Income Tax Appellate Tribunal - Pune
Kpit Cummins Infosystems Ltd, , Pune vs Assessee on 4 March, 2016
आयकर अपील
य अ धकरण "ए" यायपीठ पण
ु े म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "A" BENCH, PUNE
ी आर. के. पांडा, लेखा सद य, एवं ी "वकास अव थी, या$यक सद य के सम% ।
BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA No. 1510/PN/2011
$नधा'रण वष' / Assessment Year : 2007-08
KPIT Cummins Infosystems Limited,
Plot No. 35 & 36, Rajiv Gandhi
Infotech Park, Hinjewadi,
Pune-411057
PAN : AAACK7308N
.......अपीलाथ / Appellant
बनाम / V/s.
Income Tax Officer,
Ward - 11(3), Pune
......
यथ / Respondent
Assessee by : Shri Kishor Phadke
Revenue by : Shri S.K. Rastogi
सन
ु वाई क तार ख / Date of Hearing : 07-12-2015
घोषणा क तार ख / Date of Pronouncement : 04-03-2016
आदे श / ORDER
PER VIKAS AWASTHY, JM :
The appeal has been filed by the assessee against the assessment order dated 04-10-2011 passed u/s. 143(3) r.w.s. 144C(13) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") for the assessment year 2007-08.
2ITA No. 1510/PN/2011, A.Y. 2007-08
2. The facts of the case as emanating from the records are: The assessee company is engaged in the business of on-site and off-site software development. The services provided by assessee include development, maintenance and support of software applications, implementation of software packages, supply chain management solutions, development of PC-based tools, embedded software and networking solutions for automotive companies, development of business intelligence tools, chip design, verification and testing for semiconductor companies, SAP implementation, risk management and compliance services, transaction processing, technology based and knowledge based services. The assessee has four associated enterprises being wholly owned subsidiaries in the USA, UK and Poland. Apart from the above, the assessee is also having associated enterprise in France with 73% holding, subsidiary SolvCentral Com Inc USA with 90% holding, KPIT Infosystems Limited UK holding company for KPIT Infosystems GmbH, Germany with 60% holding. Thus, in all the assessee company is having 7 associated enterprises. During the period relevant to the assessment year under appeal, the assessee had undertaken various international transactions which inter alia include interest received on loans. During the period under consideration the assessee granted loan of Polish Zloty (PLN) 10,00,000 equivalent to `1,48,60,000/- to its 100% subsidiary, KPIT Infosystems Central Europe Sp. Z.o.o., Poland. On the said loan, the assessee charged interest of `1,83,793/- @ 5.47% at Warsaw Interbank Offer Rate (WIBOR) (4.47%) + 1%. The international transaction was benchmarked by assessee following Comparable Uncontrolled Price (CUP) Method. The Transfer Pricing Officer (TPO) held that the loan given by assessee to its AE in PLN is not a foreign currency demand 3 ITA No. 1510/PN/2011, A.Y. 2007-08 deposit, because the loan given to AE is in PLN which is local currency of Poland. Thus, for the AE the loan is not in a foreign currency. The TPO further observed that the AE cannot be equated with National Bank of Poland in so far as credibility is concerned. Accordingly, the TPO rejected the benchmarking adopted by the assessee. The TPO for benchmarking the transaction, proposed to adopt CUP method at Banking Prime Lending Rate (BPLR) of State Bank of India (SBI) @ 12.25%, the rate as was applicable on 31-03-2007. The assessee raised objection to the BPLR proposed by the TPO for benchmarking the transaction. The TPO rejected the contentions of the assessee and computed the Arm's Length Price (ALP) by considering the rate of BPLR (12.25%) as the benchmark rate and made an adjustment of `2,27,807/- in respect of international transaction towards interest receivable from its AE.
