TaxTMI 
TaxTMI 
2015 (9) TMI 326
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....on International Operations A/S Denmark". Novo Nordisk A/S. Denmark, hereinafter referred to as "Novo Nordisk A/S" is holding company of the holding companies of the Assessee. Therefore the Assessee and Novo Nordisk A/S are Associated Enterprises (AE) as defined in Sec.92A of the Act. The business of the Assessee is trading in high purity Insulin formulation, Insulin delivery system and other specified pharmaceutical products. 4. There were several international transactions between the Assessee and Novo Nordisk A/S. These transactions have to adhere to the arm's length principle embodied in the Indian Transfer Pricing Regulations contained in Sections 92, 92CA to 92F of the income Tax Act, 1961 (Act) read with Rules 10A to 10E of the Income Tax Rules, 1961 (Rules). The Assessee reported the following international transaction with Novo Nordisk A/S in the report filed u/s.92E of the Act in Form No. 3CEB:- Sl. No. Description Amount Paid Rs. Amount Received Rs. 1 Purchase of excipients 148,90,87,821 2 Purchase of finished goods 236,26,75,713 3 Quality Testing Fee 28,76,448 4 Receipt for Admin Services &....
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....had chosen Transaction Net Margin Method (TNMM) as the Most Appropriate Method (MAM) for determination of Arm's Length Price (ALP) in respect of the combined transactions referred to above which was termed as "Distribution segment" by the Assessee. 7. The Distribution Segment in the present AY 2010-11 is similar to the Distribution segment as explained by the Assessee in its TP study for AY 2009-10. The distribution segment was divided into two categories :- (1) Sale of products purchased locally: (2) Direct import and sale pf products from Novo Nordisk A/S and Novo Nordisk HealthCare AG. 8. The two categories as explained by the Assessee in its TP Study for AY 2009-10 was as follows:- "4.3.26 Sale of products purchased locally: Novo Nordisk India sells Human Monocomponent and Purified Insulin in 40 IU Vials purchased from Torrent Pharmaceuticals Limited, a company formed and registered under the laws of India. These insulin products have been manufactured by Torrent from crystals imported from Novo Nordisk A/S. This arrangement makes all the three parties namely Novo Nordisk A/S, Novo Nordisk India and Torrent, as associated enterprises and since one of the parties [i.....
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....rocedures and measures to control quality. Representatives of Novo Nordisk India and Novo Nordisk A/S, jointly or severally undertake quality checks on the manufacturing process by Torrent. These checks are undertaken almost quarterly. Quality audits are undertaken once in two years. The drugs need to be maintained at prescribed conditions of temperature (cold storage). Novo Nordisk India undertakes quality inspections of the distributors, stockists, wholesalers, etc. The above arrangement is illustrated in Figure 3 below. 4.3.31 Direct Import and Sale of Products (Buy-sell arrangement): Novo Nordisk India sells various insulin formulations, growth hormones, other diabetes therapy products and related devices including Penfills, Pens, Needles, Norditropin(r), GlucaGen Hypokit(r), Novolet(r), Novonorm(r) and Analogues which are imported directly from Novo Nordisk A/S and Novo Nordisk HealthCare AG. Some of these products are covered under the DPCO. For this purpose, Novo Nordisk India and Novo Nordisk A/S and Novo Nordisk HealthCare AG have entered into a product supply agreement dated October 4, 1999 and August 17, 2004 respectively. The term of these distribution agreements sha....
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....nto account testing fee paid to Novo Nordisk A/S as cost of sales and considering the subvention fee received as income. 10. As we have already seen Human Mono component and Highly Purified insulin in 40 IU Vials are purchased by the Assessee from Torrent Pharmaceuticals Limited a company which is not an Associated Enterprise of the Assessee. Torrent Pharmaceuticals Limited gets insulin in crystal form which is raw material required for manufacture of Human Mono Component and highly purified insulin in 40 IU Vials, which is imported from Novo Nordisk A/S. The Assessee in its TP study accepts the fact that there is an arrangement between the Assessee, Novo Nordisk A/S and Torrent Pharmaceuticals Limited (TPL) whereby insulin in crystal form will be supplied by Novo Nordisk A/S to TPL. Novo Nordisk A/S will also grant limited license with right to sub-license to TPL, know-how, trade-mark to manufacture and market with Novo Nordisk A/S's name to the Assessee to enable manufacture of purified insulin in 40 IU Vials, for ultimate sale by the Assessee in India. 11. The Assessee in its TP study had identified 4 comparable companies which were in the business of distribution. The arithm....
