TaxTMI 
TaxTMI 
2015 (10) TMI 2425
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....t services to its AEs. For Assessment Year 2008-09, the assessee filed its return of income on 30.09.2008 declaring income of Rs. 5,83,62,730. The return was processed under Section 143(1) of the Act and the case was taken up for scrutiny. 2.2 The Assessing Officer observed that the assessee had entered into international transactions in excess of Rs. 15 Crores and therefore with the approval of the CIT-I, Bangalore made a reference to the Transfer Pricing Officer (' TPO') to determine the arms length price ('ALP') thereof, as per the provisions of section 92CA of the Act. In the year under consideration, the international transactions entered into by the assessee were categorized as - (i) Processing Function, (ii) Research and Development Service; (iii) Import & Processing of Lithium Metals and (iv) Support Services. The TPO on examination thereof found that, other than the Research and Development Services of the assessee, all the other reported international transactions were at arm's length. The total operating revenues from R&D Services provided to its AE was Rs. 2,41,30,256 with operating costs at Rs. 1,96,59,322. The operating profit was Rs. 36,16,844 and the operating....
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....g grounds :- " A GROUNDS RELATING TO TRANSFER PRICING - LEGAL ISSUES The learned Assessing Officer, (alongwith the learned Transfer Pricing Officer and Honorable Dispute Resolution Panel) have erred in 1. Passing the Order in the manner passed which is bad in law. 2. passing the order disregarding the principles of natural justice. 3. making a reference to Transfer Pricing Officer for determining arm's length price without demonstrating as to how or why it was necessary and expedient so to do. 4. passing the order without demonstrating that appellant had motive of tax evasion. 5. not appreciating that the charging or computation provision relating to income under the head "Profits & Gains of Business or Profession" do not refer to or include the amounts computed under Chapter X' and therefore the addition made under Chapter X is bad in law. B GROUNDS RELATING TO TRANSFER PRICING - COMPUTATION OF ALP The learned Assessing Officer, (alongwith the learned Transfer Pricing Officer and Honorable Dispute Resolution Panel) have erred in 6. Making transfer pricing adjustment of Rs. 13,74,069/-. 7. computing the Arm's length price based on the data for the financial yea....
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....g units/mud logging services mainly for Geological Operations for oil, gas and mineral exploration. The learned Authorised Representative contends that its products and services while include 90% of mud logging services, rig instrumentation, gas detection, MWD/ directional / drilling, LOG/MAT digitizing, horizontal drilling/river crossing etc. cannot be treated as comparable to the Research and Development activity carried out by the assessee in the Agro Chemical Industry. The learned Authorised Representative for the assessee submitted that even for the immediately preceding year i.e. Assessment Year 2007-08 in the assessee's own case, the CIT (Appeals) following the decision of the ITAT, Mumbai Bench in the case of Tevapharma (P) Ltd. in ITA No.6623/Mum/2011 for Assessment Year 2007-08, had directed and upheld the exclusion of this company i.e. 'Oil Field' from the list of comparables to the assessee in the case on hand who is an R&S Service Provider in the Agro Chemical Industry. It was further submitted that the co-ordinate bench of the Tribunal in its order in IT(TP)A N 431/Bang/2012 dt.10.4.2015 for Assessment Year 2007-08 had upheld the order of the learned CIT (Appeals)....
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....rovider. Before us, no material evidence has been brought on record by revenue to justify the inclusion of these three companies in the list of comparables. 5.2.5 We also find that co-ordinate benches of this Tribunal in the cases of Apotex Research Pvt. Ltd. V DCIT in ITA No.918/Bang/2011 dt.23.11.2012 for Assessment Year 2007-08 and in Millipore India Pvt. Ltd. in IT(TP)A No.689/Bang/2012 dt.4.7.2014 for Assessment Year 2007-08, after considering the functional profile of M/s. Oil Field Instrumentation India Ltd. and M/s. Celestial Bio Labs Ltd. held that these two companies cannot be treated as comparables for an R&D Service Provider. 5.2.6 In this view of the matter, following the findings in the decision of the Tribunal Benches in the cases of Tevapharm India Pvt. Ltd. (supra), Apotex Research Pvt. Ltd. (supra) and Millipore India Pvt. Ltd. (supra), we hold that these three companies viz. Oil Field Instrumentation India Ltd., Celestial Bio Labs, Ltd., and Agile Electric Technologies Pvt. Ltd. are functionally different from the assessee in the case on hand and therefore cannot be treated as comparables. We are, therefore, in agreement with the finding of the CIT (Appeals) in....
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.... Chemical Industry. The learned Authorised Representative submitted that even in the assessee's own case for Assessment Year 2007-08, a coordinate bench of this Tribunal in its order in IT(TP)A No.431/Bang/2012 dt.10.4.2015, following the decision of the Mumbai ITAT in the case of Tevapharma Ltd. (supra), had directed and upheld exclusion of this company i.e. Celestial Biolabs Ltd. from the list of comparables to the assessee in the case on hand. The learned Authorised Representative prays that in view of the factual matrix brought out above, this company ought to be excluded from the list of comparables to the assessee. 6.4 Per contra, the learned Departmental Representative supported the order of the TPO in selecting this company as a comparable to the assessee in the case on hand. 6.5.1 We have heard the rival contentions and perused and carefully considered the material on record, including the judicial decisions cited by the assessee. From the factual matrix laid out above, it is abundantly clear that Celestial Biolabs Ltd. is engaged in diverse activities like development and sale of software products, data warehousing, bioinformatics, apart from software development se....