Dar A1 Handasah Consultants (Shir & Partners) India Pvt.Ltd, Pune V. Deputy Commissioner of Income-tax, Circle - 1 (2), Pune

ITA 1413/PUN/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3510 (ITAT-PUNE)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 26-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Period of limitation; Competent authority; Reassessment proceedings
• Section: 92C; 6; 11; 139; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH C, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO.1413/PUN/2019 / ASSESSMENT YEAR : 2010-11 DAR AL HANDASAH CONSULTANTS (SHAIR & PARTNERS) INDIA PRIVATE LIMITED, WING A,B LEVEL-2, TOWER 11, CYBERCITY MAGARPATTA CITY, HADAPSAR, PUNE 411 013 PAN : AACCD6524H VS. DCIT, CIRCLE-1(2), PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : IN THIS APPEAL, THE ASSAIL IS TO THE LEGAL TENABILITY OF THE ORDER DATED 22-07-2019 PASSED BY THE COMMISSIONER OF INCOME-T AX (APPEALS) IN RELATION TO THE ASSESSMENT YEAR 2010-11. 2. THE FACTS OF THE CASE LIE IN A NARROW COMPASS. THE A SSESSEE FILED ITS ORIGINAL RETURN DECLARING TOTAL INCOME OF RS.45,21,431/ -. SINCE THE ASSESSEE HAD REPORTED AN INTERNATIONAL TRANSACTION O F IT ASSESSEE BY SHRI RAJENDRA AGIWAL REVENUE BY SHRI ABHIJIT CHOUDHURY DATE OF HEARING 28-11-2019 DATE OF PRONOUNCEMENT 02-12-2019 ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 2 ENABLED DESIGN ENGINEERING SERVICES WITH TRANSACTED VALUE OF RS.37,54,36,101/-, THE ASSESSING OFFICER (AO) MADE A R EFERENCE TO THE TRANSFER PRICING OFFICER (TPO) FOR DETERMINING THE ARMS LENGTH PRICE (ALP). THE TPO SELECTED CERTAIN COMPARABLES WITH THEIR AVERAGE PROFIT LEVEL INDICATOR (PLI) OF OP/OC AT 26.26%. THIS RESULTED INTO SOME TRANSFER PRICING ADJUSTMENT. PURSUAN T TO THE DIRECTIONS GIVEN BY THE DISPUTE RESOLUTION PANEL (DRP), THE AO IN THE FINAL ASSESSMENT ORDER DATED 30-01-2015 PASSED U/S.14 3(3) R.W.S. 144C(13) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO C ALLED `THE ACT) MADE TRANSFER PRICING ADDITION OF RS.2,75,90,602/-. IN THE MEANTIME, THE ASSESSEE ENTERED INTO AN ADVANCE PRICING AGRE EMENT (APA) WITH THE CBDT ON 24-11-2015, IN WHICH THE OPERATING PROFIT MARGIN OF NOT LESS THAN 17% WAS AGREED UNDER THE TRANSACTIONAL NET MARGIN METHOD (TNMM). PURSUANT TO THE AP A, THE ASSESSEE FILED A MODIFIED RETURN IN TERMS OF SECTION 92C D(1) FOR THE YEAR UNDER CONSIDERATION, WHICH IS A PART OF ROLLBACK YE ARS, SHOWING TOTAL INCOME AT RS.45,21,431/-, WHICH IS THE SAME S UM AS WAS DECLARED IN THE ORIGINAL RETURN OF INCOME. THE ONLY C HANGE WHICH OCCURRED IN THE MODIFIED RETURN WAS THAT THE ASSESSEE INCREASED THE PROFIT MARGIN TO 17%, IN CONSONANCE WITH THE AP A, FROM THE ORIGINALLY DECLARED PROFIT MARGIN OF 15%. THIS RESU LTED INTO ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 3 ENHANCEMENT OF INCOME BY A SUM OF RS.20,36,023/-. SIMULTANEOUSLY, THE ASSESSEE CLAIMED A FURTHER DEDUCTION U/S .10A OF THE ACT FOR THE AMOUNT EQUAL TO THE ENHANCED INCOME, AS A R ESULT OF WHICH NO FURTHER ADDITIONAL