Assessee, a 100 per cent export-oriented unit, claimed a deduction under section 10B on its profits. Assessing Officer disallowed the claim under section 10B(7) read with sections 80-IA(8) and 80-IA(10), alleging that profits were inflated through non-market factors. CIT(A) held that AO had not substantiated allegations regarding non-market purchases or related-party pricing, observed that interest-free loans might still attract section 80-IA(10) if they lead to excess profits, held that invocation of section 80-IA(10) was proper but that reasonable\/ordinary profits must be determined using comparables, benchmarked assessee against its sister concern (engaged in same activity), and restricted section 10B deduction to 19.06 per cent of sales (sister concern\u2019s net profit rate), taxing balance at normal rates-Tribunal upheld CIT(A)\u2019s approach of using sister concern as a benchmark and sustained restriction of eligible profits to about 19 per cent for purpose of section 10B. On appeal, the Court held that since the Tribunal had failed to give any categorical finding as to the arrangement between parties that led to inflation of profits beyond what could have been ordinarily expected and, moreover, it had capped claim under section 10B to 19.06 per cent of sales i.e. at profit earned\/disclosed by sister concern without accounting for material differences in statutory benefits and cost structures. Order of the Tribunal set aside.\u00a0 (AY. 2009-10)<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 80IA : Industrial undertakings-Enterprises engaged in infrastructure development-Alleging that profits were inflated through non-market factors-The Tribunal had failed to give any categorical finding as to the arrangement between parties that led to inflation of profits beyond what could have been ordinarily expected-Order of the Tribunal set aside [S. 10IB(7), 80IA(8), 80IA(10), 260A] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[21],"tags":[],"class_list":["post-65499","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-h2r","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/65499","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=65499"}],"version-history":[{"count":1,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/65499\/revisions"}],"predecessor-version":[{"id":65500,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/65499\/revisions\/65500"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=65499"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=65499"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=65499"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}