3. During the year, the assessee had declared turnover of `315.78 Crores. The assessee filed its return of income on 30-10-2007 declaring total income as NIL, after claiming the benefit of deduction u/s. 10A on the eligible STP units. The assessee computed deduction before setting off the profits of the eligible units with the losses of other eligible /non-eligible units and the brought forward losses from assessment year 2005-06. The Assessing Officer in draft assessment order dated 21-10-2010 disallowed the claim of deduction u/s. 10A. The Assessing Officer following his earlier order in assessment year 2005-06 rejected the claim of the assessee.
Aggrieved, by the order of TPO and disallowance of deduction u/s. 10A in the draft assessment order, the assessee filed objections before the Dispute Resolution Panel (DRP). The DRP rejected the 4 ITA No. 1510/PN/2011, A.Y. 2007-08 objections of the assessee and upheld the findings of TPO and the Assessing Officer. On the basis of directions of DRP dated 03-08-2011, the Assessing Officer made additions in the income returned by the assessee vide assessment order dated 04-10-2011. Against the assessment order, the assessee has filed present appeal.
4. In grounds of appeal the assessee has raised 8 grounds assailing the findings of DRP and Assessing Officer. Shri Kishor Phadke appearing on behalf of the assessee submitted at the outset that he would not be pressing ground nos. 2, 4 and 7 raised in the grounds of appeal. Thus, in view of the statement made by the ld. AR of the assessee at Bar, ground nos. 2, 4 and 7 are dismissed as not pressed.
5. The other grounds raised in the appeal in the grounds of appeal are as under:
1. The learned Dispute Resolution Panel (DRP), Transfer Pricing Officer (TPO) and the Income-tax Officer, Ward 11(3) (i.e. ITO) erred in law and on facts in deciding the taxable income of the appellant at Rs.7,69,28,572/- instead of Rs. NIL as returned by the appellant.
3. The DRP & the TPO erred in law and on facts in making addition of Rs.2,27,809/- to the transfer price of the International Transaction of "Charge of Interest" without appreciating the facts of the case and business prudence.
5. The DRP & the AO erred in law and on facts in restricting deduction u/s 10A of the ITA, 1961 at Rs.39,62,57,126/- instead of Rs.40,25,98,771/- as claimed by the appellant.
6. The DRP & the ITO erred in law in holding that the deduction u/s 10A should be computed at unit / undertaking level but should be allowed only after set-off of losses of other business units / undertakings.5 ITA No. 1510/PN/2011, A.Y. 2007-08
8. The appellant craves to add/ modify/ alter/ delete all/ any of the grounds of appeal.
6. The ld. AR submitted that in ground no. 3, the only issue is, Whether the rate of interest to be adopted is BPLR of SBI or WIBOR + 1% for benchmarking the transaction? The ld. AR in support of his claim reiterated the submissions made before the TPO and DRP. Further, the ld. AR to strengthen his submissions placed reliance on the decision rendered by the Hon'ble Bombay High Court in the case of Commissioner of Income Tax Vs. Tata Autocomp Systems Ltd. reported as 276 CTR 481 (Bom) and the decision of Mumbai Bench of the Tribunal in the case of Deputy Commissioner of Income Tax Vs. Tech Mahindra Ltd. reported as 46 SOT 141 (Mumbai)(URO). The ld. AR also placed reliance on the decision of Co-ordinate Bench of the Tribunal in the case of Varroc Engineering Pvt. Ltd. Vs. The Asstt. Commissioner of Income Tax in ITA No. 2482/PN/2012 for the assessment year 2008-09 decided on 30-12-2014. The ld. AR submitted that the Co-ordinate Bench of the Tribunal after considering several decisions including the decision rendered in the case of Deputy Commissioner of Income Tax Vs. Tech Mahindra Ltd. (supra) has held that where the transaction is between the assessee and its associated enterprise in foreign currency then the same had to be looked into by applying commercial principle in regard to international transactions.