INCOME WAS OFFERED. THE AO, IN HIS ORDER DATED 30-03-2017 PASSED U/S.143(3) R.W.S. 92CD OF THE ACT, DID NOT ACCEPT THE CLAIM OF THE ASSESSEE FOR THE ENHANCED DEDUCTION ON THE ADDITIONAL INCOME OF RS.20,36,023/- PRIMARILY ON THE GROUND THAT THE MODIFICATION IN THE RETURN U/S.92CD(1) WAS PERMISSIBLE ONLY TO THE EXTENT OF STIPULATION IN THE APA AND THE APA IN QUESTION DID NOT PROVIDE FOR ANY SUCH DEDUCTION. HE FURTHER TOOK NOTE OF THE MANDATE OF SECTION 10A(3) OF THE ACT WHICH PROVIDES THAT THE SALE PROCEEDS IN RESPECT OF EXPORT OF SOFTWARE SHOULD BE BROU GHT INTO INDIA IN CONVERTIBLE FOREIGN EXCHANGE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE RELEVANT PREVIOUS YEAR. SINCE THE ENH ANCEMENT IN THE AMOUNT OF SALE VALUE WAS BROUGHT INTO INDIA IN CONVE RTIBLE FOREIGN EXCHANGE AFTER SUCH PERIOD, THE AO HELD THAT THE AS SESSEE WAS NOT ENTITLED TO FURTHER DEDUCTION U/S.10A TO THE TUNE OF RS.20,36,023/-. THE LD. CIT(A) SCANNED THE REASONS A SCRIBED BY THE AO AND ACCORDED HIS IMPRIMATUR TO THE VIEW SO CANVASSED. THIS HAS BROUGHT THE ASSESSEE BEFORE THE TRIBUNAL. ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 4 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH TH E RELEVANT MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT THE APA SETTLED THE ARMS LENGTH MARGIN AT NOT LESS THAN 17% COVERING THE APA YEARS AND THE ROLLBACK YEARS INCLUDING THE ONE UNDER CONSIDERATION. IN CONSONANCE WITH THE APA, THE ASSESSEE F ILED ITS MODIFIED RETURN FOR THE YEAR UNDER CONSIDERATION WITH 17% OPERATING PROFIT MARGIN AND RAISED FURTHER INVOICE AMOUNTING TO RS.20,36,023/- ON ITS ASSOCIATED ENTERPRISE (AE) ON 07-12 -2015. IT BROUGHT INTO INDIA THE CONVERTIBLE FOREIGN EXCHANGE ON 23-1 2-2015, WHICH IS WITHIN A PERIOD OF ONE MONTH FROM THE DATE OF THE A PA. THERE IS NO QUARREL ON THE FACT THAT THE ASSESSEE ORIGINALLY FILED RETURN CLAIMING DEDUCTION U/S.10A, WHICH WAS ALSO ALLOWED BY THE AO EXCEPT TO THE EXTENT OF TRANSFER PRICING ADJUSTMENT. IT IS IN THIS BACKDROP OF THE FACTS THAT THE QUESTION ARISES AS TO WHETHER THE ASSESSEE IS ENTITLED TO FURTHER DEDUCTION U/S.10A ON THE ADDITIO NAL INCOME? 4. THE FOUNDATION OF THE ACTION OF THE AUTHORITIES BELOW FOR TH E DENIAL OF DEDUCTION IS PREMISED ON THE UNDERSTANDING THAT TH E MODIFIED RETURN CANNOT BREACH THE MANDATE OF THE APA, WHICH , IN TURN, RESTRICTS ITS SCOPE ONLY TO THE DETERMINATION OF THE ALP AND NOTHING MORE THAN THAT. ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 5 5. IN ORDER TO APPRECIATE THE RIVAL CONTENTIONS, IT WOULD BE APPOSITE TO HAVE A GLANCE AT THE RELEVANT PROVISIONS IN THIS REG ARD. SECTION 92CC WITH THE CAPTION ADVANCE PRICING AGREEMENT PROVIDES THROUGH SUB-SECTION (1): `THE BOARD, WITH THE APPR OVAL OF THE CENTRAL GOVERNMENT, MAY ENTER INTO AN ADVANCE PRICING AGREEMENT WITH ANY PERSON, DETERMINING THE ARM'S LENGTH PRICE IN RELATION TO AN INTERNATIONAL TRANSACTION . SUB-SECTION (2) GIV ES THE MANNER OF DETERMINATION OF THE ALP REFERRED TO IN SUB -SECTION (1) BY STATING THAT IT: ` MAY INCLUDE