9911796707
TMI Blog2019 (4) TMI 1774X X X X Extracts X X X X X X X X Extracts X X X X ..... its parent company and is acting as an independent distributor of CASIO products. During the year, assessee has undertaken the following international transactions as reported in TP study report: - Sl. No Type of International Transaction Total value of Transaction (INR) Method Selected 1. Purchase of finished goods 82,17,04,260/- TNMM using operating Profit/Operating Revenue as a PLI. 2. Purchase of spare parts 29,04,040/- 3. Receipt of product guarantee fee 85,01,083 4. Receipt of Global SMS Modification Fee 28,54,895/- 5. Provision of customer support services 50,65,985/- TNMM using operating Profit/Operating cost as a PLI 6. Reimbursement of Expenses 31,79,549/- No Benchmarking required. 3. Ld. TPO noted that the assessee has incurred AMP expenditure of Rs. 7,49,01,076/- which has not been separately benchmarked. According to him, such an AMP expenses has led to building of the brand value "CASIO" which has benefitted the parent company who owns the brand. He further noted that in the past assessment years, the assessee used to receive 'Special Promotional Subsidy' on the basis of agreements with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file of the assessee. The rationale underlying the concept is simply to determine what is the excessive marketing spend over and above the comparable who are not promoting any brand. The excessive marketing spend leads to creation of a marketing intangible for the overseas AE for which the assessee should also be remunerated on an arm's length basis, regardless of its functional profile. This requires the reimbursement of the AMP spend with an appropriate mark-up to the assessee since the assessee has created marketing intangible for the overseas AE. Hence, whether the assessee is a low risk distributor or a full risk bearing entity, it does not matter inasmuch as regardless of the same, the assessee needs to be compensated for its marketing efforts. The assessee has argued that application of the bright line concept would result in a compensation for non-performance where the sales do not increase but high AMP expenditure is incurred (thereby leading to a high AMP/ sales ratio). Here, I wish to highlight that the assessee has not correctly appreciated the concept of bright line test. For any marketing effort there are two related aspects/ issues to be considered. One is the eff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the higher profit margin. After detailed discussion, TPO held that AMP has to be determined in accordance with Bright Line Test and after analysing the various comparable companies, he applied Bright Line margin of 3.62% based on certain comparables and made following adjustment:- Particulars Value (Rs.) Value of gross sales of Casio India 130,16,28,045 Arithmetic mean of AMP/Sales of comparables 3.62% Amount that represents 'Bright Line' 4,71,18,935/- Expenditure incurred by Casio India on AMP 7,49,01,076/- Expenditure in excess of 'Bright Line' that ought to have been received by Casio India as a compensation 2,77,82,141/- 6. Thereafter, he also applied further mark up of 14.88% of 41,33,983/- and finally made adjustment of Rs. 3,19,16,124/. 7. The DRP has also taken note of the finding and observation of the TPO that there was an agreement between the assessee and M/s. CASIO Computer Ltd., Japan (AE) in the earlier years whereby AE was outsourcing the advertisement function to the assessee and for this purpose AE was paying special promotion subsidy to the assessee. The DRP further upheld that the decision of Special Bench in the case of LG Electronic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CO., LTD(Herein after referred as THE PRODUCTS and FIRST PARTY respectively) in India (hereinafter referred as TERRITORY). Second party as the exclusive sales company in the territory market, shall put the best efforts to expand the business of the products in territory market: for the first party, and for aforesaid purpose provide the necessary maximum information to the first party and contribute to the first party's decision of business strategy, and the second party shall put the best efforts to expand and strengthen own business set up. (Bold portion - Emphasis Supplied) Second party as an Indian company, shall strengthen the autonomous independent management system, and shall remain aware about the responsibility of contributing to Indian society, and for aforesaid purposes, gain the necessary profits and work on to strengthen the marketing and distribution channel set ups to gain the necessary profits. The first party to gain the wide recognition and increase the value of its products and the registered trade mark, shall carry out general PR activities and events at its own cost, with respect to the market which the first party recognize the requisite necessity, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the assessee's contention that AMP is covered by TNMM and it has higher profit margin on OP/sales which was at 13.11% and same was much more than the comparables. The reason for such rejection was that the assessee has failed to substantiate that it was compensated on account of discharge of AMP services and such compensation is reflected by way of higher profit margin of the assessee. The pricing policy also does not include compensation to the assessee on account of AMP. After detailed discussion, DRP held that neither the Indian transfer pricing law nor the international practice supports the simultaneously benchmarking of ALP of different transactions. 