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....re Novo Nordisk A/S know how is used for production of any of Novo Nordisk Products. 2. Trade Mark Master License Agrement-1 dated 28.2.1994: Novo Nordisk A/S owns Trade Marks Actrapid, Lentard, Monotard, Insulatard, Mixtard, NovoPen, NovoFine, Glucagon Novo. By the agreement dated 28.2.1994, the Assessee is given the Master License to exclusively use and or sub-license the use of the Trade Marks of the aforesaid products which are listed in Appendix-1 to the agreement. 3. Insulin Formulation Supply Agreement dated 1-3-1994: By this Agreement TPL undertakes to manufacture and supply 40iu insulin to the Assessee. There is also an arrangement whereby TPL is given sublicense to use Novo Nordisk A/S Know how to manufacture Novo Nordisk Products. 4. Facility Establishment Agreement dated 6.8.2005: Whereby the Assessee and TPL agree about the facility to be created by TPL exclusively for insulin production in terms of agreement of Assessee and TPL for insulin formulation supply. 5. Agreement for quality control testing dated 1-4-1997: This agreement is between Novo Nordisk A/S and the Assessee. Novo Nordisk A/S under this agreement undertakes to do quality control testing for....
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....." 14. The TPO after analyzing the aforesaid agreements and the claim of the Assessee for characterization of the activities in relation to manufacture of Highly purified Insulin in 40 IU vials through TPL and distribution of products directly imported from Novo Nordisk A/S as distribution function, was of the view that the arrangements between the Assessee, Novo Nordisk A/S and Torrent was in fact a manufacturing activity and cannot be characterized as distribution operations. The TPO in his TP order conducted a fresh comparability analysis based on the application of TNMM and arrived at a set of 15 purported comparable companies with a mean operating margin of 8.26%. Accordingly, the TPO, considered the whole distribution segment of the Assessee for the purpose of computing the Arm's Length Price (ALP) adjustment, without considering the fact that the entire sales are of purchased products (more than 61% of the total purchases being products imported from Group companies) and made an adjustment of INR 352,638,074 [including additional adjustment computed on account of application of Profit Split Method ('PSM') as discussed below]. 15. The TPO also applied Profit Split Metho....
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....the said transaction can be benchmarked for the purpose of determining ALP together with the international transaction of import of products directly from Novo Nordisk A/S and selling the same in India (which is purely distribution function performed by the Assessee on behalf of Novo Nordisk A/S) on the plea that both the transactions are interlinked and therefore have to be benchmarked together? 3. If the answer to the above question is in the negative, How the ALP of the transactions has to be determined? 4. Whether the determination of ALP as directed by the DRP is correct? 18. The Tribunal decided the aforesaid issues as follows: "Issue No.1: Whether transaction by which incipient (raw material for manufacture of Human Mono component and Highly Purified insulin in 40 IU Vials) is supplied by Novo Nordisk A/S to TPL and the transaction by which the Assessee engages the services of TPL to convert the incipient into Human Mono component and Highly Purified insulin in 40 IU Vials and ultimately sells the same in Indian market on behalf of Novo Nordisk A/S. can be considered as an International Transaction between two Associated Enterprises attracting the provisions o....
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....ssion "Associated Enterprise" as used in Sec.92B(1) of the Act and it does not dispense with the condition that either or both the parties to a transaction should be non-resident for a transaction to be termed as "International Transaction". In other words according to him Sec.92B(2) controls only the definition of "Associated Enterprises" as laid down in Sec.92A of the Act. 51, The learned counsel for the Assessee drew our attention to the decision of the ITAT Hyderabad Bench in the case of Swarnandra IJMII Integrated Township Development Co. Pvt. Ltd. Vs. DCIT ITA No.2071/Hyd/11 AY 07-08 dated 31.12.2012. In the aforesaid decision the facts were that the Assessee, Swarnandhra IJMII, was a Joint Venture company between APHB and IJM (India). IJM (India) was a subsidiary of a foreign group of companies i.e., IJM (Group). During the previous year the Assessee entered into a transaction with IJM (India). The question was whether the said transaction was a deemed international transaction. The Hyderabad ITAT held: "28.4. Section 92B(2) embodies a legal fiction. It deems a transaction to have been entered into between two associated enterprises. Though section 92B(2) is a part of ....