THE METHODS REFERRED TO IN SUB- SECTION (1) OF SECTION 92C OR ANY OTHER METHOD, WITH SUCH ADJUSTMENTS OR VARIATIONS, AS MAY BE NECESSARY OR EXPEDIE NT SO TO DO. SUB-SECTION (3), WHICH STARTS WITH THE NON OBSTANTE CLAUS E QUA SECTIONS 92C/92CA, STATES THAT THE ALP OF ANY INTERNATIONAL TRANSACTION IN RESPECT OF WHICH THE APA HAS BEEN ENTERED INTO: `SHALL BE DETERMINED IN ACCORDANCE WITH THE ADVANCE PRICING AGREEMENT SO ENTERED. THE CRUX OF THE ABOVE REFERRE D PROVISIONS DEALING WITH THE ADVANCE PRICING AGREEMENT IS THAT THE ARMS LEN GTH MARGIN OR PRICE IS SETTLED AS PER THE TERMS OF THE APA; THE M ANNER OF DETERMINATION OF SUCH ALP MAY BE BY ANY OF THE METHODS RE FERRED TO IN SECTION 92C(1) OR ANY METHOD DE HORS THE PRESCRIPTION OF SECTION 92C(1); AND THE PROVISIONS OF SECTION 92C (COMPUTATION OF ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 6 ALP) AND SECTION 92CA (REFERENCE TO THE TPO) SHALL NOT APPLY IN RESPECT OF THE DETERMINATION OF THE ALP UNDER THE APA. 6. SECTION 92CD DEALS WITH GIVING ` EFFECT TO THE ADVANCE PRICIN G AGREEMENT. SUB-SECTION (1) REQUIRES FILING OF THE MODIFIED RETURN BY THE ASSESSEE IN ACCORDANCE WITH THE APA. SUB-SECTION (3 ) STATES THAT IF THE ASSESSMENT ETC. FOR AN ASSESSMENT YEAR RELEVANT TO A PREVIOUS YEAR TO WHICH THE AGREEMENT APPLIES HAS BEEN COMP LETED BEFORE THE EXPIRY OF PERIOD ALLOWED FOR FURNISHING OF MODIF IED RETURN UNDER SUB-SECTION (1), WHICH IS A CASE UNDER CONS IDERATION, THE ASSESSING OFFICER SHALL: `PROCEED TO ASSESS OR REASSES S OR RECOMPUTE THE TOTAL INCOME OF THE RELEVANT ASSESSMENT YEAR HA VING REGARD TO AND IN ACCORDANCE WITH THE AGREEMENT. SUB-SECTIO N (4) DEALS WITH A SITUATION IN WHICH THE ASSESSMENT ETC. FOR AN ASSE SSMENT YEAR RELEVANT TO THE PREVIOUS YEAR TO WHICH THE APA APPLIES AR E PENDING ON THE DATE OF FILING OF MODIFIED RETURN. IT LAYS DO WN THAT : `THE ASSESSING OFFICER SHALL PROCEED TO COMPLETE THE ASSESSM ENT OR REASSESSMENT PROCEEDINGS IN ACCORDANCE WITH THE AGREEMENT TAKING INTO CONSIDERATION THE MODIFIED RETURN SO FURNISHED. ON GO ING THROUGH THE PRESCRIPTION OF SUB-SECTIONS (3) AND (4) OF SE CTION 92CD, IT BECOMES EXPLICITLY CLEAR ONCE AN ASSESSEE HAS FILED ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 7 MODIFIED RETURNS UNDER SUB-SECTION (1) OF SECTION 92CD, THE AO IS OBLIGED TO MAKE/COMPLETE THE ALREADY COMPLETED OR PENDING ASSESSMENTS U/S.92CD ITSELF AFRESH HAVING REGARD TO OR IN ACCORDANCE WITH THE TERMS OF THE APA. NOT ONLY THAT, SUB-SE CTION (5) OF SECTION 92CD ALSO ENSHRINES PERIOD OF LIMITATION FOR MAKING/COMPLETING SUCH ASSESSMENTS. IT, THEREFORE, FOLLOWS THA T THE ACT CONTAINS A SEPARATE DESIGNATED PROCEDURE FOR DEALING WITH THE ASSESSMENTS PURSUANT TO THE APA, WHICH ALSO CONTAINS DISTINCT TI ME LIMITS IN THIS REGARD. 