7. In respect of grounds of appeal no. 5 and 6, the ld. AR submitted that the similar issue had come up before the Co-ordinate Bench of the Tribunal in assessee's own case in assessment years 2005-06 and 2006-07. The Tribunal in ITA Nos. 1508 & 1509/PN/2011 vide order dated 30-11-2015 had decided the issue in favour of the assessee. The 6 ITA No. 1510/PN/2011, A.Y. 2007-08 ld. AR placed on record a copy of the Tribunal order in ITA Nos. 1508 & 1509/PN/2011 (supra).
8. On the other hand Shri S.K. Rastogi representing the Department vehemently supported the findings of DRP and Assessing Officer.
9. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. In the present appeal the first issue before us is with respect to international transaction arising from interest charged on the loan advanced by the assessee to its AE. The assessee has charged interest at WIBOR + 1%, whereas, the TPO had adopted BPLR of SBI for benchmarking the transaction. The objections raised by the assessee against adopting BPLR are as under:
"BPLR or the Lending Rates would not be correct indicative factors for the determination of the charge of Interest on Advance to the subsidiary on account of the following reasons :-
• The Assesses Company is neither a banker lending money for earning interest nor has Interest Cost for these funds, since the advance has been granted out of accrual and is in the normal course of its business.
• The Borrowing Company, i.e. AE is not located in India and has its operations in Poland.
• In terms of the deemed opportunity costs the better relevant comparative rate would be the ''Fixed Deposit Rate" with the bank that the assessee company could otherwise earn on these funds."
The ld. AR further pointed that due to frequent changing of the BPLR by all the banks, the prevalent BPLR of all the Indian Banks are not readily available in the Public Domain or any statistical database. Poland being member of European Union, the more appropriate rate for 7 ITA No. 1510/PN/2011, A.Y. 2007-08 comparison would be the RFC rates for Euros. The average RFC rates for Euros being 2.80% and the highest rate for 3 years and above being 3.30% only, the rate of 5.47% charged by the assessee company to its subsidiary in Poland is justified.
10. We find that the similar issue had come up before the Co- ordinate Bench of the Tribunal in the case of Varroc Engineering Pvt. Ltd. Vs. The Asstt. Commissioner of Income Tax (supra). In the said case the assessee had benchmarked its international transaction relating to interest rate charged at international rate. The benchmarking was adopting at foreign currency City Bank rates. The TPO rejected the benchmarking made by the assessee and adopted the BPLR. The Co-ordinate Bench decided the issue by observing as under:
"13. During the year under consideration, interest of Rs.2,91,82,060/- had accrued as interest on loan granted to its associated enterprises. The assessee had granted loan to M/s. Varroc European Holding BV Netherlands Euro 1,00,00,000 and repayment of loan of Euro 5,00,000, hence during the year, the effective loan amounted to Euro 96,30,000 which was equivalent to Rs.55,21,57,400/-. The assessee had charged interest @ 4.75% per annum. As per the TPO, the rate prevailing as per LIBOR +, for the year ending 31.03.2008 was 6.79%. The TPO tabulated the transactions of granting of loan and the interest charged by the assessee and computed the proposed adjustment as under:-
(Amt. in Rs.) Description Varroc European Holding BV Netherlands [A] Loan advanced / Balance of loan at the Rs.59.43 Crs. (figures as year ending 31.03.2008 per the financials) [B] Base charge adopted by the assessee LIBOR [C] Base charge adopted by the assessee However, rate charged to benchmark the transaction by the assessee = 4.75% 8 ITA No. 1510/PN/2011, A.Y. 2007-08 [D] Bank Prime lending rate (BPLR) of SBI 12.25% as on 31.03.2008 [E] RATE CHARGED BY THE ASSESSEE 4.75% [F] Interest charged by the assessee Rs.2,86,27,089 [G] The rate prevailing as per 6 months Rs.4,03,52,970 LIBOR for the year ended 31.03.2008 was 6.79% [H] Interest @ 12.25% as per BPLR of SBI Rs.7,28,00,000 [I] Difference in BPLR and assessee's Rs.4,41,74,661 amount [J] Proposed adjustment Rs.4,41,74,661
14. The assessee had benchmarked its international transactions taking the interest rate charged at international rates of the disbursing bank i.e. Citi Bank. However, the TPO was of the view that loan given to the associated enterprises in the currency of that country was not a foreign currency deposit with associated enterprises. On the other hand, the assessee had borrowed the money on banking prime lending rates and was show caused by the TPO as to why lending rate for the purpose of comparability following CUP method should not be taken. The TPO in view of the related discussion found that the arm's length price computed by the assessee in respect of the international transactions relating to provision of interest, was not acceptable. The view of the TPO was that in normal circumstances where any advance had