10. The DRP also rejected the search process of the comparables conducted both by the assessee as well as by the TPO and observed that in absence of any details provided by the assessee with regard to the price details on which the assessee has sold to the third in India or abroad, internal CUP cannot be worked out. The DRP then further carried out its own search process on 'Prowess' database relating to companies in 'Trade in Electrical Machinery'. The comparables selected by the DRP were as under: Company Name Sales OR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p of 14.88%, DRP directed the TPO to quantify the amount of AMP service charges receivable by the AE ad apply a rate equal to the base rate of SBI to the Financial Year under consideration and apply at 150 base point. 13. Regarding TPO's action in holding sales relating to expenses, namely, trade discounts, commission etc as part of AMP expenditure, the DRP has upheld the same on the ground that the decision of the ITAT Special Bench in the case of LG Electronics Pvt. Ltd. (supra) is pending before the Hon'ble Delhi High court. DECISION 14. We have heard the rival submissions and also perused the relevant findings given in the impugned orders as well as material referred to before us. The assessee had carried out various international transactions with the AE like purchase of finished goods, purchase of spare parts, receipt of product, guarantee fee, receipt of applicable SMC, modification fees and provision of customer support services. All these international transactions reported in TP study report has been benchmarked by adopting TNMM using PLI of operating profit/operating revenue. The assessee's sales has been reported at Rs. 130,16,28,045/- as against the total purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000,000 (say Japanese Yen seven million only). Casio India shall invoice Casio not later than 30th September, 2007 to comply with the fiscal year end accounting purpose of Casio. Article 4: Period Promotion under this agreement must be carried out strictly in the period starting 25 day of April, 2007 and ending by 30the September, 2007. Casio shall be exempted from payment for promotion executed before and/or after this period. Article 5: Evidence Casio shall be exempted from payment of the agreed amount unless such evidence as described below are completely presented to CASIO. 1) Invoice to CASIO duly signed by CASIO INDIA. 2) Copies of corresponding invoices to concerned party (parties) issued by a local advertising agencies and/or media. 3) The proofs of advertisement carrying' the date of execution. Article 6: Entire Agreement All other conditions not specifically set forth in this agreement shall be amicably discussed by the two parties. This agreement shall supersede all the verbal or written advertising agreements or memorandum, if any, made between the parties prior to the agreement." 15. The aforesaid agreement first of all was relevant onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowhere it is borne out that the assessee has to carry out AMP functions either at the behest of the AE or providing any kind of benefit to the AE. It only highlights that the assessee shall put best effort to expand the business of the product in the territory market and to co-operate AE by providing necessary information and opinion of the activities carried out in its territory. In fact from the said MOU, it is clearly borne out that all the necessary advertisement and promotional activities is done by the assessee on its own cost. Thus, it cannot be held that incurring of AMP expenses for promotion of sale by the assessee company was to provide any kind of benefit to the AE which needs to be reckoned as separate international transaction. He further submitted that ultimately both TPO and DRP have upheld the application of BLT which now stands rejected by the Hon'ble Delhi High Court in series of judgment, viz., Sony Ericson Mobile Communication India Ltd. reported in (2015) 374 ITR 118, Maruti Suzuki India Ltd. vs. CIT, (2015) 381 ITR 117, CIT vs. Whirlpool India Ltd., 280 ITR 154 and Bausch & Lomb Eyecare (India) Pvt. Ltd. vs. ACIT, 381 ITR 227. Thus, here in this case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed position. The arm's length determination pertains to adequate compensation to the India, AE for incurring and performing the functions by the domestic AE. The dispute pertains to adequacy of compensation for incurring and performing marketing and 'nonroutine' AMP expenses in India by the AE. The expenses incurred or the quantum of expenditure paid by the Indian assessee to third parties in India, for incurring the AMP expenses is not in dispute or under challenge. This is not a subject matter or arm's length pricing or determination." 