any business against such profits & gains of the undertaking would not arise. Similarly, as per section 72(2), unabsorbed business loss is to be first set off and thereafter unabsorbed depreciation u/s. 32(2) is to be set off as deduction u/s. 10A has to be excluded from the total income of assessee, the question of unabsorbed business loss being set off against such profits & gains of undertaking would not arise. See C.I.T. & Another Versus M/s Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT] Reduction of telecommunication expenses from the export turnover - Held that:- This issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and circumstances of the case, the learned CIT(A) erred in upholding the rejection of Transfer Pricing ("TP") documentation by the learned TPO. 8. That the learned CIT(A) erred in upholding the rejection of comparability analysis carried in the TP documentation and conducting a fresh comparability analysis for determining the arm's length price by the learned TPO. 9. That the learned CIT(A) erred in not giving reasonable opportunity to the Appellant of refuting and rebutting the basis on which adjustment was proposed by the learned CIT(A) and in not admitting the contentions, arguments, and evidentiary data put forward by the Appellant. 10. That the learned CIT(A) failed to adjudicate on the disallowance of the marketing commission by the learned TPO. 11. That the Appellant craves leave to add to and/or to alter, amend, rescind modify the grounds herein above or produce further documents before or at the time of hearing of this Appeal." IT(TP)A No.452/B/11 (Revenue's appeal) "1. The order of the Learned CIT (Appeals), in so far as it is prejudicial to the interest of revenue, is opposed to law and the facts and circumstances of the case. 2. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appeal came to be partly allowed by the CIT(Appeals) vide his order dated 17.01.2011. 3. During the pendency of the above cross appeals before the Tribunal, the assessee's AE in Canada approached the competent authority in Canada for resolution of TP adjustment issues insofar as it related to the software development services provided by assessee to its AE in Canada through MAP prescribed under Indo-Canada DTAA. Thereafter, the assessee was informed vide order dated 01.12.2015 that the competent authority of India & Canada DTAA has resolved the TP adjustment arising in the appeal insofar as it relates to Canada. The assessee thereafter accepted the terms of MAP resolution as per Rule 44H(4) of the I.T. Rules, 1962 and withdrew its appeal before this Tribunal insofar it relates to software development services provided by assessee to its AE in Canada vide its letter dated 09.02.2016. 4. In view of the above, the cross appeals filed by the assessee before this Tribunal relate to TP adjustment made by the TPO survive only to the extent of transactions pertaining to software development services provided by the assessee to its AE located in countries other than USA & Canada i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same is reproduced as under:- Appendix D : Details of International Transactions entered with Associated Enterprises in FY 2004-05 The details of the international transactions entered by CGI India with its associated enterprises during the financial year 2004-05 are as follows: No. Name and Address of the Associated Enterprise Description of the transactions Amount (In Rupees) Paid Received 1 CGI AMS Inc., 600 Federal Street, Andover, MA 01810, US Export of Software development and maintenance services 378,048,343 Payment of Technical service fee 8,339,100 Payment of commission for marketing and sales services 21,592,130 Payment for Branch Administration and reimbursement of expenses 11,236,144 2 CGI-Group (Europe) Ltd., Broadlands House, Primett Road Stevage. Hertz SG13EE, UK Export of Software development and maintenance services 16,315,230 3 CGI Information Systems and Management Consultant's Inc, 4 King Street West, Suite 1900, Ontario, Canada M5H 1B6 Export of Software development and maintenance services 111,343,111 Reimbursement of expenses 4,250,094 4 CDSL Canada Limited, # 190-4, King Street West, Toronto, ONM5H 1B6. Canada Export of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions, for remaining transactions of 4% also same treatment should be given, same bench marking should be done, and ALP mark-up of 14.38% should be applied, more particularly, because of the fact that the AO or DRP have not made any distinction between the 'US' entities and 'non-US' entities. It was further submitted that although the assessee can very well contest these additions, but this concession has come from the assessee's side with a view to bury the litigation, notwithstanding the facts that no addition should have been made as the case of the assessee falls within +/- 5% range. It was also submitted that the assessee reserves its right to contest the levy of any kind of penalty, as and when initiated, if any. Our attention has been drawn to the annual accounts of the company and orders of the lower authorities to show that no distinction has been made between the '96%' and '4%' transactions. 3.5. On the other hand, Ld. CIT-DR, vehemently opposing the arguments of the Ld. Counsel, submitted that there is no concept of determination of ALP under the Mutual Agreement Procedure. The rules and regulations of transfer pricing as prescribed u/s. 92C Chapter X of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational transactions. Accordingly, we set aside the order of CIT(Appeals) and direct the AO/TPO to apply the ALP of 117.50% with respect to the remaining transactions. 11. Ground No.2 in assessee's appeal relate to deduction u/s. 10A of the Act and this issue is covered by the order of the Tribunal in assessee's own case for the AY 2001-02 & 2002-03. Copy of the Tribunal's order is placed on record and in para No.8, this issue was discussed. For the sake of reference, we extract the relevant portion of the order of Tribunal as under:- "8. From the above paras of the order of the ld. CIT(A) for the assessment year 1998-99, it is seen that the unit, for which the deduction is being claimed u/s. 10A of the Act, was first set up in assessment year 1996-97 and categorical finding has been given by the ld. CIT(A) that of the total value of the plant and machinery installed in the said unit, 80:80% comprised of plant and machinery transferred from its erstwhile units located at Mumbai and Trivandrum. Hence it is seen that the assessee has violated the conditions prescribed in clause (iii) of sub-sec.(2) of sec.10A of the IT Act and therefore, the assessee is not eligible for deduction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held that as the profits & gains u/s. 10A were not to be included in the income of the assessee at all, the question of setting off of loss of the assessee from any business against such profits & gains of the undertaking would not arise. Similarly, as per section 72(2), unabsorbed business loss is to be first set off and thereafter unabsorbed depreciation u/s. 32(2) is to be set off as deduction u/s. 10A has to be excluded from the total income of assessee, the question of unabsorbed business loss being set off against such profits & gains of undertaking would not arise. The judgment of Hon'ble jurisdictional High Court was also approved by the Hon'ble Apex Court vide its judgment dated 16.12.2016 reported at (2017) 77 taxmann.com 41 (SC). 14. Since the impugned issue is squarely covered by the aforesaid judgment of the Hon'ble Apex Court, we set aside the order of CIT(Appeals) and direct the AO to recompute the deduction u/s. 10A in terms of judgment of Hon'ble Apex Court in the case of CIT v. Yokogawa India Ltd. (supra). 15. Ground Nos. 2 & 3 in the revenue's appeal i.e., ITA No.45/Bang/2011 relate to the reduction of telecommunication expenses from the export turnover. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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