to be given to any unrelated entity, then the rate of interest chargeable would be higher than the BPLR. Since the higher rate of interest more than BPLR was neither ascertainable nor determinable, the TPO considered it suitable to benchmark the international transactions with benchmark of interest taken as BPLR. Accordingly, rate of 12.25% i.e. the BPLR of the SBI was taken as benchmark rate and the differential quantum of interest on the loan advanced to the subsidiaries, amounting to Rs.4,41,74,661/- was added to the value of international transactions to arrive at the arm's length price of the international transactions. The TPO dis-regarded the LIBOR+ rate of 6.75% as not the benchmark applied by the assessee as according to that rate, the interest should have been charged at Rs.4,03,52,970/- whereas it had only charged Rs.2,86,27,089/-. In 9 ITA No. 1510/PN/2011, A.Y. 2007-08 view thereof, an adjustment of Rs.4,41,74,661/- was made in the hands of the assessee. The said order of TPO has been upheld by DRP.
15. In the facts of the present case, the assessee had advanced money in the form of share application money which were later converted into loan on the advice of European Consultants. On such advance made to its associated enterprises, the assessee had charged interest @ 4.75%.
While benchmarking the international transactions what has to be seen is the comparison between related transactions i.e. where the assessee has advanced money to its associated enterprises and charged interest then the said transaction is to be compared with a transaction as to what rate the assessee would have charged, if it had extended the loan to the third party in foreign country. Once there is a transaction between the assessee and its associated enterprises in foreign currency, then the transaction would have to be looked upon by applying the commercial principles with regard to the international transactions. In that case, the international rates fixed being LIBOR+ rates would have an application and the domestic prime lending rates would not be applicable. The assessee has further explained that it had raised the loan from Citi Bank on international rates for the purpose of investment in the share application money of its associated enterprises, which in turn was partly converted from capital into loan. Where the assessee had a comparable of borrowing loan on international rates and advancing to its associated enterprises, then the said comparable was to be applied for benchmarking the transaction of advancing the loan on interest to its associated enterprises. The assessee had charged interest rate of 4.75% on the loan advanced to the associated enterprises. The assessee on the other hand, claims that it had borrowed the money on LIBOR+ rates i.e. international rates, which were Japanes based LIBOR+ rates which were lower than the US based LIBOR+ rates. The plea of the assessee before us was that it had advanced the loan to its associated enterprises on LIBOR+ rates i.e. 4.75%. In the totality of the facts and circumstances where the assessee has the internal CUP of operating at international rates available and since the said loan raised by the assessee at international rates was advanced to its associated enterprises, we find no merit in the order of the TPO in applying the domestic loan rates i.e. BPLR rates for benchmarking transaction of charging of interest on the loans advanced to the associated enterprises by the assessee. Where the assessee had made the borrowings on LIBOR+ rates and advanced the same at LIBOR+ rates, then the said transaction is at arm's length price and there is no merit in any adjustment to be made on this account. 10 ITA No. 1510/PN/2011, A.Y. 2007-08
16. The Chennai Bench of the Tribunal in M/s. Siva Industries & Holdings Limited Vs. ACIT, Chennai (2012) 26 taxmann.com 96 (Chennai) had held as under:-
"The assessee had given the loan to the associated enterprises in US dollars, and assessee was also receiving interest from the associated enterprises in Indian rupees. Once the transaction between the assessee and the associated enterprises was in foreign currency and the transaction was an international transactions, then the transaction would have to be looked upon the applying the commercial principles in regard to international transactions. If that was so, then the domestic prime lending the rate would have no applicability and the international rate fixed being LIBOR would come into play. In the circumstances, the view that LIBOR rate had to be considered while determining the arm's length price interest rate in respect of the transaction between the assessee and the associated enterprises was to be upheld. As it was noticed that the average of the LIBOR rate for 1-4-2005 to 31- 3-2006 is 4.42 per cent and the assessee had charged interest at 6 per cent which was higher than the LIBOR rate, no addition on this account was liable to be made in the hands of the assessee. In the circumstances, the addition made by the Assessing Officer on this count was deleted."