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.... 92A. The legal form of the transaction in such circumstances is ignored. The substance of the transaction is given effect to, not by disregarding the existence of the intermediary but by deeming the transaction with the intermediary itself to be one with an associated enterprise. 28.7 The legal fiction created in respect of the specified transaction can be used only for the purpose of examining whether such transaction constitutes an 'international transaction' under section 92B(1). In case section 92B(1) is not attracted, the fiction under section 92B(2) ceases to operate. In our opinion, the impugned transaction between the assessee and IJMII does not fall under section 92B(2). This is for the following reasons. (a) Both the assessee and IJMII are residents of India for tax purposes. They pay their taxes in India. To fall under 92B(1), the international transaction has to be between associated enterprises, at least one of whom is a non-resident. As both the parties are residents, the transaction between the assessee and IJMII do not constitute an international transaction. Thus the basic premise for invoking the deeming fiction under section 92B(2) does not arise. ....
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...." 52. It was further pointed out by him that Sec.92B(2) has been amended by the Finance Act, 2014 to read as below:- (2) A transaction entered into by an enterprise with a person other than an associated enterprise shall, for the purposes of sub-section (1), be [deemed to be a transaction] entered into between two associated enterprises, if there exists a prior agreement in relation to the relevant transaction between such other person and the associated enterprise, or the terms of the relevant transaction are determined in substance between such other person and the associated enterprise [where the enterprise or the associated enterprise or both of them are non-residents irrespective of whether such other person is a nonresident or not]. 53. The words in brackets in italics were introduced only w.e.f 1-4-2015. Prior to the said amendment, if either or both the parties to a transaction are not non-residents, than the provisions of Sec.92B(2) of the Act were not attracted and therefore the transaction was outside the purview of Sec.92(1) of the Act. He also placed reliance on the decision of the ITAT Mumbai in the case of Kodak India Pvt. Ltd. Vs. ACIT ITA No.7349/Mum/2012 ....
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....reement between Novo Nordisk A/S and TPL and the know-how and trade mark sub-license agreement between the Assessee and TPL. 4. He also drew our attention to the Quality Testing Agreement between the Assessee and Novo Nordisk A/S whereby the testing of quality of the product manufactured by TPL is undertaken by Novo Nordisk A/S. 55. According to him all the terms of all the agreements have to be read together and if so read it becomes clear that the arrangement between the parties was that the Assessee will carry out manufacture and sale of Human Mono component and Highly Purified insulin in 40 IU Vials through TPL. According to him both the TPO and the DRP have rightly drawn conclusion that the transaction of manufacture and sale of Human Mono component and Highly Purified insulin in 40 IU Vials through TPL was an international transaction entered into between the Assessee and Novo Nordisk A/S. Novo Nordisk A/S is admittedly an Associated Enterprise and was a non-resident. Therefore the conditions for applicability of the provisions of Sec.92B(1) of the Act were satisfied and therefore the said transaction was rightly held to be subject to scrutiny u/s.92(1) of the Act. 5....
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....in writing; or (B) whether or not such arrangement, understanding or action is intended to be enforceable by legal proceeding. 59. He laid emphasis on the words "arrangement" and "action in concert" and submitted that all the agreements read as a whole clearly shows that the arrangement was between the Assessee and Novo Nordisk A/S for carrying out manufacture and sale of Human Mono component and Highly Purified insulin in 40 IU Vials through TPL, the latter supplying raw materials and the Assessee carrying out manufacture through TPL. The arrangement starts with supply of raw materials and ends with manufacture of finished products. Thereafter the Assessee sells the finished product in Indian market. 60. It was also submitted by the learned DR that the amendment to the provisions of Sec.92B(2) of the Act by the Finance Act, 2014 w.e.f. 1-4-2015 is clarificatory in nature, clarifying the law as always out to be. It may in that sense be held to be retrospective. 61. In his rejoinder, the learned counsel for the Assessee submitted that Sec.92F specifically provides that "Unless the context otherwise requires" and thereafter gives definition of certain terms. According to ....
