Sushee Infra & Mining Limited Vs ACIT (ITAT Hyderabad)
ITAT Hyderabad held that Transfer Pricing Officer [TPO] doesn’t have jurisdiction to scrutinize the claim of deduction under section 80IA of the Income Tax Act. Accordingly, addition made by AO on account of TP adjustment is not sustainable.
Facts- The assessee has undertaken certain infrastructure projects under sub-contract from it’s related party being Joint Venture and Special Purpose Vehicle which were awarded by the State Government in favour of the related party and the same were executed by the assessee under the sub-contract between the assessee and the related party. Assessee submitted that the assessee has claimed deduction u/sec.80IA of the Act in respect of the project which were eligible for the deduction. However, the Assessing Officer and DRP has disallowed the claim on the ground that the assessee has not entered into any agreement with the Government as a mandatory condition u/sec.80IA(4) of the Income Tax Act, 1961.
Further, The TPO did not accept the TP analysis of the assessee and proceeded to determine the Arm’s Length Price of the specified domestic transactions by adopting Transactional Net Margin Method as Most Appropriate Method and then, re-calculated the profit margin of the assessee by re-apportionment of the expenses between the non-eligible and eligible infrastructure facilities for deduction u/s. 80IA(4) of the Act and after re- apportionment of the expenditure