17. The Mumbai Bench of the Tribunal in DCIT Vs. Tech Mahindra Ltd. (2011) 12 taxmann.com 132 (Mum.) held that where there is a choice between the interest rate of currency other than the currency in which transaction had taken place and the interest rate in respect of the currency in which transaction has taken place, the latter should be adopted. Where the transaction is between the assessee and its associated enterprises in foreign currency and the transaction is international transaction, then the transaction would have to be looked upon by applying commercial principles in regard to international transactions.
18. Similar principle has been laid down by the Mumbai Bench of the Tribunal in Hinduja Global Solutions Ltd. Vs. ACIT (2013) 35 taxmann.com 348 (Mumbai - Trib.).
19. In the entirety of the above facts and circumstances, we hold that where the assessee had entered into a transaction with its associated enterprises in foreign currency, and the transactions were international transactions, then the same had to be looked into by applying 11 ITA No. 1510/PN/2011, A.Y. 2007-08 commercial principle in regard to international transactions. In the facts of present case, the assessee had borrowed the loan from Citi Bank and advanced the same on LIBOR+ rates to its associated enterprises, then the said transaction with its associated enterprises is within arm's length price. The TPO / AO thus, directed to re-compute the arm's length price of the international transactions. Another aspect to be kept in mind is the plea of the assessee with regard to the interest receivable. The assessee had also raised the issue that the TPO had adopted the interest receivable from associated enterprise company at Rs.2,86,27,089/- instead of Rs.2,91,82,060/- which is disclosed in the audit report in Form No.3CEB. The Assessing Officer is also directed to verify the claim of the assessee in this regard and compute the arm's length price of the international transactions. Reasonable opportunity of being heard shall be afforded to the assessee by the Assessing Officer / Transfer Pricing Officer. The grounds of appeal Nos.1 and 2 raised by the assessee are thus, allowed as indicated above."
11. In view of the facts of the case and the decision of Co-ordinate Bench of the Tribunal, we hold that the DRP has erred in confirming the findings of the TPO in adopting BPLR rates. The TPO is directed to recompute the interest rate by adopting WIBOR + 1% in respect of the international transaction under appeal. Accordingly, ground no. 3 raised in the appeal is allowed.
