TaxTMI 
TaxTMI 
2018 (1) TMI 453
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....ppeal are as under:- ITA No. 2936/DEL/2014 (Revenue Appeal) 1. Whether the Ld.CIT(A) has erred on facts and in law to direct the Assessing Officer /TPO to exclude Choksi Laboratories from the list of comparables. ITA No. 3005/DEL/2014 (Assessee's Appeal) The grounds hereinafter taken by the Appellant are without prejudice to one another. 1. That the learned Commissioner of Income Tax (Appeals) - XX, Delhi ['CIT (Appeals)'] erred in disregarding the Transfer Pricing (TP) documentation and thereby erred in not appreciating economic analysis conducted bonafide by the Appellant in respect of its contract research and development services ('R&D segment'), performed with due diligence and using the data available at the....
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....the limited risk nature of the contract research and development services provided by the Appellant and in not providing an appropriate adjustment towards the risk differential. 2.5. not appreciating the fact that there are significant differences in the levels of working capital employed by the comparables vis-a-vis that of the Appellant and suitable adjustment for differences in working capital needs to be provided. 3. The learned CIT (Appeals) erred in upholding the charging of interest under section 234B of the Act. 4. That the Appellant craves leave to add to and / or alter, amend, rescind or modify the grounds taken hereinabove before or at the time of hearing of this appeal." 4. Akzo Nobel Car Refinishes....
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.... 1,52,87,628/- for the contract R&D services segment. 5. The assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 6. The present appeals are filed by the Revenue as well as by the assessee. 7. In Revenue's appeal, the sole ground is to include Choksi Laboratories from the list of comparables which was directed by CIT(A) to exclude to the A.O/TPO. 8. In assessee's appeal, the assessee challenged that the international transaction pertaining to contract R & D segment do not specify the Arm's Length Principle envisaged under the act. The assessee is challenging CIT(A)'s order saying that the CIT(A) has not appreciated that the assessee's Transfer Pricing documentation is bonafide and in goo....
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....nctional dissimilarity there is also no separate segmental information available. Thus, on both the fronts this comparable has been rightly rejected/excluded by the CIT(A). There is no need to interfere with the findings of the CIT(A). Hence, the appeal of the Revenue on this issue is dismissed. 12. In result, appeal of the Revenue being ITA No. 2936/Del/2014 is dismissed. 13. As relates to the assessee's appeal, the Ld. AR submitted that the assessee is engaged in sale and distribution of car refinishes and contract (R &D) which is engaged in automobile industry. R & D segment of Akzo India undertakes contract Research and Development for the Akzo Group. Akzo India carries out not in Research and Development Activities (Colour mixing....
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....ave to be excluded. 14. The Ld. DR submitted that the TPO has rightly included these companies and this contention was not before the CIT(A). Therefore, the appeal of the assessee be dismissed. 15. We have heard both the parties and perused the material available on record. TCG Lifesciences Ltd. and Transgene Bioteck Ltd. both are functionally dissimilar. They are having intangible assets which are owned by both the companies. There is high risk involved by both the comparables. These are functionally dissimilar because they are into Pharmaceutical Industry and not in Auto Mobile Industry. Thus, both these comparables needs to be excluded. Therefore, the TPO/A.O is directed to exclude these two comparables. 16. As relates to R & D ....