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| The Tax Publishers2020 TaxPub(DT) 3413 (Bang-Trib) INCOME TAX ACT, 1961
Section 92C
Where assessee worked out ALP adjustment which was offered to tax in Modified Return filed in accordance with APA terms and ALP adjustment made by the assessee, pursuant to APA was a Voluntary TPA and where section 10AA specifically provides a formula for computation of 'profits derived from export of articles or things or computer software' and section 10AA(7), uses the expression 'profits of the business of the undertaking', therefore, ALP adjustment made pursuant to APA would fall within ambit of scope of deduction and income offered to tax pursuant to voluntary TPA should be regarded as profits of business.
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Transfer pricing - Computation of arm's length price - Deduction under section 10AA in respect of voluntary TP adjustment made in revised return -
Assessee was engaged in the business of providing back office support services in the nature of ITES to its AEs and claimed deduction under Chapter VI-A and deduction under section 10AA. It entered into an Advance Pricing Agreement (APA) with the CBDT as per section 92CD(1). In the modified return filed in compliance to section 92CD, assessee declared a taxable income after claiming deduction under section 10AA on the income from a SEZ Unit. AO referred the matter to TPO for determination of ALP of international transactions. Assessee had filed the annual compliance report with TPO, pursuant to which TPO accepted the international transaction entered by assessee, as at arm's length. Assessee claimed deduction under section 10AA in respect of the voluntary TP adjustment made in revised return of income in respect of TP adjustment voluntarily made of a SEZ Unit which unit was eligible for deduction under section 10AA. AO denied the revised claim of deduction under section 10AA. Held: According to computation mechanism provided under the APA agreement, assessee worked out the ALP adjustment which was offered to tax in Modified Return filed in accordance with APA terms. ALP adjustment made by the assessee pursuant to APA was a Voluntary Transfer Pricing adjustment and was therefore eligible for deduction under section 10AA. Accordingly, section 10AA specifically provides a formula for computation of 'profits derived from export of articles or things or computer software' and section 10AA(7), uses the expression 'profits of the business of the undertaking'. ALP adjustment made pursuant to APA would fall within ambit of scope of deduction and therefor income offered to tax pursuant to voluntary Transfer Pricing adjustment should be regarded as profits of business for the purpose of computing deduction under section 10AA.
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2014-15
IN THE ITAT, 'B' BANGALORE BENCH
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