12. The second issue raised in the present appeal is with respect to claim of deduction u/s. 10A of the Act. We find that identical issue had come up before the Tribunal in appeal of the assessee for the assessment years 2005-06 and 2006-07. The Tribunal decided the issue in favour of the assessee. The relevant extract of the order of the Tribunal in ITA Nos. 1508 & 1509/PN/2011 (supra) is as under:
"12. We have heard the rival contentions and perused the record. The assessee is engaged in export of software and IT enabled services. During the year under consideration the assessee was running eight units at different places and five of which units had declared positive 12 ITA No. 1510/PN/2011, A.Y. 2007-08 profits and the balance three units declared losses for the captioned assessment year. The assessee was entitled to claim deduction u/s. 10A of the Act in respect of export of software. The assessee computed the deduction u/s. 10A of the Act by treating each of the unit as separate unit/undertaking and claimed the deduction at Rs.24,55,53,914/-. The losses from three units aggregating Rs.4,55,31,667/- was carried forward to be adjusted in the succeeding years. On the other hand the Revenue authorities were of the view that the losses earned by the assessee from separate unit have to be adjusted against the profits earned by the assessee in separate units and after making this intra- head set off, the deduction under section 10A of the Act were to be allowed to the assessee. In this exercise the deduction under section 10A of the Act was reduced to Rs.20,68,49,064/- and there were nil carry forward loss in the hands of the assessee. The reason for the said adjustment by the Assessing Officer and Commissioner of Income Tax (Appeals) was on the surmise that the amendment brought to section 10A of the Act w.e.f. 1st April, 2001 under which deduction from income was to be allowed to the assessee and not any exemption. Further, the Assessing Officer referred to the provisions of section 70(1) and observed that the intra-head adjustment had to be made before claiming the deduction u/s. 10A of the Act. The assessee is in appeal against the said order of Assessing Officer, which has been upheld by the Commissioner of Income Tax (Appeals).
13. Undoubtedly, after the amendment w.e.f. 1st April, 2001 under the provisions of section 10A of the Act, the assessee is now entitled to deduction. Prior to the amendment the assessee was entitled to exemption of the said income. In other words the said income did not form part of the total income and was excluded at the entity level itself. The question which arises for adjudication is whether in view of the amended provisions of section 10A of the Act, under which deduction can be claimed by an enterprises, whether the intra head adjustment of losses of certain units is to be made against the profits of other units of the same assessee, before computing the deduction under section 10A of the Act.
14. The Hon'ble Bombay High Court in Hindustan Unilever Ltd. Vs. DCIT & Anr. (supra) in an appeal relating to assessment year 2004-05 where reassessment proceedings were initiated under section 147/148 of the Act on several issues, considered the reason to believe recorded by the Assessing Officer with regard to set off of loss incurred by unit eligible for deduction u/s. 10B of the Act. The Assessing Officer had 13 ITA No. 1510/PN/2011, A.Y. 2007-08 reopened the assessment on the surmise that since the income of the Crab Stick Unit was exempted from tax under section 10B, the loss of that unit was wrongly set off against the normal business income. The Hon'ble High Court noted that after the substitution of section 10B of the Act by the Finance Act of 2000, the provisions provided for deduction of such profit or gains as were derived by 100% EOU for the period prescribed under that section. The Hon'ble High Court thus held that the basis on which the assessment was sought to be reopened was belied by a plain reading of the provisions and the Assessing Officer was in error in proceeding on the basis that because the income was exempted, the loss was not allowable. The Hon'ble High Court further considered that all the four units of the assessee were eligible under section 10B, out of which three units had returned profits during the course of the assessment year, while the Crab stick Unit had returned a loss. The High Court further held that "The assessee was entitled to a deduction in respect of the profits of the three eligible units while the loss sustained by the fourth unit could be set off against the normal business income."
In these circumstances, the Hon'ble High Court held that the basis on which the assessment was sought to be reopened was contrary to the plain language of section 10B.
15. The Hon'ble Bombay High Court in CIT Vs. Black & Veatch Consulting Pvt. Ltd. (supra) also observed that section 10A was a provision which was in the nature of a deduction and not an exemption. The Hon'ble High Court further held that the deduction under section 10A, in our view, was to be given effect to at the stage of computing the profits and gains of business. This is anterior to the application of the provisions of section 72 which deals with the carry forward and set off of business losses. The Hon'ble High Court held that the deduction under section 10A has to be given at the stage when the profits and gains of business are computed in the first instance. The issue before the Hon'ble High Court was with regard to the adjustment of brought forward unabsorbed depreciation and loss of the unit, which were not eligible for deduction under section 10A of the Act and it was held that the same could not be set off against the current profit of the eligible units while computing the deduction under section 10A of the Act.
