Transfer pricing

ALP — Extension of credit to associated enterprises beyond the stipulated credit period cannot be construed as an “international transaction” for the purposes of s 92B(1), requiring an adjustment for ascertaining the ALP, as held by PuneTrib in Patni Computer Systems Ltd v Dy CIT — In favour of: The assessee; ITA No 426 and 1131/PN/06: (AYs 2002–2003 and 2003–2004).

Decided on: 30 June 2011.

The bare allegation that the associate enterprises had received “specific and identifiable benefits” is not sufficient to justify apportionment of cost under s 92B(1) in absence of a mutual agreement.

In favour of: The assessee.

Exemption under s 10A — The assessee is entitled to set-off losses sustained by the eligible units against the normal business income while computing income as per the normal provisions of the Act.

The mere fact that, in the approvals granted by the STPI, the three units have been referred to as an expansion of the corresponding old units, would not disentitle the assessee from the claim of a deduction under s 10A.

Deduction under s 80HHE — An element which is excludable from the “export turnover” should also be excluded from the “total turnover” for the purposes of computing a deduction under s 80HHE.