7. HAVING TAKEN AN OVERVIEW OF THE RELEVANT PROVISIONS OF THE APA, WHICH ARE GERMANE TO THE ISSUE UNDER CONSIDERATION, LET US PROCEED TO EXAMINE THE QUESTION AS TO WHETHER THE ASSESSEE, IN THE GIVEN FACTS AND CIRCUMSTANCES AND AS PER LAW, IS ENTITLED TO DEDUCTION U/S 10A IN ASSESSMENT U/S 92CD OF THE ACT ON THE ADDITIONAL INCOME OFFERED IN THE MODIFIED RETURN? THE PRECISE ANSWER TO THE QUESTION CAN BE FOUND OUT BY ANSWERING THE FOLLOWING THREE SUB-QUESTIONS:- I. WHETHER PROVISO TO 92C(4) DEBARS DEDUCTION U/S 10A ON ADDITIONAL INCOME IN ASSESSMENT U/S 92CD? II. IF NO, WHETHER ASSESSMENT U/S 92CD PROVIDES FOR GRA NTING DEDUCTION U/S 10A? ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 8 III. IF YES, WHETHER THE ASSESSEE HAS SATISFIED THE CONDITIO NS OF DEDUCTION U/S 10A? I. WHETHER PROVISO TO 92C(4) DEBARS DEDUCTION U/S10A ON AD DITIONAL INCOME IN ASSESSMENT U/S 92CD? 8. THE CASE OF THE AO IS THAT THE ASSESSEE CANNOT BE ALLOWED DEDUCTION U/S 10A IN RESPECT OF THE INCREMENTAL INCOME OFFER ED IN THE MODIFIED RETURN, WHICH AS PER THE AO, IS ELOQUENTLY PROS CRIBED BY THE PROVISO TO SUB-SECTION (4) OF SECTIONS 92C/92CA OF THE ACT. IN THIS REGARD, IT IS SEEN THAT SECTION 92C DEALS WITH THE COMPU TATION OF ALP BY THE AO. SUB-SECTION (4) PROVIDES THAT WHERE AN ALP IS DETERMINED BY THE AO UNDER SUB-SECTION (3): THE ASSESSING OFFICER MAY COMPUTE THE TOTAL INCOME OF THE ASSESSEE HAVING REGARD TO THE ARMS LENGTH PRICE SO DETERMINED. PROVISO TO THIS SUB-SECTION , WHICH IS THE BEDROCK FOR THE DENIAL OF THE ASSESSEES CLA IM, STATES THAT .... NO DEDUCTION U/S.10A . . . . . . SHALL BE ALLOWED IN RESPE CT OF THE AMOUNT OF INCOME BY WHICH THE TOTAL INCOME OF THE ASSESSEE IS ENHANCED AFTER COMPUTATION OF INCOME UNDER THIS SUB-SECTION . SECTION 92CA, THROUGH WHICH A REFERENCE IS MADE BY THE A O TO THE TPO FOR DETERMINATION OF THE ALP AND THEREAFTER THE ASSESSMEN T IS COMPLETED BY THE AO IN TERMS OF THE TPOS ORDER, PROVID ES THROUGH SUB-SECTION (4) THAT ON RECEIPT OF ORDER FROM THE TPO, `THE ASSESSING OFFICER SHALL PROCEED TO COMPUTE THE TOTAL INCOME OF THE ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 9 ASSESSEE UNDER SUB-SECTION (4) OF SECTION 92C IN CONFOR MITY WITH THE ALP DETERMINED BY THE TPO. THUS, NOTWITHSTANDING THE ALP DETERMINATION BY THE AO OR THE TPO, THE ASSESSMENT IS FINALIZED BY THE AO IN TERMS OF THE MANDATE CONTAINED IN SUB-SECTION (4) O F SECTION 92C, WHICH SPECIFICALLY PROVIDES THAT NO DEDUCTION U/S.1 0A SHALL BE ALLOWED IN RESPECT OF THE AMOUNT OF INCOME BY WHICH THE TOTAL INCOME IS ENHANCED AFTER COMPUTATION OF INCOME UNDER THIS SUB-SECTION . A CLOSE SCRUTINY OF THE CRUCIAL WORDS IN THE PROVISO DECODES THAT THE DENIAL OF DEDUCTION IS PERMISSIBLE ONLY WHEN, FIRST THERE IS COMPUTATION OF INCOME UNDER SUB-SECTION (4) OF S ECTIONS 92C/92CA OF THE ACT AND SECOND, THE TOTAL INCOME IS ENHANCED BECAUSE OF SUCH COMPUTATION, NAMELY, BY VIRTUE OF THE TRANS FER PRICING ADJUSTMENT. THUS, IT IS VIVID THAT THE PROVISO RESTRICTING THE GRANTING OF DEDUCTION U/S.10A ON ENHANCED INCOME APPLIES ON LY WHERE THE COMPUTATION OF INCOME IS MADE UNDER THE SUB-SEC TION (4) OF SECTIONS 92C/92CA, WHICH TALKS OF MAKING SOME TRANSFE R PRICING ADDITION BY THE AO. IF THE COMPUTATION OF INCOME IS NEITHER U /S.92C NOR 92CA, NAMELY, NO TRANSFER PRICING ADDITION IS MADE BY TH E AO, THEN IT IS OBVIOUS THAT THE PROVISO SHALL HAVE NO APPLICATION AND THE FORTIORI IS THAT THERE WILL NOT BE ANY DENIAL OF DEDUCTION UNDER THE SECTIONS GIVEN IN THE PROVISO. ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 10 9. WE HAVE NOTED ABOVE THE SCHEME OF ASSESSMENT U/S 92CD PURSUANT TO THE APA, UNDER WHICH THE ASSESSEE IS MANDATED TO FILE MODIFIED RETURNS IN CONSONANCE WITH THE APA. THEREAFTER, THE ASSESSMENT IS MADE BY THE AO U/S. 92CD(3)/(4) IN ACCORDAN CE WITH THE APA. AS THE INCREMENTAL INCOME IS OFFERED BY THE ASSESS EE ITSELF IN THE MODIFIED RETURN IN ACCORDANCE WITH THE APA, IT CANNOT BE EQUATED WITH THE COMPUTATION OF INCOME U/SS. 92C/92CA OF THE ACT, AS THE LATER PROVISIONS TALKS OF MAKING SOME TRANSFER PRICING ADDITION BY THE AO. THE SUO MOTU OFFERING OF ADDITIONAL INCOME BY THE ASSESSEE PURSUANT TO THE APA IS OF THE SAME NATURE AS TH E ASSESSEE ITSELF OFFERING SOME TRANSFER PRICING ADJUSTMENT IN THE ORIGINAL RETURN OF INCOME. IN THAT CASE ALSO, DEDUCTION U/S 10 A, IF OTHERWISE PERMISSIBLE, WOULD BE ALLOWED AND NOT CURTAILED AS IT W ILL NOT BE A CASE OF TRANSFER PRICING ADDITION MADE BY THE AO. IN THE SAME MANNER, DEDUCTION U/S 10A CANNOT BE DISALLOWED IN RESP ECT OF ADDITIONAL INCOME OFFERED IN THE MODIFIED RETURN AS IT IS NOT A TRANSFER PRICING ADDITION MADE BY THE AO BUT THE ADDITIONAL TRAN SFER PRICING INCOME OFFERED BY THE ASSESSEE IN CONSONANCE WITH THE APA WITH THE CBDT. ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 11 10. THE SECOND COMPONENT FOR MAGNETIZING THE PROVISO IS THAT THE `TOTAL INCOME OF THE ASSESSEE IS ENHANCED. AN ENHANCEM ENT OF INCOME IN THIS CONTEXT PRE-SUPPOSES SOME ACTION OF THE AUTHOR ITIES AFTER THE FILING OF THE RETURN OF INCOME BY THE ASSESSEE, WH ICH HAS THE CONSEQUENCE OF INCREASING THE TOTAL INCOME FROM THE ONE DECLARED BY THE ASSESSEE. FILING OF THE MODIFIED RETURN U/S 9 2CD OF THE ACT WITH THE INCOME AS AGREED BETWEEN THE ASSESSEE AND THE CBDT UNDER THE APA IS AN ACT OF THE ASSESSEE IN OFFERING THE ADDITIONAL INCOME AND NOT AN ACT OF THE AO IN MAKING THE ENHANCEMENT OF THE TOTAL INCOME. 11. INSTANTLY, WE ARE DEALING WITH A SITUATION IN WHICH THE AS SESSEE ITSELF HAS FILED A MODIFIED RETURN OF INCOME AT THE MUTUALLY AGRE ED RATE OF 17% UNDER THE APA. AS SUCH, THERE CANNOT BE ANY QUESTION OF THE AO MAKING ANY ENHANCEMENT IN THE INCOME AS A RESULT OF TRANSFER PRICING ADJUSTMENT SO AS TO ATTRACT THE PROVISO TO SE CTION 92C(4) OF THE ACT. 12. THUS THE FIRST SUB-QUESTION IS ANSWERED BY HOLDING THAT PROVISO TO SECTION 92C(4) DOES NOT PER SE DEBAR DEDUCTION U/S 10A ON ADDITIONAL INCOME IN ASSESSMENT U/S 92CD. ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 12 II. WHETHER ASSESSMENT U/S 92CD PROVIDES FOR GRANTING DEDUC TION U/S 10A? 13. HAVING ANSWERED THE FIRST QUESTION IN NEGATIVE, IT REMA INS TO BE DECIDED AS TO WHETHER THE ASSESSEE IS ENTITLED TO DEDUCTION U/S. 10A WITHIN THE FRAMEWORK OF THE APA PROVISIONS. IN THIS RE GARD, IT ASSUMES SIGNIFICANCE TO NOTE THE MANDATE OF SUB-SECTION (2) OF SECTION 92CD OF THE ACT, WHICH PROVIDES THAT: SAVE AS OTHERWISE PROVIDED IN THIS SECTION, ALL OTHER PROVISIONS OF THIS ACT SHALL A PPLY ACCORDINGLY AS IF THE MODIFIED RETURN IS A RETURN FURNISHED UN DER SECTION 139 . A CAREFUL CIRCUMSPECTION OF SUB-SECTION (2) DECIPHERS AND DELINEATES THAT IN THE COMPUTATION OF TOTAL INCOME BY THE AO PURSUANT TO THE FILING OF THE MODIFIED RETURN BY THE ASSESSEE IN TERMS OF THE APA, ALL OTHER PROVISIONS OF THIS ACT SHALL APPLY ACCORDINGLY . IN OTHER WORDS, IF AN ASSESSEE IS OTHERWISE ELIGIBLE FOR DE DUCTION UNDER ANY OTHER APPROPRIATE PROVISION IN RESPECT OF THE INCO ME OFFERED IN THE MODIFIED RETURN, THERE CANNOT BE ANY EMBARG O ON GRANTING DEDUCTION UNDER SUCH RELEVANT PROVISION. THE SAVIN G CLAUSE CONTAINED IN SUB-SECTION (2), MAKING ALL OTHER PROVISIO NS OF THE ACT APPLICABLE IN THE ASSESSMENT OF THE MODIFIED RETURN, OSTENSIBLY INCLUDES THE APPLICABILITY OF SECTION 10A AS WELL, OF COURSE, SUBJECT TO THE FULFILLMENT OF OTHERS CONDITIONS AS SET OU T IN ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 13 THE SECTION. IT, THEREFORE, FOLLOWS THAT IF AN ASSESSEE IS O THERWISE ENTITLED TO DEDUCTION U/S.10A, OR FOR THAT MATTER UNDER ANY OTHER PROVISION OF THE ACT, IN RESPECT OF THE INCOME OFFERED IN THE MODIFIED RETURN, THE SAME CANNOT BE DENIED. AS SUCH, THE VIEW OF THE AUTHORITIES BELOW THAT IN THE ABSENCE OF ANY SPECIFIC PROVIS ION IN SECTION 92CD FOR GRANTING OF DEDUCTION U/S.10A, NO DEDUCTIO N CAN BE ALLOWED, IS SANS MERIT. SUCH STIPULATION IS CONTAINED IN SUB- SECTION (2) OF 92CD ITSELF. IT IS, ERGO, HELD THAT THE ASSESS MENT U/S 92CD PROVIDES FOR GRANTING DEDUCTION U/S 10A OF THE ACT. III. WHETHER THE ASSESSEE HAS SATISFIED THE CONDITIONS OF DEDUCTION U/S 10A ? 14. NOW WE TURN TO THE VIEW CANVASSED BY THE AO THAT TH E ASSESSEE FAILED TO COMPLY WITH THE MANDATE OF SUB-SECTION (3) OF SECTION 10A, WHICH PROVIDES THAT: THIS SECTION APPLIES TO TH E UNDERTAKING, IF THE SALE PROCEEDS OF ARTICLES OR THINGS OR CO MPUTER SOFTWARE EXPORTED OUT OF INDIA ARE RECEIVED IN, OR BROUGH T INTO INDIA, BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXCHANGE, WITHIN A PE RIOD OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR OR WITHIN SUCH FURTHER PERIOD AS THE COMPETENT AUTHORITY MAY ALLOW IN THIS BEHALF. A PERUSAL OF SUB-SECTION (3) OF SECTION 10A TRANSPIRES THAT THE CONDITION FOR BRINGING INTO INDIA THE REQUISITE CONVERTIBLE FOREIG N ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 14 EXCHANGE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR IS NOT BE ALL END ALL OF THE ISSUE. IT ALSO EXTENDS TO SU CH FURTHER PERIOD AS THE COMPETENT AUTHORITY MAY ALLOW IN THIS BEHALF. IN OTHER WORDS, IF THE COMPETENT AUTHORITY HAS ALLOWED FURTHER PE RIOD FOR BRINGING INTO INDIA THE CONVERTIBLE FOREIGN EXCHANGE, TH E ASSESSEE WILL BE ENTITLED TO DEDUCTION U/S.10A. EXPLANATION 1 TO SECTION 10A(3) STATES THAT: `FOR THE PURPOSES OF THIS SUB-SECTIO N, THE EXPRESSION 'COMPETENT AUTHORITY' MEANS THE RESERVE BANK OF INDIA OR SUCH OTHER AUTHORITY AS IS AUTHORISED UNDER ANY LAW FOR THE TIME BEING IN FORCE FOR REGULATING PAYMENTS AND DEALINGS IN FOREIG N EXCHANGE. 