16. The case of the Revenue before us on the other hand is that ratio laid down by the Hon'ble Supreme Court in Synco Industries Ltd. Vs. Assessing Officer, Income Tax, Mumbai (supra) is to be applied while computing the deduction under section 10A of the Act. In the facts of the case before Hon'ble Supreme Court the assessee had claimed deduction 14 ITA No. 1510/PN/2011, A.Y. 2007-08 from the profits and gains of the business under section 80HH r.w.s. 80-I and 80B of the Act. The Hon'ble Supreme Court held that while working out gross total income of the assessee, losses suffered by it in earlier years have to be adjusted and if gross total income of assessee is nil then the assessee would not be entitled to deduction under Chapter VI-A.
17. The authorities below have further placed reliance on the provisions of section 70(1) for the proposition of set off of loss from one source against income from another source under the same head of income. The provisions of section 10A and 10B of the Act are para materia. In such a situation the ratio laid down by the jurisdictional High Court in Hindustan Unilever Ltd. Vs. DCIT & Anr. (supra) are to be applied. The Hon'ble High Court had held that where three units of the assessee had returned profit during the course of assessment year and one unit had returned the loss, the assessee was entitled to deduction in respect of the profits of three eligible units, while the loss sustained by the fourth unit could be set off against normal business income. Applying the said ratio to the facts of the present case we are of the view that the deduction u/s. 10A and 10B are units specific in contradiction to be assessee specific. The assessee while claiming the deduction u/s. 10A of the Act in respect of each of its unit has to satisfy the conditions viz-a-viz each unit/undertaking. Even the quantification of amount of deduction has to be worked out independently in each unit. The assessee before us has furnished on record the audit report in Form No. 56F in respect of each of the unit against which it has claimed the deduction under section 10A of the Act. The quantification of the deduction under section 10A of the Act is to be worked out independently for each eligible unit and in case after the deduction so claimed under section 10A of the Act, there are profits in the hands of the assessee for such unit then the same can be set off against the losses, if any, incurred by the assessee in any other unit. There is no merit in first aggregating the profits of each of the eligible unit and setting of the losses of other units and on the net profits, if any, the deduction under section 10A of the Act to be computed. We find support from the ratio laid down by the Hon'ble Bombay High Court in CIT Vs. Black & Veatch Consulting Pvt. Ltd. (supra) wherein it has been held that the deduction under section 10A of the Act has to be given at the stage when the profits and gains of the business are computed in the first instance. In view thereof we reverse the order of Commissioner of Income Tax (Appeals) in this regard."
15ITA No. 1510/PN/2011, A.Y. 2007-08
Since there has been no change in the facts and circumstances in the impugned assessment year, we respectfully follow the order of Co- ordinate Bench in earlier assessment years in the case of assessee and allow ground nos. 5 and 6 in the appeal of the assessee.
13. Ground Nos. 1 and 8 raised in the appeal are general in nature, hence, require no adjudication.
14. In the result, the appeal of the assessee is partly allowed in the aforesaid terms.
Order pronounced on Friday, the 04th day of March, 2016.
Sd/- Sd/-
(आर. के. पांडा / R.K. Panda) (!वकास अव"थी / Vikas Awasthy)
लेखा सद"य / ACCOUNTANT MEMBER $या%यक सद"य / JUDICIAL MEMBER
पुणे / Pune; &दनांक / Dated : 04th March, 2016
RK
आदे श क+ ,$त.ल"प अ/े"षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. DRP, Pune
4. DIT (Intl. Taxation), Pune
5. !वभागीय %त%न)ध, आयकर अपील य अ)धकरण, "ए" ब-च, पुणे / DR, ITAT, "A" Bench, Pune.
6. गाड/ फ़ाइल / Guard File.
//स या!पत %त // True Copy// आदे शानुसार / BY ORDER, %नजी स)चव / Private Secretary, आयकर अपील य अ)धकरण, पण ु े / ITAT, Pune