AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2013 (3) TMI 539
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....80%) from marketing of the same products after purchase from P2P manufacture, despite the fact that increase in profit to the company in those products was only 6% after it started manufacturing the said products at Baddi Unit? G. Whether the Appellate Tribunal has substantially erred in holding that the Assessing Officer has no right to determine the fair market value of goods, when there is no-inter-corporate transfer of goods, despite the clear provisions of section 80IA(8), which apply to 'intro-corporate transfer of goods' from eligible business to other non-eligible business of the assessee?" L. Whether the Appellate Tribunal has substantially erred in deleting the addition of Rs.1,18,84,177/- quantified as disallowance expenditure u/s.14A, despite the specific provisions of clause (f) of Explanation-I to 115JB?" Learned counsel Shri RK Patel waives service of notice of admission on behalf of the respondent-assessee. We notice that the Revenue has proposed additional questions also. Some of these questions, we have not included since they are more in the nature of contentions in connection with the questions already admitted. Some questions,....
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.... new asset to the assessee. We are informed that a Division Bench of this Court in the case of CIT v. Torrent Pharmaceuticals Ltd, also in somewhat similar facts had upheld the decision of the Tribunal. With respect to the expenditure for trademark and patent, learned counsel for the respondent-assessee rightly pointed out that such issue was examined by the Supreme Court in the case of 20 ITR 475, wherein it was held and observed as under: "In our opinion, the contention urged on behalf of the appellant must fail. It is not contended that by the Trade Marks Act a new asset has come into existence. It was contended that an advantage of an enduring nature had come into existence. It was argued that just as machinery may attain a higher value by an implementation causing greater productive capacity, in the present case the trade mark which existed before the Trade Marks Act acquired an advantage of an enduring nature by reason of the Trade Marks Act and the fees paid for registration thereunder were in the nature of capital expenditure. In our opinion, this analogy is fallacious. The machinery which acquires a greater productive capacity by reason of its improvement by th....
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....ribunal has substantially erred in holding that the expenses incurred outside the approved R&D facility would also get weighted deduction based on the word under "on in house" interpreting contradictorily to the finding of coordinate bench in Concept Pharmaceuticals Ltd. v. ACIT (ITAT, Mum) reported at 43 SOT 423?" We may record that question 'E' in the appeal memo is an additional question which has an element of above noted question. We have, therefore, not separately reproduced the same in this order. The issue is whether the assessee who has incurred expenditure for scientific research, which was not in the in-house facility, could be covered for deduction under section 35(2AB) of the Income Tax Act, 1961. More or less, facts are not in dispute. The assessee carried out scientific research in its facility approved by the prescribed authority. It incurred various expenditure including on clinical trials for developing its pharmaceutical products. These clinical trials were conducted outside the approved laboratory facility. The Revenue holds a belief that such expenditure not having been incurred in the approved facility cannot form part of the deduction provided u....
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....le to be conducted in closed laboratory or in similar in-house facility provided by the assessee and approved by the prescribed authority. Before a pharmaceutical drug could be put in the market, the regulatory authorities would insist on strict tests and research on all possible aspects, such as possible reactions, effect of the drug and so on. Extensive clinical trials, therefore, would be an intrinsic part of development of any such new pharmaceutical drug. It cannot be imagined that such clinical trial can be carried out only in the laboratory of the pharmaceutical company. If we give such restricted meaning to the term expenditure incurred on in-house research and development facility, we would on one hand be completely diluting the deduction envisaged under sub-section (2AB) of section 35 and on the other, making the explanation noted above quite meaningless. We have noticed that for the purpose of the said clause in relation to drug and pharmaceuticals, the expenditure on scientific research has to include the expenditure incurred on clinical trials in obtaining approvals from any regulatory authority or in filing an application for grant of patent. The activities of obtaini....