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....n within the meaning of Sec.92(1) read with Sec.92A and 92B of the Act. 63. The main thrust of the argument on behalf of the Assessee was that u/s.92B(1) two conditions are required to be satisfied before a transaction can be said to be "International Transaction" viz., (i) there should be a transaction between two or more associated enterprises and (ii) either or both of them should be non-residents. According to the Assessee at least one party to a transaction should be a non-resident. According to the Assessee the transaction for supply of incipient was between Novo Nordisk A/S and TPL. Though the condition that at least one of the parties to a transaction should be a non-resident is satisfied in respect of this transaction, TPL is admittedly not an associated enterprise of Novo Nordisk A/S and therefore the said transaction cannot be regarded as "International Transaction". As far as the transaction of manufacture of Human Mono component and Highly Purified insulin in 40 IU Vials between TPL and the Assessee, it is the stand of the Assessee that both the Assessee and TPL are residents and therefore the condition that either or both the parties to a transaction should be non-....
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....nowhow and use of trade mark is sub-licensed for manufacture of Human Mono component and Highly Purified insulin in 40 IU Vials, the Assessee will disclose the source of the Assessee's right to grant sub-license of know-how and trade mark as from Novo Nordisk A/S and further provides that such original license agreement will be deemed to be incorporated in the sub-license agreement. 3. Insulin Formulation Supply Agreement dated 1-3-1994: By this Agreement TPL undertakes to manufacture and supply 40iu insulin to the Assessee. There is also an arrangement whereby TPL is given sub-license to use Novo Nordisk A/S Know how to manufacture Novo Nordisk Products. Insulin formulations supply agreement between the Assessee and TPL in clause 14.2 specifically provides that the agreement is co-terminus with the bulk supply agreement shall be coterminus with the Insulin Crystals and Excepients Supply agreement between Novo Nordisk A/S and TPL and the know-how and trade mark sub-license agreement between the Assessee and TPL. 4. Facility Establishment Agreement dated 6.8.2005: Whereby the Assessee and TPL agree about the facility to be created by TPL exclusively for insulin production in t....
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.... into between the Purchaser and Novo Nordisk (India) Pvt. Ltd., a company incorporated in accordance with the laws of India, hereto, and the finished formulations shall be supplied exclusively to Novo Nordisk (India) Pvt. Ltd. under another separate product supply agreement." As per the this Agreement for bulk supply of excepient between Novo Nordisk A/S and TPL, which the raw material for manufacture of Human Mono component and Highly Purified insulin in 40 IU Vials by TPL, in its preamble, there is a reference to the Agreement for long term insulin formulations supply agreement between TPL and the Assessee i.e., the Human Mono component and Highly Purified insulin in 40 IU Vials. Clause 7.1 of the agreement provides that in the event of discontinuance of production by TPL, the all saleable unexpired stock of Insulin Crystals and excepient should be delivered to Novo Nordisk A/s. Clause- 11.2 of the Agreement specifically provides that the bulk supply agreement shall be co-terminus with the Insulin Formulations Supply agreement between TPL and the Assessee and the know-how and trade mark sub-license agreement between the Assessee and TPL. 65. It is clear from the aforesaid a....
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....cheme of Transfer Pricing provisions in India, if it impacted or eroded tax base in India. Amendment to Section 92B(2) by the Finance Act, 2014 was inserted only by way of abundant caution. It is made with a view to clarify the position that by entering into series of transactions with third parties who are not associated enterprises or nonresidents, one cannot claim that the Transfer Pricing regulations were not applicable, if in reality and in substance transactions were with related parties one or both of whom might be nonresidents. For example in the present case if the cost of excepient/insulin crystal which is the raw material for manufacture of Human Mono component and Highly Purified insulin in 40 IU Vials, is not subjected to the test of ALP, it could result in erosion of tax base in India. The transfer pricing provisions will therefore apply to such transactions. We therefore hold that the transaction by which supply of excepients was made by Novo Nordisk A/S to TPL was in effect an international transaction between the Assessee and Novo Nordisk A/S. The income from such transaction had to be computed having regard to Arm's Length Price as laid down in Sec.92(1) of the Ac....
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....erial and manufacture and sale of them are closely linked transaction. The distribution of products imported from Novo Nordisk A/S was not a closely linked transaction with the sale of manufactured products and therefore both have to be benchmarked separately for determination of ALP. The learned counsel for the Assessee on the other hand reiterated the stand of the Assessee as made before the TPO/DRP. 68. We have given a careful consideration to the rival submissions. The Act and the Rules contemplate determining ALP by aggregating international transactions which are multiple, interlinked or inter-related to each other and cannot be evaluated separately. A 'combined transaction approach' where the transactions are closely linked or continuous that they cannot be evaluated adequately on an individual basis, is advocated by the OECD Guidelines on Transfer Pricing. In such a situation, rather than assessing the ALP of the transactions individually, the transactions could be evaluated together using the most appropriate method. 69. In the present case, can it be said that the transaction of supply of raw material and the transaction of sale of imported products directly from No....
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....o reduce the addition on account of determination of ALP, if any, that might ultimately survive. Issues No.2 to 4 are decided accordingly. 70. Thus grounds No. 32 to 40 and the additional ground of appeal are partly allowed." 19. The parties agreed before us that similar findings and directions can be followed in the present assessment year also. Accordingly, we hold that the issues raised in Grounds No. 39 to 47 in the present assessment year are decided according to the decision rendered in AY 09-10 referred to above. The AO is directed to give effect to the directions as are contained in AY 09-10 in the present assessment year also. 20. We shall next take up for consideration grounds No.4 to 16 raised by the Assessee which projects the grievance of the Assessee with regard to disallowance made u/s.40(a)(ia) of the Act. As we have already seen Human Mono component and Highly Purified insulin in 40 IU Vials are purchased by the Assessee from Torrent Pharmaceuticals Limited a company which is not an Associated Enterprise of the Assessee. Torrent Pharmaceuticals Limited gets insulin in crystal form which is raw material required for manufacture of Human Mono Component and h....
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....n default under the first proviso to sub-section (1) of Section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso." 22. Since provisions of Section 40(a)(ia) as amended by Finance Act, 2012 is linked to Section 201 of the Act, in which a proviso was inserted, the Tribunal took notice of those provisions which read thus: "Sec.201: (1) Where any person, including the principal officer of a company - (a) who is required to deduct any sum in accordance with the provisions of this Act; or (b) referred to in sub-section (1A) of Section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of th....
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....f the - (i) payee has furnished his return of income under section 139; (ii) payee has taken into account such sum for computing income in such return of income; and (iii) payee has paid the tax due on the income declared by him in such return of income, and the payer furnishes a certificate to this effect from an accountant in such form as may be prescribed. 25. The Tribunal thereafter considered the question as to whether the amendment made as above is prospective or retrospective w.e.f. 1.4.2005 when the provisions of Sec.40(a)(ia) were introduced. Keeping in view the purpose behind the proviso inserted by the Finance Act, 2012 in section 40(a)(ia) of the Act, it can be said to be declaratory and curative in nature and therefore, should be given retrospective effect from 1st April, 2005, being the date from which sub-clause (ia) of section 40(a) was inserted by the Finance (No. 2) Act, 2004. 26. The learned counsel for the Assessee brought to our notice that a certificate in Form No.26A of the Rules had already been filed before the AO and DRP. The said Certificate in Form No.26A of a Chartered Accountant is a certificate certifying that TPL has paid tax on the....
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....ce the Assessee charged its AE was at Arm's Length. The TPO rejected the TP study of the Assessee and arrived at a set of 9 comparable companies whose arithmetic mean was 25.69%. The details in this regard are given at para 3.5. at page 8 of the TPO's order. After allowing working capital adjustment of -1.93%, the arithmetic mean of comparable was arrived at by the TPO at 27.62%. 29. The TPO ultimately made an addition of Rs. 67,83,95,931 which was subsequently reduced to Rs. 83,95,931. The addition was sustained by the DRP. Hence, the aforesaid grounds of appeal by the Assessee before the Tribunal. 30. Before us the learned counsel for the Assessee prays for exclusion of 2 comparable companies out of the 9 comparable companies finally chosen by the TPO for the purpose of comparison. A chart was filed before us showing how the 2 comparable companies which the Assessee seeks to exclude viz., Accentia Technology Limited and Infosys BPO Ltd., were also considered by ITAT Bangalore Bench in the case of Symphony Marketing Solutions India Pvt.Ltd. Vs. ITO IT (TP) A/No.1316/Bang/2012 for AY 08- 09, by the Hyderabad Bench of ITAT in the case of Paraxel International (India) Private L....
