Discuss the following statements : The gross total income of Yuvraj Co. Ltd., Indore was ₹70 Lakh which is wholly attributable to a unit located in SEZ since April, 2012. Adjustments to total income made by the Assessing

As per the proviso to Section 92C(4) of the Income tax Act, 1961, where the arm's length price is determined by the Assessing Officer by applying transfer pricing provisions, no deduction, inter alia, under section 10AA shall be allowed from the income so enhanced by the Assessing officer. Assuming that the entire turnover represents the export turnover, and consequently, the entire profit of ₹70 Lakh is eligible for deduction under Section 10AA, the total income would be computed as follows: Income of the unit in SEZ (computed) 70 Lakh Less : Deduction u/s 10AA = 50% of ₹70 lakh, being the 8th year of operation = 35 Lakh Add : Enhancement in total income by the assessing officer, applying transfer pricing provisions 50 lakh Total Income 85 lakh (No deduction u/s 10AA is allowable in respect of income so enhanced.)