17. Considering the above positions of law, it is clear that AMP expense incurred by the assessee is an international transaction. The argument that Hon'ble High Court in subsequent decision in the case of Maruti Suzuki cited supra has held that the revenue has to establish AMP function as international transaction is not applicable to the facts of the case, as in the case of Maruti Suzuki India Ltd. was a manufacturer and not a distributor. In the case of manufacturer there is no import of finished goods from the AE which may compensate for AMP functions on behalf of AE. Further in the case of Maruti Suzuki Ltd., the assessee company was also ow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... torily mandated. Later on, the Hon'ble Jurisdictional High Court has expanded this jurisprudence in other cases like Maruti Suzuki India Ltd, Whirlpool India Ltd.; and Bausch & Lomb Eyecare (India) Pvt. Ltd. (supra). The distinction has been sought to be drawn by the ld. CIT-DR that the judgment of Sony Ericson was with regard to the batch of appeals dealing with the assessee who were distributors and subsequent judgments dealt with manufacturers who were operating as risk bearing entities. Here, in this case, the assessee undisputedly is an independent distributor whereby it was purchasing finished goods and spare parts from its AE and selling the same in India on its own risk and the profit derived from such sales has been offered to tax in India. The FAR of the assessee company for its trading segment as given in T.P. Study Report, which is not in dispute by the department are that: * Casio India imports finished goods and spares for further distribution in the Indian market. These finished goods and components are in the nature of office automation products such as handheld calculators, desktop calculators, scientific calculators, printing calculators, data banks, digita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying and developing new business opportunities and maintaining the existing customer base in India. The sales force is also responsible re-negotiating with customers in relation to product purchases and pricing. Casio India sets sales forecasts any sales targets on an annual basis to assist in the product planning and budgeting process. Distribution Channel * Distribution networks enable the firm to locate customers, determine their needs and provide services or products to meet those needs. * Casio India determines the distribution channel for products sold in India. Casio India is responsible coordinating the distribution of the products through their own distribution channels as well as through is extensive dealer network. Customer Support * Customer support involves provision of product information to the client, advising them on the selection, optimal use and maintenance of the product, training customers, provision of technical support and product servicing. * The products of Casio India are sold with a warranty. Casio India is responsible for determination of terms ar; conditions of warranty for various products sold by it and consequently for costs incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations in demand. Scheduling risk is of particular concern for companies with highly volatile demand or demand that is extremely sensitive to timing of product delivery. * Casio India would primarily bear the scheduling risk as it would enter into contract with customers. Casio India would place the order on the AE along with delivery schedules. While the AE would be responsible to meet TC orders provided by Casio India within the stipulated timeframe, it also bears the scheduling risk with respect to demands made by Casio India. Product Liability Risk * Product liability risk refers to the risk associated with the possibility of facing legal action from customers due to defects in the products provided. * All products sold by Casio India carry a warranty on labour and parts. Thus, Casio India bears the costs, associated with warranty repair services. These costs are taken into account during price negotiations between Casio India and its suppliers. Casio India also bears the product liability risk as it compensates the customer; are any defect in the products. Also since Casio Japan provides a product guarantee fee to Casio India, the product liability risk is shared b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me, losses or assets of such enterprises and shall include a mutual agreement or arrangement between two or more associated enterprises for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to anyone or more of such enterprises. From the plain reading of the aforesaid Section, it is quite clear that: (i) the transaction has to be between two or more associated enterprises either or both of whom are non-resident; (ii) the transaction is in the nature of purchase, sale or lease of tangible or intangible property or provision of services or lending or borrowing money; (iii) or any other transaction having bearing on the profits, income, loss or assets of such enterprises; (iv) all such nature of transaction described in the section will also include mutual agreement and the arrangement between the parties for allocation or apportionment or any contribution to any cost or expenses incurred or to be incurred in connection with benefit, services and facility provided to any of such parties. Relevant