15. SUB-SECTION (1) OF SECTION 92CC PROVIDES THAT THE B OARD, WITH THE APPROVAL OF THE CENTRAL GOVERNMENT, MAY ENTER INTO A N ADVANCE PRICING AGREEMENT WITH ANY PERSON . . . . . . . . IT IS THUS CLEAR FROM THE MANDATE OF SUB-SECTION (1) OF SECTION 92CC THAT THE CBDT ENTERS INTO AN APA WITH THE APPROVAL OF THE CENTRAL GOVERNMENT. THE APA IS A PACKAGE DEAL AIMED AT REDUCING LITIGATION. IF THE APA CONTAINS SOME CLAUSE RELAXING THE RIGOR OF ANY PROVISION OR TO FACILITATE ITS WORKABILITY, SUCH A CLAUSE WILL PREVAIL OVER THE NORMAL PROVISIONS OF THE ACT. IT IS MANDATED BY THE LEGISLATURE ITSELF THROUGH SUB-SECTION (2) OF SECTION 92CD, WHIC H ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 15 OPENS WITH A SAVING CLAUSE BY PROVIDING: `SAVE AS OTHERWISE PROVIDED IN THIS SECTION, ALL OTHER PROVISIONS OF THE ACT SHALL APPLY. SUB-SECTION (1) OF SECTION 92CD PROVIDES THAT: `. SUCH A PERSON SHALL FURNISH . A MODIFIED RETURN IN ACCORDANCE WITH AND LIM ITED TO THE AGREEMENT. A COROLLARY WHICH FOLLOWS ON A HARMONIOUS CONSTRUCTION OF SUB-SECTIONS (1) AND (2) OF SECTION 92CD IS THAT IF THE APA CONTAINS A CLAUSE DEPARTING FROM THE NORMAL PROVISIONS , IT IS SUCH CLAUSE WHICH SHALL PREVAIL UPON THE NORMAL PROVISION. 16. WE HAVE GONE THROUGH THE APA ENTERED BETWEEN THE A SSESSEE AND THE CBDT. CLAUSE 7 OF THE APA DISCUSSES THE CRITICAL ASSUMPTIONS. IT PROVIDES THAT: `THE CRITICAL ASSUMPTIONS (AS RE FERRED TO IN THE RULES) SHALL, FOR THE PURPOSES OF THIS AGREEMENT, BE AS SPECIFIED IN APPENDIX II. CLAUSE 5 OF THE APPENDIX II D EALS WITH INVOICING AND CREDIT TERMS. THE MATERIAL PART OF SUCH A CLAUSE, WHICH IS RELEVANT FOR THE YEAR UNDER CONSIDERATION, STATES THA T: ` THE APPLICANT SHALL SHOW THE DIFFERENCE BETWEEN THE INVOICED AMOUNT FOR THE PREVIOUS YEAR/ROLLBACK YEARS AND THE ALP AS AGREED, AS TAX ADJUSTMENT IN THE MODIFIED TAX RETURNS FOR ASSESSMENT YEAR 2010-11 TO ASSESSMENT YEAR 2014-15 AND WILL ALSO RAISE AN INVOICE (AND REALISE IT) FOR THE EQUIVALENT AMOUNT IN THE MONTH FOLLOWING THE MONTH IN WHICH THE AGREEMENT IS SIGNED . ON GOING THROUGH THE ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 16 RELEVANT PARTS OF CLAUSE 5 OF THE APPENDIX II, IT CLEARLY EMERGES THAT THE CBDT PROVIDED FOR RAISING THE INVOICE FOR THE ADDITIONAL AM OUNT AND ALSO REALISE IT IN THE MONTH FOLLOWING THE MONTH IN WHICH THE APA IS SIGNED. TO PUT IT SIMPLY, THE CBDT NOT ONLY STIPULATED F OR RAISING OF THE INVOICE FOR THE ADDITIONAL INCOME BUT ALSO FOR THE REALIZATION OF THE ADDITIONAL AMOUNT WITHIN THE MONTH FOLLOWING THE MONTH IN WHICH THE AGREEMENT IS SIGNED. THUS, IT IS OVERT THAT THE APA CONTAINS A CLAUSE FOR REALIZING THE AMOUNT OR BRINGING INTO INDIA CONVERTIBLE FOREIGN EXCHANGE FOR THE ADDITIONAL AMOUNT OF INVOICE WITHIN ONE MONTHS PERIOD. THERE CAN BE NO OTHER RE ASON FOR MANDATING IN THE APA FOR BRINGING INTO