M/S GENISYS INTEGRATING SYSTEMS (INDIA) PVT. LTD.,,BANGALORE vs. DCIT, BANGALORE

In that case, it was held by the Hon’ble Karnataka High Court that deduction/exemption u/s 10A has to be allowed without setting off of brought forward unabsorbed losses and depreciation from earlier assessment year or current assessment year either in the case of non STP units or in the case of very same undertaking. Since no difference in facts could be pointed out by the learned DR of the revenue, we decline to interfere with the order of the ld. CIT(A) on this issue by respectfully following this judgment of the Hon’ble Karnataka High Court rendered in the case of CIT Vs M/s Yokogawa India Ltd., (Supra).

& 1661(B)/2012 2.The learned Deputy Commissioner of Income Tax, Circle-I 1(3), Bangalore (herein after referred as "Assessing Officer"), learned Additional Director of Income Tax (Transfer Pricing) - I (herein after referred as "Transfer Pricing Officer"), Bangalore and the learned Commissioner of Income Tax (Appeals) - IV (collectively referred as "lower authorities") have erred in passing the Orders in the manner passed by them. The Orders being bad in law are liable to be quashed.

3. The learned Assessing Officer has erred in making a reference to Transfer Pricing Officer for determining arm's length price without demonstrating as to why or how it was necessary and expedient to do so. The learned Commissioner of Income Tax (Appeals) - IV has erred in confirming the action of the Assessing officer.

4. The lower authorities have erred in:

a. Passing the order without demonstrating that appellant had motive of tax evasion. b. Not appreciating that the charging or computation provision relating to income under the head "Profits & Gains of Business or Profession" do not refer to or include the amounts computed under Chapter X and therefore the addition made under Chapter X is bad in law.

5. The lower authorities have erred in a. Computing the arm's length price based on the data for the Financial Year 2003-04 of the comparables, which was not available when the appellant undertook transfer pricing documentation and reporting obligations;

b. Rejecting the cost plus method adopted by the appellant and adopting transactional net margin method as the most appropriate method. c. Rejecting the comparables selected by the appellant on unjustifiable grounds; d. Ignoring the additional comparables proposed by the appellant during the course of appeal proceedings; and e. Rejecting the transfer pricing analysis undertaken by the appellant on unjustifiable grounds.

6.The lower authorities have erred in & 1661(B)/2012 a. Performing fresh transfer pricing analysis and adopting inappropriate filters in doing fresh transfer pricing analysis. b. Adopting companies as comparables even though they are not comparable to the appellant. c. Not appreciating that the law does not compel adopting many (or any minimum) companies as comparables and that the appellant could justify the price paid/charged on the basis of anyone comparable only. d. Not making proper adjustment for enterprise level and transactional level differences between the appellant and the comparable companies. e. Not granting adjustment towards under utilisation of capacity/manpower.

7.The lower authorities have erred in not appreciating that interest u/s 234B and 234D levied in the assessment order is not so leviable based upon the facts and circumstances of the case.

PRAYER

9. Interest levied u/s 234B and 234D be deleted.

The appellant submits that each of the above grounds/ sub- grounds are independent and without prejudice to one another.

The appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing, of the appeal, so as to enable the Income-tax Appellate Tribunal to decide the appeals according to law.

The appellant prays accordingly.

Thereafter, he has drawn our attention to page no.355 of the paper book and in particular para-15.3.3 of the Tribunal order as per which it was held by the Tribunal that M/s Tricom India Ltd. should also be excluded from the list of comparables. Then, he has drawn our attention to para 15.3.4 on page no.356 and pointed out that as per this para, it was held by the Tribunal that this company M/s Fortune InfoTech Ltd., has unique technology and therefore, cannot be taken as a comparable. He submitted that since all the three comparables selected by the TPO are required to be excluded as per this Tribunal order, the TP study undertaken by the assessee should be accepted.

8. In reply, it was submitted by the ld. DR of the revenue that if it is held that all the comparables selected by the TPO are to be excluded then the matter has to be restored back to the file of the TPO for a fresh decision after considering other suitable comparables which may be selected by the TPO or may be brought on record by the assessee because as per the TP study, assessee has adopted cost plus method and the TPO has selected TNMM as most appropriate method. Although, the assessee has furnished a Tribunal & 1661(B)/2012 order based on which the assessee is requesting for exclusion of all the three comparables selected by the TPO but this could not be established by the assessee that cost plus method is most appropriate method as compared to TNMM. In the absence of that, the TP study of the assessee cannot be adopted because the TPO has considered TNMM as the most appropriate method and no defect would be pointed out by the ld. AR of the assessee in the same. He also submitted that the matter should be restored back to the file of the TPO for a fresh decision on all aspects including this aspect as to whether the assessee is satisfying employees cost filter of 25% for this segment i.e. ITES segment.

Order pronounced in the open court on the date mentioned on the caption page.