Explanation to Section 92B as inserted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angement, understanding or action in concert amongst the parties, whether in writing or formal, then too it is treated as international transaction. Here the conjoint reading of both the sections lead to an inference that in order to characterized as international transaction, it has to be demonstrated that transaction arose in pursuant to an arrangement, understanding or action in concert. Such an arrangement has to be between the two parties and not any unilateral action by one of the parties without any binding obligation on the other or without any mutual understanding or contract. If one of the parties by its own volition is incurring any expenditure for its own business purpose, then without there being any corresponding binding obligation on the other or any such kind of an arrangement actually existing in wring or oral or otherwise, it cannot be characterized as international transaction within the scope and definition of Section 92B (1). 22. The Hon'ble Delhi High Court in the case of Maruti Suzuki, Whirlpool and Bausch & Lomb have categorically held that for an international transaction to exist within a meaning of Section 92B, the onus is on the Revenue to show the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P, the Court held that "37. The provisions under Chapter X do envisage a 'separate entity concept'. In other words, there cannot be a presumption that in the present case since WOIL is a subsidiary of Whirlpool USA, all the activities of WOIL are in fact dictated by Whirlpool USA. Merely because Whirlpool USA has a financial interest, it cannot be presumed that AMP expense incurred by the WOIL are at the instance or on behalf of Whirlpool USA." (Para 37) (f) There is no machinery provision in the Act to bring an international transaction involving AMP expense under the ambit of transfer pricing provision if it cannot be shown that such an international transaction was entered into by the assessee. In Court's words, "It is in this context that it is submitted and rightly by the Assessee that there must be machinery provision in the Act to bring an international transaction involving AMP expense under the tax radar. In the absence of clear statutory provision giving guidance as to how the existence of an international transaction involving AMP expense, in the absence of an express agreement in that behalf', should be ascertained and further how the ALP of such a transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly on AMP in order to promote the brand SMC...... 61......Even if the word 'transaction' to include 'arrangement', 'understanding' or 'action in concert', 'whether formal or in writing', it still incumbent on the revenue to show the existence of an 'understanding' or an 'arrangement' or 'action in concert' between MSIL and SMC as regards AMP spend for brand promotion. In other words, for both the 'means' part and the 'includes' part of Section 92B (1) what has to be definitely shown is the existence of transaction whereby MSIL has been obliged to incur AMP of a certain level for SMC for the purposes of promoting the brand of SMC." 24. The Ld. CIT DR has also referred to the decision of Hon'ble Delhi High Court in the case of Sony Ericsson Mobile Communication India Pvt. ltd. to contend that mere incurrence of AMP expenditure in respect of brand not owned by the assessee has to be treated as international transaction. Ultimately the case of the department is that, such an international transaction has to be benchmarked as per BLT to arrive at ALP. Both the inferences by the department is not tenable in view of the Hon'ble Delhi High Court in the judgment in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g AMP expenses, the very basis of the Revenue's case is negated." "68. The above submissions proceed purely on surmises and conjectures and if accepted as such will lead to sending the tax authorities themselves on a wild goose chase of what can at best be described as a 'mirage'. First of all, there has to be a clear statutory mandate for such an exercise. The Court is unable to find one. To the question whether there is any 'machinery' provision for determining the existence of an international transaction involving AMP expenses, Mr. Srivastava only referred to Section 92F (ii) which defines ALP to mean a price "which is applied or proposed to be applied in a transaction between persons other than AEs in uncontrolled conditions". Since the reference is to 'price' and to 'uncontrolled conditions' it implicitly brings into play the BLT. In other words, it emphasizes that where the price is something other than what would be paid or charged by one entity from another in uncontrolled situations then that would be the ALP. The Court does not see this as a machinery provision particularly in light of the fact that the BLT has been expressly neg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;assumed' price cannot form the reason for making an ALP adjustment. 