Case Law Details
ACIT Vs HSBC Software Development (India) Pvt. Ltd (ITAT Pune)
ITAT Pune held that AO had not brought any material indicating the existence of an arrangement between the assessee company and its foreign AE, as a result of which more profits than ordinarily have been produced to the assessee company. Hence, provisions of section 10B(7) r.w.s. 80IA have no application.
Facts-
The assessee is engaged in the business of development and sale of software development services and IT solutions to HSBC group of companies. The return of income for AY 2010-11 was filed on 05.10.2010 declaring total income of Rs.36,01,71,190/- after claiming exemption under the provisions of section 10B of the Income Tax Act, 1961. Against the said ROI, the assessment was completed by the Dy. Commissioner of Income Tax, Circle-1(2), Pune vide order dated 28.03.2014 passed u/s 143(3) r.w.s. 144C of the Act at total income of Rs.121,42,56,739/-. While doing so, the AO made a disallowance under the provisions of section 10A(7) read with section 80IA(10) of Rs.85,40,85,549/-.
During the course of assessment proceedings, the Assessing Officer issued a show-cause notice to the assessee to explain as to why the deduction u/s 10B should not be restricted under the provisions of section 80IA(10) as the margins earned by the assessee is at 42.49% as against the average margin of the comparables companies is 22.31%.
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