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....rch Pvt. Ltd., Hyderabad (supra), being relevant in this case, are reproduced below- "19.2 We have considered the rival contentions and noticed that this company operates in a different business strategy of acquiring companies for inorganic growth as its strategy. In earlier years on the reason of acquisition of various companies, being an extraordinary event which had an impact on the profit, this company was excluded. As submitted by the learned counsel, this year also, the acquisition of some companies by that company may have impact on the profit. Considering the profit margins of the company and insufficient segmental data, we are of the opinion that this company cannot be selected as a comparable. Moreover, this is also not a comparable in the case of M/s. Mercer Consulting (India) P. Ltd. (supra), which indicates that the TPO therein has excluded it at the outset. In view of this, we direct the Assessing Officer/TPO to exclude this comparable, from the list of comparables selected." 13. As pointed out by the learned counsel for the assessee, there was acquisition of a company by M/s. Accentia Technologies Limited during the relevant year, and the said company, therefor....
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....ons made by the Tribunal in the decision referred in the earlier paragraph will hold good for the present AY 2010-11 also. Respectfully following the decision of the Tribunal referred to above, we direct that the aforesaid 2 companies be excluded from the list of comparable companies for the purpose of computing arithmetic mean for comparability purpose. The TPO is directed to give effect accordingly. 33. The last issue that arises for consideration in this appeal is Ground Nos. 33 to 38 of the grounds of appeal raised by the Assessee are with regard to an addition of Rs. 1,17,46,336 to the total income of the Assessee on account of adjustment in the arm's length price with respect to co-ordination/monitoring services relating to clinical trial activities undertaken in India provided by the Assessee to its associated enterprises. It is the grievance of the Assessee that the TPO/AO/DRP have erred in recharacterizing the Assessee as a Clinical Research Organization ("CRO") as opposed to a mere coordinator of clinical trial activities being carried out in India on behalf of its AE. Without prejudice it has also been prayed that TPO/AO/DRP erred in accepting certain comparables whic....
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....* Provide the investigators (and support personal) with necessary information and training with respect to procedures and scope of research; * Undertake periodical verification of the progress of clinical trials; * Pay visits to hospitals and collect the study medication and additional materials, study documentation; * Conduct preliminary compilation of results; * Assist in final elaboration of the outcome of tests; * Conduct the additional activities necessary to perform the above activities, such as supplying services the investigators with the appropriate forms and questionnaires for each phase of the research, ordering translation of the necessary documents and supplying the investigators with study medication to be used exclusively within the trials. Further, the Assessee basically acts as the first line local liaison and is responsible for complying with all the local regulatory requirements including filing price information with the price control authorities. The costs of local registration trials and phase IV (Post Marketing Studies) trials are met by the Assessee as part of its distribution activities. Phase IV trials have a mainly marketing function to ....
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....nical research activity but was facilitating only contract support services to Novo Nordisk A/S, as referred to above. The Assessee submitted that it transfers the cost of clinical trial activities undertaken by independent investigators without any mark-up. The Assessee emphasized that the actual services performed as stated earlier, is limited to mere support and coordination services for the clinical trial activity of Novo Nordisk A/S, and does not perform any services/functions of a clinical research or organization as alleged by your good(self) during the hearing. 37. The Assessee also objected to the choice of comparable companies as adopted by the TPO. The Assessee placed reliance on the decision of the ITAT Mumbai Bench in the case of Zydus Atlanta Healthcare Pvt. Ltd. ITA No.3311 & 3312/Mum/2008 wherein on identical facts as the case of the Assessee the Mumbai Bench held that the services rendered cannot be characterized as clinical trial services. 38. The TPO however did not deal with any of the objections raised by the Assessee but computed the ALP as follows: "5.7 ALP COMPUTATION: In the light of the above discussions, the arm's length price of receipt of co....
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....om selection of the hospitals/institutions, the clinical trial agreements with these bodies are also entered into by the assessee itself. All quality control and inspection work is performed by the assessee, which is also fully responsible for legal compliances in India. As such it follows that the assessee shoulders substantial local risk in the course of its activities. 15.6. In view of the above, we are of the view that comparables taken by the TPO as bodies engaged in clinical trial activities are fully justified. For determination of the ALP, therefore, the AO has correctly adopted certain comparables which are however not acceptable to the assessee. The argument of the assessee seeks to lighten the depth of its involvement in clinical trials which we do not find acceptable. It performs as a full fledged clinical services provider to its AE and ought to be compensated as such. Accordingly, this objection is not acceded to." 40. Before us the learned counsel for the Assessee reiterated the stand of the Assessee as was put forth before the TPO/DRP. The learned DR relied on the order of the DRP. 41. After considering the rival submissions, we are of the view that the ord....