TaxTMI 
TaxTMI 
2022 (1) TMI 1034
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....ly one comparable selected by the TPO i.e. Siro Clinpharm Pvt. Ltd. & other two by the assessee and was also confronted to the assessee during the transfer pricing proceedings. 3. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the Transfer Pricing Adjustment of Rs. 2.34 crores related to the Import of Finished Drugs Formulation ('FDFs') (i.e. Minipress') from the AEs, without appreciating the facts of the case. 4. "On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in ignoring TPO's adjustment of Rs. 2.34 crores, based on the comparison of the assessee's operating loss of 16.90% with the average operating profit margin of comparable companies of 3.47%, without distinguishing the finding of the TPO and working of the ALP and deciding the issue solely on the basis of the submission made by the assessee". 5. "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance related to Market Research Expenses of Rs. 73,29,752/-, without appreciating the facts of the case. 6. "On the facts and in the circ....
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....sions of clinical study management and sport services. Assessee in order to benchmark its international transaction qua import of Minipress for trading purposes for resale in Indian market claimed that it has incurred an operating loss of 16.90% from the sale of said product whereas margin as earned by comparable companies was 3.47% on sales and claimed economical adjustment by eliminating the difference created on account of marketing and distribution expenses. However, TPO in order to benchmark this transaction compared margin of comparable companies @ 3.47% with operating loss incurred by the assessee at (-) 16.9% and made adjustment of Rs. 234,00,000/-. 3. In order to benchmark the international transactions qua provision of clinical study management and monitoring sport services, Ld. TPO accepted TNMM with Operating Profit /Total Cost (OP/TC) applied by the assessee, however rejected 7 comparables out of 9 comparables chosen by the assessee by following AY 2002-03 and 2003-04 and thereby introduced 1 additional company as comparable namely Choksi Labs Ltd. and finally selected 3 comparables as under:- SI Company Name Operating margin on operating costs. 1 ....
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.... examine Gr. No. 1 & 2 raised by revenue qua TP adjustment of Rs. 3.17 crores pertaining to provision of clinical study management and monitoring sport services in the light of the findings rendered by Ld. CIT(A) in para 2.5.19 in the impugned order, it is apparently clear that when the issue as to removing "the pass-through cost" from the cost base in order to compute the operating margin decided in assessee's own case in A.Y.2002-03 in its favour has not been further challenged by the revenue, Ground No. 1 & 2 raised by the assessee have become infrucutous. Because even by taking TPO‟s comparables as correct one, assessee's margin comes to 19.57% as against margin of 25.52% of comparables, which falls within + 5% range and in this situation, no adjustment is warranted. 11. We have perused the order passed by Coordinate Bench of Tribunal in assessee's own case for AY 2003-04 in which identical issue has been decided in favour of the assessee by rendering the following findings:- 24. We have considered the submissions of the parties and perused the material available on record. On a perusal of the order passed by the Co-ordinate Bench of the Tribunal in assessee's....
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....ify the facts as to the claim of the assessee qua "pass-through cost", if correct to allow the same. Consequently, we are of the considered view that Ld. CIT(A) has legally and validly decided the issue in favour of the assessee, hence ground no. 1 & 2 are determined against revenue. Ground No. 3 & 4 13. Transfer price adjustment made by the TPO to the tune of Rs. 2,34,00,0000/- qua international transaction pertaining to import of Finished Drugs Formulations (FDF) i.e. Minipress for trading purposes, deleted by Ld. CIT(A) is under challenge before the Tribunal. 14. Undisputedly, TPO compared the margin of the comparable companies i.e. 3.47% with operating loss incurred by the assessee i.e. -16.90%. It is also not in dispute that Ld. TPO had taken note of the fact that in AY 2003-04, margin at 3.41% was adopted to determine the arm‟s length price of import of Minipress for the purpose of trading. It is also not in dispute that assessee imported finished goods Minipress for the purpose of trading for Rs. 80,814,000/- and Minipress constitute the majority of import of finished goods for the purpose of trading totally at Rs. 90,651,000/-. In view of the aforesaid undisp....
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....as under FY 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 Net Margin (% on sales) 3.49% - 12.38% -16.90% 7.205 18.66% 23.73% 33.56% 22.45% 23.17% 19. When we examine the arguments addressed by Ld. AR for the assessee in the light of the profitability trend which is from FY 2004-05 to 2009-10, the assessee has recorded substantial increase in the sales and operating margin in 4th year. The operating loss incurred during the year under consideration is certainly not on account of transfer pricing of the product, a rather due initial business strategy of marketing penetration adopted by the assessee. During the initial years for which, Ld. CIT(A) has rightly provided the economic adjustment, hence rightly deleted the transfer pricing adjustment pertaining to import of Minipress for trading purposes. So, Ground no. 3 & 4 are determined against revenue. Ground No. 5 & 6 20. Disallowance of Rs. 73,29,752/- made by AO on account of market research expenses deleted by the Ld. CIT(A) are under challenge before the Tribunal. Ld. CIT(A) deleted the additions by following the order passed by Tribunal for AY 200....
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....by Ld. CIT(A), on the ground that when the said unit has stopped operations in 2019 to 2020, there is no question of following earlier decisions. 23. We are of the considered view that this contention of the Ld. DR is not tenable because once the asset is purchased and enters into a particular block of assets, the same is not individually identifiable as depreciation is available on the entire block of assets in view of section 32 of the Act. Moreover, this issue has been successively decided in favour of the assessee from AY 2001-02 to 2003-04 vide order dated 18th March 2010 passed in ITA No. 8821/Mum/2004 by Coordinated Bench of Tribunal in para 17 of the order (supra) has duly examined the contention raised by Ld. DR, which are as under:- 17. This order was upheld by the Hon'ble Bombay High Court in ITA No. 598 of 2009 dated 28th July 2009 by following the judgement in the case of Whittle Anderson Ltd. vs. CIT 79 ITR 613 and in the case of CIT vs. G.N. Agarwal (Individual) 217 ITR 250. In view of this, since the assets have become part of the block of assets the assessee is entitled to depreciation. The learned D.R.'s reliance on the decision of CIT vs. McDowell....