TaxTMI 
TaxTMI 
2022 (12) TMI 500
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....he Income Tax Act, 1961 (for short "the Act"), consequent to the directions of Hon'ble Dispute Resolution Panel, Bengaluru ("DRP"), assessee filed this appeal. 2. Brief facts of the case are that the assessee is engaged in manufacturing and sale of bulk drugs, Active pharmaceutical Ingredients (APIs) and other pharmaceutical products. For the assessment year 2009- 10 the assessee filed the return of income declaring total income of Rs. 59,03,71,958/-, which was subsequently revised on 6/2/2010 declaring the same amount, but by including short term capital loss on realisation of yield enhancement certificates amounting to Rs. 28.98 Crores. Though originally a reference under section 92CA of the Act was made on 20/5/2011, pursuant to the....
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.... pricing adjustment proposed without resorting to any transfer pricing exercise as per any of the methods prescribed in section 92C (1) to determine the ALP, is bad in law and has to be deleted. 5. Second line of argument advanced on behalf of the assessee is that the assessee provided loans to its Associated Enterprises ("AEs") for interest by showing the same in the P&L Account on accrual basis, such an interest income in the past was assessed as business income in the earlier years under the head "business income" and was accepted by the Department, and therefore once the interest income was offered on accrual basis, which was debited in the P&L Account as business income and was accepted by the Department, if it is written off as irrec....
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....tional transaction, it is not open for the assessee now to claim the same as business loss. 7. We have gone through the record in the light of the submissions made on either side. Aurobindo (Datong) Biopharma Company Limited is a 100% wholly owned subsidiary of the assessee, manufacturing 6 APA, a derivative of Pen G and is the main ingredient of SSPs and cephalosporin drugs, and the company started commercial production in 2003 with annual production capacity of 1500 metric tons. Purpose of the assessee setting up the said unit was to ensure continuous uninterrupted supplies of raw material to parent company, namely, assessee. As on 31/3/2008 the foreign loan from the assessee to the said entity was US$ 22.61 M. In the year under consider....
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.... to note here that the Ld. TPO did not make any adjustment in respect of the international transactions in respect of which the assessee adopted the Transactional Net Margin Method (TNMM) and Comparable Un-controlled Price (CUP) Methods. For determination of the ALP of the writing off transactions, Ld. TPO did not refer to any method contemplated under section 92C (1) of the Act. He simply stated that any unrelated commercial enterprise working at arm's length would have made all efforts to recover all its dues. In Henkel Chembond Surface Technologies Ltd (supra) it is held that where the Ld. TPO did not resort to any transfer pricing exercise as per any of methods prescribed in section 92C(1) of the Act and determine the ALP of the transac....
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.... expecting the assessee to prove that debts had actually became bad. In Pranava Electronics (P) Ltd (supra) the Hon'ble Karnataka High Court held that writing off of irrecoverable loan in books of account is sufficient to claim the deduction for bad debts under section 36(1)(vii) of the Act, and the assessee is not required to be in money lending business to claim the said deduction. 12. It's not out of place at this juncture to refer to the observations of the Hon'ble Bombay High Court in the case of Harshad J Choksi (supra), wherein it was held that if an amount cannot be deducted as a bad debt in view of non-compliance of the conditions precedent as provided under section 36(2) of the Act, the same will not prevent the assessee from cla....