INDIA CONVERTIBLE FOREIGN EXCHANGE WITHIN ONE MONTH FOLLOWING THE MONTH IN WHICH THE APA IS SIGNED EXCEPT FOR THE GRANTING THE CONSEQUENTIAL BENEFITS OF SUCH REALIZATION, EVEN THOUGH SUB-SECTION (1) OF SECTION 92CD GIV ES TIME OF THREE MONTHS FOR FILING THE MODIFIED RETURN. THE SEQUITUR IS THAT THE APA HAS MADE IT MANDATORY FOR THE ASSESSEE TO BRING IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA WITHIN ONE MONTH. BUT FO R GRANTING THE RELEVANT DEDUCTIONS CONNECTED WITH THE REALIZATION OF CONVERTIBLE FOREIGN EXCHANGE IN INDIA, THERE WAS NO PURPOS E TO STIPULATE IT IN THE APA. THIS STIPULATION IS, THUS, A DIRECTION TO GRANT DEDUCTION U/S 10A ONLY IF THE ASSESSEE SUCCEEDS IN BRINGING IN ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 17 CONVERTIBLE FOREIGN EXCHANGE IN INDIA WITHIN ONE MONTH, BRINGI NG THE CASE WITHIN THE SAVING CLAUSE OF SUB-SECTION (2) OF SECTIO N 92CD. AS THE ASSESSEE BROUGHT INTO INDIA THE CONVERTIBLE FOREIGN EXCHANGE WITHIN THE STIPULATED ONE MONTHS PERIOD, IT BECAME ENTITLED TO DEDUCTION U/S 10A. 17. WHAT IS FURTHER PERTINENT TO NOTE FROM PARA 2 OF T HE CLAUSE 6 OF THE APA IS THAT: THE DETERMINATION OF ALP FOR ROLLBACK YEA RS IS SUBJECT TO THE CONDITION THAT THE ALP WOULD GET MODIFIED TO THE EXTENT THAT IT DOES NOT RESULT IN REDUCING THE TOTAL INCOME OR INCREASING THE TOTAL LOSS, AS THE CASE MAY BE, OF THE APPLICAN T AS ALREADY DECLARED IN THE RETURN OF INCOME OF THE SAID YEAR. REVERTING TO FACTS OF THE EXTANT CASE, IT IS SEEN THAT THE ASSES SEE DECLARED TOTAL INCOME OF RS.45,21,431/- IN THE ORIGINAL RETURN . AFTER THE INCREASE IN THE INCOME DUE TO THE APA AND WITH THE SIMULTANEOUS CLAIM OF DEDUCTION U/S.10A, THE TOTAL INCOME OF THE ASSESSEE AS DECLARED IN THE MODIFIED RETURN REMAINED AT THE SAME LEVEL. THUS, IT IS NEITHER A CASE OF REDUCING THE TOTAL INCOME NOR INCREASING THE TOTAL LOSS. EX CONSEQUENTI , IT IS HELD THAT THE ASSESSEE HAS SATISFIED THE CONDITION OF DEDUCTION U/S 10A(3) READ WITH SECTION 92CD(2) OF THE ACT. ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 18 18. TO SUM UP, WE HOLD THAT THE PROVISO TO SECTION 92 C(4) DOES NOT DEBAR DEDUCTION U/S 10A ON ADDITIONAL INCOME IN ASSESSME NT U/S 92CD; ASSESSMENT U/S 92CD PROVIDES FOR GRANTING DEDUCTION U/S 10A; AND THE ASSESSEE HAS SATISFIED THE REQUIREMENT OF SE CTION 10A(3) READ WITH SECTION 92CD(2), THEREBY ENTITLING IT TO DEDUC TION U/S.10A ON THE ADDITIONAL AMOUNT OF RS.20,36,023/-. THE IM PUGNED ORDER IS OVERTURNED AND DEDUCTION IS GRANTED. 19. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02 ND DECEMBER, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 02 ND DECEMBER, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-13, PUNE 4. 5. 6. THE PR.CIT-V, PUNE , , / DR C, ITAT, PUNE; / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE ITA NO.1413/PUN/2019 DAR AL HANDASAH CONSULTANTS INDIA PVT. LTD., 19 DATE 1. DRAFT DICTATED ON 28-11-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 02-12-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *