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September 2011

Dispute Resolution Panel (DRP): Powers: Deduction u/s.10A: AO allowed deduction u/s. 10A; DRP has no power to withdraw it..

By K. B. Bhujle, Advocate
Reading Time 2 mins
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[GE India Technology Centre Pvt. Ltd. v. DRP (Kar.), WP No. 1010 of 2011 dated 5-7-2011.]

For the A.Y. 2006-07, the assessee had claimed deduction of Rs.32.58 crore u/s.10A. In the draft assessment order passed u/s.144C of the Act, the Assessing Officer allowed deduction u/s.10A, but he reduced the quantum by Rs.44.49 lakh. The assessee filed an objection before the Dispute Resolution Penal (DRP). The DRP held that the assessee was not entitled to deduction u/s.10A of the Act as it was engaged in ‘research and development’. On the alternative plea of the assessee that the assessee was engaged in providing ‘engineering design services’ the DRP directed the Assessing Officer to examining the claim on merits.

The assessee filed a writ petition before the Karnataka High Court claiming that the direction given by the DRP withdrawing the deduction u/s.10A was beyond jurisdiction. The Single Judge dismissed the petition. On appeal by the assessee, the Division Bench held as under :

“As the Assessing Officer had accepted that the assessee was eligible for section 10A deduction and had only proposed a variation on the quantum, the DRP had no jurisdiction to hold that the assessee was not eligible for section 10A deduction.”

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