TaxTMI 
TaxTMI 
2016 (5) TMI 1306
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....to in Sun Pharma Global Inc. 4. During the course of the scrutiny assessment proceedings, when A.O found that certain International Transactions have to be considered by the TPO, the matter was remitted to the Transfer Pricing Officer who proposed to make following additions in respect of International Transactions relating to investment/loans to Associated Enterprises- (1) Interest on Loan to AEs at LIBOR plus rate allowed to AEs Rs. 7,83,82,483/- (2) Interest on 9% OFCD Rs. 21,08,42,301/- Total Rs. Rs. 28,92,24,784/- 5. Assessee was asked to explain why this amount should not be added to the total income. Assessee filed a detailed reply explaining that the assessee had sourced the loans to AE out of the excess funds lying idle out of the issue of FCCBs. Certain portion of the FCCB proceeds were deployed in fixed deposits in overseas banks. It was brought to the notice of the A.O that the assessee has charged interest to the AEs at 3.81% being the 12 month LIBOR rate. The assessee strongly objected to the charge of LIBOR+ rate of interest. In so far as, the money raised through Foreign Currency Convertible Bonds, it was explained that since money raised thr....
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.... subsequently utilized by the Ireland Company for acquiring shares in Zydus Healthcare, Brazil. As per the terms of agreement, no interest was payable if the amount was converted into equity. However, if the same is redeemed, interest was payable at Libor Plus 290 bps and the interest was to be computed at annual rates and payable at maturity that is 5 years from the date of first disbursement. The rupee value of the amount of loan as on 31.03.2008 was Rs. 108.32 crore. It was also noticed that Assessee has not shown any income from the aforesaid loan. In response, Assessee interalia submitted that Assessee had not opted for conversion of the loan during the year and therefore it was loan for the year and as per the terms of agreement, no interest accrued to the Assessee and therefore no income was considered. The TPO did not find the contention of the Assessee acceptable. He considered the Optionally Fully Convertible loan as debt and considering the average six month Euro Libor rate for the year @ 4.48% to which he added the interest rate of 2.90 basis point as per the agreement and thereafter considered the rate of interest to be @ 7.38% and accordingly computed the interest on ....
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.... (a) Trade Mark Registration Charges : 2,42,56,296/- (b) Overseas Product Registration Charges : 2,00,00,508/- 12. The assessee was asked to justify its claim. Assessee filed a detailed reply justifying its claim of weighted deduction. It was explained that the expenditure incurred for product registration although named as Product Registration Expenditure is not merely an expenditure for registration of the product, but in large measure constitutes expenditure for validation and confirmation of the Research carried out. The A.O did not accept the claim of the assessee holding that these expenses were incurred for registration of drug patents in foreign countries. The A.O accordingly withdrew the weighted deduction and allowed only 100% of the same as revenue expenditure. 13. Assessee carried the matter before the ld. CIT(A) but without any success. While dismissing the grievance of the assessee, the ld. CIT(A) followed the findings of his predecessor given in A.Y. 2002-03 to 2004-05. Before us, the ld. counsel for the assessee stated that the Tribunal in assessee's own case in earlier years has decided this issue in favour of the assessee and again....
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....mulation drugs and whether claiming any special deduction under the Act or not. Assessee filed a detailed working of the allocation of expenses. The reply of the assessee did not find any favour with the A.O who was of the firm belief that R & D expenses are basically pertaining to the head office expenses which are not directly relatable to a particular unit. According to the A.O, if the expenses are not scientifically distribute, it may lead to excess deduction u/s. 80IB or 10A or 10B of the Act. Taking a leaf out of the earlier assessment years, the A.O reallocated further expenses of Rs. 4,27,59,003/- to the Silvassa II Unit. 20. Assessee carried the matter before the ld. CIT(A) and reiterated its claim of deduction. However, the ld. CIT(A) followed the findings of his predecessor given in earlier assessment years holding that there is no change in the facts and circumstances of the case during the year under appeal. Before us, the ld. counsel for the assessee drew our attention to the decision of the Tribunal given in earlier assessment years and requested for a similar view. We have carefully considered the facts in issue in this ground of appeal. We have also gone t....
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.... Rs. 50,68,982/-. The assessee was asked to explain the same. Assessee filed a detailed reply explaining the provisions and reserves and heavily relying upon the decision of the Hon'ble Supreme Court given in the case of Apollo Tyres Ltd. 255 ITR 273. It was strongly contended that the A.O has only the power of examining whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. 20. The contention of the assessee did not find favour with the A.O The A.O was of the opinion that since the said section has been amended the assessee should have added back the provision while computing the book profit also. The A.O relied upon the amended provisions and further drawing support from the decision of the Hon'ble Madras High Court 244 ITR 256 added back Rs. 50,68,982/- to the book profit u/s. 115JB. 21. Assessee carried the matter before the ld. CIT(A) but without any success. Before us, the ld. counsel for the assessee heavily relied upon the decision of Hon'ble Karnataka High Court given in the case of Yokogawa Ltd. The ld. D.R. supporting the findings of the revenue authorities, drew....
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....und no. 7 relates to the additions made on account of sales made to Sun Pharmaceutical Industries. 29. An identical issue has been considered and decided by us in favour of the assessee in ITA No. 2430/Ahd/2009 qua ground no. 9 of that appeal. Respectfully following our own decision, we direct the A.O to delete the impugned additions on account of sales made to Sun Pharmaceutical Industries. Ground no. 7 is allowed. 30. Ground no. 8 relates to the disallowance of expenses incurred on behalf of Sun Pharmaceutical Industries. 31. An identical issue has been considered and decided by us in ITA No. 2430/Ahd/2009 qua ground no. 10 of that appeal. For our detailed discussion therein, we direct the A.O to delete the impugned disallowance of expenses. Ground no. 8 is allowed. 32. Ground no. 9 relates to the Foreign Exchange Fluctuation Gain. 33. After perusal the orders of the authorities below qua the issue, in our considered opinion, this issue has to go back to the A.O as the matters have been resorted to the files of the A.O in earlier years. The A.O is directed to decide the issue afresh as per the directions given in earlier years and after giving an opportunity of bei....
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....of repairs & payment of municipal taxes. 46. For the reasons given in ground no. 2 hereinabove, Ground no. 3 is also dismissed. 47. Ground no. 4 relates to the deduction of interest on overdue bills for computation of deduction u/s. 80IB of the Act. 48. An identical issue has been considered and decided by us in ITA No. 2400/Ahd/09 qua ground no. 3 of that appeal. Respectfully following our own decision, ground no. 4 is dismissed. 49. Ground no. 5 relates to the deletion of the addition made on account of allocation of R & D expenses. 50. An identical issue has been decided by us in ITA No. 2430/Ahd/09 qua ground no. 6 of that appeal. For similar reasons, ground no. 5 is dismissed. 51. Ground no. 6 relates to the deletion of the addition of Rs. 6,80,281 made on account of depreciation. 52. In our considered opinion, this issue has been decided in favour of the assessee and against the revenue in the light of the decision of the Hon'ble Supreme Court given in the case of ICDS Ltd. 350 ITR 527. No interference is called for. 53. Ground no. 7 relates to the exclusion of provision for FBT for computing book profit. 54. An identical issue has been considered b....