71. Since a quantitative adjustment is not permissible for the purposes of a TP adjustment under Chapter X, equally it cannot be permitted in respect of AMP expenses either. As already noticed hereinbefore, what the Revenue has sought to do in the present case is to resort to a quantitative adjustment by first determining whether the AMP spend of the Assessee on application of the BLT, is excessive, thereby evidencing the existence of an international transaction involving the AE. The quantitative determination forms the very basis for the entire TP exercise in the present case. 72. As rightly pointed out by the Assessee, while such quantitative adjustment involved in respect of AMP expenses may be contemplated in the taxing statutes of certain foreign countries like U.S.A., Australia and New Zealand, no provision in Chapter X of the Act contemplates such an adjustment. An AMP TP adjustment to which none of the substantive or procedural provisions of Chapter X of the Act apply, cannot be held to be permitted by Chapter X. In other words, with neither the substantive nor the machinery provisions of Chap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nection. It does not matter whether the comparables are domestic enterprises or not. However, and it is manifest that the comparable should have similar rights, if any, as the tested party in the brand name, trademark, etc. 121. During the course of hearing before us, counsel for the Revenue had submitted that paragraph 17.4 should be treated as illustrations and not as binding comparables. We would prefer to observe, that an Assessing Officer/ TPO can go and must examine the question whether the assessee is performing functions of a pure distributor or performing distribution and marketing functions, in the latter case, he must examine and ascertain whether the transfer price takes into consideration the marketing function, which would include AMP functions. This would ensure adequate transaction price and hence assure no loss of revenue. When the distribution and marketing functions are interconnected and reliable comparables are available, arm's length price could be computed as a package, if required and necessary by making adequate adjustments. When the Assessing Officer/TPO comes to the conclusion that it is not possible to compute arm's length price without segregati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y way of an advertisement where there is a display of 'CASIO' Logo which needs to enhancement of CASIO brand is owned by the Assessing Officer, and therefore, incurring of AMP expenditure it enhances the brand value of the AE. First of all, brand is a capital asset and it would be fallacious to treat any kind of AMP expenditure leading to brand building. The brand building not only lead to enhancement of the value of the brand and benefits the brand owner but also helps simultaneously the brand exploiter, like distributor brand building on one hand it falls in realm of capital and brand promotion is targets towards sales of goods which is in the realm of revenue transaction, therefore, any distributor which increase AMP expenditure for promoting the sales of its goods is not guided by motive of enhancing brand value but purely by enhancing its sales. Increase in brand value happens at a very slow pace over a long period of time and there cannot be direct co-relation between AMP expenditure and brand value because brand value depends upon numerous other factors which may not be linked with AMP expenditure. The most important component of brand is its reliability and quality of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cult to define. It is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However, widely extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates. Goodwill is composed of a variety of elements. It differs in its composition in different trades and in different businesses in the same trade. One element may preponderate here and another element there. To analyse goodwill and split it up into its component parts, to pare it down as the Commissioners desire to do until nothing is left but a dry residuum ingrained in the actual place where the business is carried on while everything else is in the air, seems to me to be as useful for practical purposes as it would be to resolve the human body into the various substances of which it is said to be composed. The goodwill of a business is one whole, and in a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effective way to tell a brand story to a large audience, but just that is not enough to create or build a brand. Market value of a brand would depend upon how many customers you have, which has reference to brand goodwill, compared to a baseline of an unknown brand. It is in this manner that value of the brand or brand equity> is calculated. Such calculations would be relevant when there is an attempt to sell or transfer the brand name. Reputed brands do not go in for advertisement with the intention to increase the brand value, but to increase the sales and thereby earn larger and greater profits. It is not the case of the Revenue that the foreign AEs are in the business of sale/transfer of brands. 109. The aforesaid position finds recognition and was accepted in CIT v. B.C. Srinivasa Setty [1981] 128 ITR 294 (SC) , a decision relating transfer to goodwill. Goodwill it was held was a capital asset and denotes benefits arising from connection and reputation. A variety of elements go into its making and the composition varies in different trades, different businesses in the same trade, as one element may pre-dominate one business, another element may dominate in another business. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als, for the latter are not legal owners of the brand name/trademark.)" 27. In any case, legal ownership of intangibles, by itself, does not confer any right ultimately to retain returns derived by MNE group from exploiting the intangibles, even though such returns is initially accruing to the legal owner as a result of its legal /contractual right to exploit the intangible. The return depends upon the functions performed by the legal owner, assets it uses, and the risks assumed; and if the legal owner does not perform any relevant function, uses no relevant assets, and assumes no relevant risks, but acts solely as a title holding entity, then the legal owner of the intangible will not be entitled to any portion of the return derived by the MNE group from the exploitation of the intangible other than the Arm's Length compensation if any for holding the title. 28. Otherwise also, it would be very difficult to determine the impact of increase intensity of advertisement function on profit margin, the impact of advertisement on sale cannot be determined or quantified in a particular year, and therefore, even if AMP expenditure is to be compared with other comparables by applying an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvations made by the Statutory Auditors, the aforesaid amount was declared as bad debts and written off in books of accounts though the provision as made in FY 2000-01 and no deduction was claimed on account of the same. It was further submitted by the assessee that as per as per normal business prudence and in accordance with generally accepted accounting principles, Rs. 4,36,84,216/- had been written off from the Books of Accounts in the FY 2009- 0. However, the same was routed through the Profit & Loss account. The amount of provision that was created in FY 2001-02 was written back amounting to Rs. 4,36,84,216/- and simultaneously an expense of Rs. 4,36,84,216/- was booked as the bad debts written off. Therefore, in effect there was no impact on the profit and loss account as it was credited and debited with the same amount. Subsequently, on account of credit entries worth Rs. 50,21,193/- the taxpayer claimed bad debts of Rs. 3,86,63,023/- in the computation of Income for AY 2010-11. The break-up of the sum of Rs. 4,36,84,216/- was given as under: S. No. Name of Company Outstanding 1. ABC Communications (India) Pvt. 79,56,990 2. DSS Mobile Communications Ltd. 74 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... puted in the P&L account; and on the other hand, in so far as amount of Rs. 3,86,63,023/- was concerned, the DRP observed that this amount has not been routed through the books of account but deduction has been claimed directly u/s.36(1)(vii). The said bad debt pertains to five entities whose outstanding amount of Rs. 4,36,84,216/- and out of the said amount the assessee has claimed bad debt to the extent of Rs. 3,86,63.023/-. Accordingly directed the Assessing Officer to examine that such debts should be actually written off as irrecoverable and debt should have been taken into account in computing the income of the assessee. 33. However, in the order giving effect the Assessing Officer has rejected the assessee's submission summarily holding that it cannot be conclusively held that amount of Rs. 3,,86,63,203/- quantified the context prescribed u/s.36(1)(vii) r.w.s. 36(2) for allowing the bad debt. 34. After considering the submissions made by both the parties and on perusal of the relevant material referred to before us, we find that it is not in dispute that there were certain outstanding dues pertaining to earlier business and same has appeared in the books of account of CA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A for its STPI Unit amounting to Rs. 3217591/- and in support, Form 56F was filed claiming 100% of deduction u/s.10A. In the draft order, Assessing Officer has held that assessee was entitled to 50% as it was the 7th year of the claim after interpreting section 10A(1A) and after five years the assessee is only entitled to 50% of deduction for two years and thereafter 30% for next three years. Accordingly, he has restricted the allowability of Rs. 16,08,796/-. The assessee submitted that the deduction u/s.10A has been claimed by it in the Assessment Years 2004-05, 2005-06 and 2006-07 which was allowed by the Assessing Officer and for the subsequent years the matter was in dispute before the ld. CIT (A). 38. The DRP threadbare analyzed the earlier provision of Section 10A inserted by Finance Act, 1981 and new Section 10A substituted by the Finance Act, 2000 w.e.f. 01.04.2001 and also CBDT No. 794 explaining the new provision substituting the new provision. However, analyzing the entire provisions, the DRP held that it is an undisputed fact that STP unit was set up in Financial Year 2001-02 and will be entitled for full tenure of ten years for deduction. After relying upon CBDT No.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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