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TMI Blog2020 (3) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... back to the file of the AG for de novo consideration. CIT(DR) had no serious objections for restoring the matter back to the file of the AO/TPO for fresh analysis of TP study. In the circumstances, we remit the matter back to the AO to consider the above submissions de novo after affording due opportunity of being heard to the assessee company. Deduction u/s 10A - HELD THAT:- Ground raised by the revenue is covered against the revenue by the decision rendered by Hon ble jurisdictional Karnataka High Court in the case of Tata Elixi Ltd [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] . Requirement of considering the issue of deduction of foreign expenses from both export turnover and total turnover shall arise only if the additional ground urged by the assessee is decided against the assessee, i.e., if the additional ground is decided in favour of the assessee by holding that there is no requirement of deducting foreign expenses from the export turnover, then the ground urged by the revenue shall become infructuous. AO has actually allowed deduction u/s 10B of the Act. The Ld DRP has referred to both sec.10B and 10A in its directions. The grounds urged by both the parties refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re development and premium solution worldwide. The assessee is a subsidiary of company named Key Management Group (KMG) (Inc), USA. 5. The first common issue related to transfer pricing adjustment made by the TPO and partially confirmed by ld DRP. Both the parties are in appeal challenging the decision rendered by ld DRP. The ld AR submitted that KMG, USA does extensive marketing and secure contracts from 3rd parties. It outsources the same to the assessee on back to back basis i.e, the assessee company serves as an execution center for contracts won by KMG USA. The Ld AR submitted that KMG USA does not retain any margin from the amounts billed to the end customers. However, the assessee company pays commission to KMG USA for the marketing services rendered by it. The assessee company applied CUP method (Internal CUP) to bench mark the international transactions entered with its AE. The TPO, however, rejected the CUP method and adopted TNMM method as most appropriate method and accordingly made transfer pricing adjustment. The ld DRP granted relief with respect of comparables. 6. The ld AR submitted that the identical issue was considered by the coordinate bench in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AE. It was also submitted that TPO has not considered the alternative submissions of the assessee company that in case TNMM is adopted as the most appropriate method, same should be applied based on internal comparables rather than external comparables. Now, law is quite settled that internal comparables are more preferable to external comparables. Finally, learned authorised representative of the assessee submitted that the TPO had not considered the submissions of the assessee-company for adjustment towards unutilized capacity. The AO also not followed directions of the DRP while passing final assessment order. In the circumstances, it was prayed that the matter may be restored back to the file of the AG for de novo consideration. 8. On the other hand, learned CIT(DR) had no serious objections for restoring the matter back to the file of the AO/TPO for fresh analysis of TP study. In the circumstances, we remit the matter back to the AO to consider the above submissions de novo after affording due opportunity of being heard to the assessee company. 9. Since the facts are identical in this year also, following the decision rendered by coordinate bench (referre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the factual aspects relating to the issue and the applicability of the decision rendered by Hon ble Karnataka High Court in the case of Mphasis Ltd (supra) need to the examined by the AO. We find merit in the submissions made by Ld D.R. 14. We further notice that the AO has actually allowed deduction u/s 10B of the Act. The Ld DRP has referred to both sec.10B and 10A in its directions. The grounds urged by both the parties refer to sec.10A only. Thus, there is confusion about the section under which the deduction was claimed by the assessee. 15. In view of the foregoing discussions, we restore this issue to the file of the AO for examining it afresh by considering the additional ground raised by the assessee. 16. We shall now take up the other issues urged by the assessee. 17. At the time of hearing the ld AR did not press ground relating to disallowance made u/s 14A of the Act in view of the smallness of the amount. Accordingly the said ground is dismissed as not pressed. 18. The next issue urged by the assessee relates to Disallowance of Provision for doubtful debts claimed by the assessee u/s 36(1)(vii) of the Act. 19. The facts rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e heard both the parties and have gone through the orders, decisions and judgments and provisions of the Income-tax Act. From the facts, it is noticed that the objection of the revenue is with regard to the assessee s failure to follow the AS-15 and the actuarial method referred therein and not disputed the quantification of the provision of gratuity. In other words, the incorrect quantification of the provision makes the provisions as an unascertainable liability and therefore, such provisions should be dealt with as per the provisions of section 115JB read with Explanation1( c) and accordingly, the book provisions should be increased. On the other hand, the case of the assessee is that it is an ascertained liability as evident from the books and method of quantification does not decide the issue of ascertainment or otherwise of the liability and therefore, the provision for gratuity is required to be excluded for the purpose of determining the book profits. Considering the rival positions, it is noticed that the said provision of section 115JB are code by itself and determination of the book profits has to be done only as per the provisions of section 115JB, which unambiguousl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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