TaxTMI 
TaxTMI 
2018 (4) TMI 2014
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....elying on the decision of ITAT in the case of M/s Evonik Degussa India Pvt. Ltd. (ITA No.7653/MUM/2011). (ii) Whether on the facts and circumstances of the case, the CIT(A) has erred in rejecting Syngene International Ltd. as comparable as it is into diagnostics by relying on the decision of ITAT in the case of M/s Evonik Degussa India Pvt. Ltd. (ITA No.7653/MUM/2011). (iii) The appellant prays for leave to add, amend, modify or alter any grounds of appeal at the time or before the hearing of the appeal." 3. Facts of the case, in brief, are that the assessee is a company and filed its return of income on 31.10.2007 declaring Nil income after claiming income to the tune of Rs.25,98,34,000/- as exempt being agricultural income. The assessee is a world leader in agricultural products. The Indian Branch carries out research and production. Research done by Pioneer Facilities worldwide creates a large pool of agricultural products that are disease resistant and give superlative performance in diverse climatic and soil conditions. Research information and materials are documented and preserved by Pioneer to ensure availability of materials and information for produci....
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..... The assessee has used TNMM and PLI of Net Operation Profit Margin based on Sales (NPM). During the year the assessee also imported agricultural equipments-rice seeders from its AE for production function. Since the import of equipment was inextricably linked to main activity of production of parent seeds, the cost of equipment has been claimed as operating expense and clubbed with production function under TNMM. The assessee has also paid seed processing and storage services to its AE, these transactions have also been aggregated under TNMM. The assessee has stated that it has earned NPM margin of 86.67% from sale of parent seeds as compared with 18 comparables companies whose average arithmetic NPM margin using three year data is 11.90%. 6. Regarding reimbursement of agricultural research expenses, assessee has stated that the research unit of POC India carries out research and the entire cost of research is reimbursed by POC on a cost to cost basis. It was claimed by the assessee that POC India does not provide any services to its group companies. The entire research data is pooled and shared by all research units of POC worldwide. The assessee stated that POC India has full....
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...._non_fin _services/in c_sales*100 Sales pbit/in c_sales *100 pbit /exp_tot al*100 OP/OI OP/OE Scitech Centre 100 3.65 4.11 3.48 -9.73 -8.78 Contract R&D research Dabur Research Foundation 100 41.76 44.76 47.39 6.49 6.49 Contract R&D research I M C Ltd. 88.05 54.89 12.9 13.43 13.5 15.94 Contract R&D research I D C (India) Ltd. 100 13.38 13.68 14.88 13.97 16.23 Contract R&D research Teg Lifesciences Ltd. 100 48.2 22.24 23.4 14.04 16.34 Contract R&D research Venus Diagnostics Ltd. 100 1.02 24.51 27.17 24.51 32.47 Contract R&D research Choksi Laboratories Ltd. 100 9.11 24.15 26.7 29.92 42.7 Contract R&D research Great Offshore Ltd. 100 537.33 36.73 48.95 36.78 58.17 Contract R&D research Syngene International Ltd. 100 128.2 40.12 62.41 38.97 63.87 Contract R&D research Biotech Consortium India Ltd. 82.15 4.25 60.24 49.33 39.82 66.17 Contract R&D research Transgene Biotek Ltd. 73.68 3.42 39.77 62.1 41.4 70....
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....not be considered as comparables and, therefore, to be rejected. 13. Aggrieved with such order of the ld. CIT(A), the Revenue is in appeal before the Tribunal. 14. We have considered the rival arguments made by both the sides and perused the orders of the authorities below. The grievance of the Revenue is regarding the order of the ld. CIT(A) in rejecting Venus Diagnostics Ltd. and Syngene International Limited as comparables. 15. So far as Venus Diagnostics Ltd. is concerned, we find the ld. CIT(A) while considering the same as not comparable has held that the said company is operating as diagnostic centre which is evident from the annual report of the company. Since it is not engaged in the provision of research services, he held that the same cannot be considered as comparable. While doing so, he has not relied on the decision of the Mumbai Bench of the Tribunal in the case of M/s Evonik Degussa India Pvt. Ltd. vide ITA No.7653/Mum/2011 as mentioned by the Revenue in the grounds of appeal. In fact, ld. CIT(A) has relied on the decision in the case of M/s Evonil Degussa India Pvt. Ltd. and has accepted TCG Lifesciences Limited as a comparable to the assessee and has not ....
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....ds and since segmental details are not available, therefore, in absence of any contrary material brought to our notice, we do not find any infirmity in the order of the ld. CIT(A). Accordingly, the same is upheld and the grounds raised by the Revenue are dismissed. C.O. No.254/Del/2015 (By Assessee) : 18. The grounds of Cross Objection raised by the assessee read as under :- "Ground No.1: That on the facts of the case, the order of the Learned Commissioner of Income Tax (Appeal) ["Id. CIT(A)"]/ Assessing Officer ("AO)/ Transfer Pricing Officer (TPO) is bad in law. Ground No.2: The Id. CIT(A)/ AO / TPO erred in re-characterisation of the business wherein R&D function which is vertically integrated to the Research unit of Associate enterprise incidental to main business of cultivation of parent seeds has been considered as a separate and distinct activity of provision of services to associate enterprises. Ground No.3: That the Id. CIT(A)/ Assessing Officer/ TPO have erred in: Ground No. 3.1: Ignoring the fact that research unit in India of POC, USA is not a permanent establishment of (PE) and it is specifically covered under exclusionary clau....