TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 954
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.... trial are entered into between the Assessee and the Principal Investigators (clinical labs] directly and that all rights or obligations arising out of clinical trial directly vests in the assessee and by virtue of this, the assessee cannot be merely treated as a mere intermediary. 3. On the facts and circumstances of the case, Ld. CIT(A) erred in not appreciating the fact that as per clause 3 of Agreement between assessee and Principal Investigator any amendment in protocol will be offered by assessee company only, and as per clause 17 the assessee company undertakes to indemnify and hold harmless the principal investigator from any and all liabilities, loss or damage they may suffer out of activities of clinical trial and therefore assumes the risk of recovery of cost to Principal Investigator and in the capacity of risk bearer assessee company cannot be treated as mere intermediary. 4. On the facts and circumstances of the case, Ld. CIT(A) failed to appreciate the functions performed by the assessee in organizing and arranging the conduct of clinical trials including feasibilities, start-up, execution, follow-up and close-up and also other functions of compilations, storing ....
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.... the TPO considered the Assessee's operating margin earned from the provision of CSMM support services as 10.08% (including pass through cost) as against the comparables operating margin of 23.76%. Accordingly, an adjustment of INR 2,66,54,778 was made in respect of the international transaction of provision of CSMM activity of the respondent. The Ld. CIT(A) relying on the order passed by his predecessor in Respondent's own case in following the principles laid down by the Delhi Tribunal in the case of DCIT vs Cheil Communications India Pvt. Ltd.: ITA No. 712/Del/2010, held that there is a merit in the Assessee's contentions that in order to compute the operating margin, the pass through cost needs to be removed from the cost base and the margin of 13.71% is to be considered for computation of margin of the Assessee in respect of CSMM services. 3. The main argument of the appellant company that these payments which represent third party costs incurred by the Respondent while acting an intermediary, are, therefore in the nature of pass-through cost and hence there cannot be any mark-up on such payments. 4. The Ld. DR relied on the assessment order and Grounds of appea....
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....ment was already covered in its favour in its own case by the order of Hon'ble Tribunal of Mumbai in A.Ys. 2003-04 where the Tribunal has held that the Respondent company acts as a mere facilitator as it does not carry out the clinical trial activity by itself rather the Respondent is getting the clinical trial done from third party. To sum up, the Tribunal held that the action of TPO comparing the margin of the Respondent with comparable set of companies performing contract R&D services is incorrect. Finally, the Ld. AR of the Respondent company has submitted that the Revenue's appeal against the order of Tribunal passed for A.Y. 2003-04 on the same issue was dismissed by the Hon'ble High Court of Bombay in ITA No. 1731 of 2016. 9. In view of the above arguments of Respondent company and the order of Tribunal, the grounds of appeal 6&7 are dismissed. 10. The last concise grounds of appeal No. 8 of Revenue deals with respect to considering same set of comparables to benchmark the transaction of provision of CSMM as well as far as provision of marketing support services. Here the Ld. TPO held that since Assessee has calculated same set of comparables for benchmarking this ....
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....ing support services should not be compared with the institutions and companies engaged in high end contract research and development services and that of the comparables selected by the Respondent company. Thus, the order of Ld. CIT(A) is upheld and the addition made by the Ld. AO in this regard is deleted. The ground of appeal No. 8 is dismissed. 12. Thus, the appeal of the Revenue is Dismissed. C.O. No. 40/Mum/2022 13. Following legal ground is taken by the appellant company in its Cross objection challenging the assumption of jurisdiction by Ld. AO while passing the assessment order. This cross objection was filed by the appellant company on 22.4.2022, whereas the assessment order in this case was passed on 31.12.2008. 14. The main crux in the legal grounds of cross objection in all the grounds No. 1, 2 & 3 is that the Additional CIT who passed the assessment order did not have jurisdiction to pass the assessment order in the absence of order issued to him under section 120(4)(b) of the IT Act conferring him with valid jurisdiction. As there is no order under section 127 of the I.T. Act, transferring the case to Additional Ld. CIT(A), the assessment order passed by him is i....
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....there is no notification or order under section 120(4)(b) or 127 of the Act. 9. After filing of the additional ground, this Tribunal has called for the records from the department to verify, whether there was any such order under section 120(4)(b) or 127 of the Act passed by the concerned authority assigning the case to the Addl. Commissioner of Income Tax from DCIT. However, department could not produce the record on the ground that same is not traceable, because of lapse of time and after so many restructurings in the jurisdiction and field officers the concerned records are not available/traceable. 10. Before us, the Ld. Senior counsel had submitted that, if once the department could not be able to produce the records, then it is to be presumed there is no such order, because onus is upon the department to show that there is an order by the concerned authority authorizing the Addl. Commissioner of Income Tax for passing the order. 11. It was also pointed out that the originally the return of income was filed with Asst. CIT - 7(1), Mumbai, who was then jurisdictional Assessing Officer and thereafter Dy. CIT- 7(1), Mumbai had issued notices under section 143(2) of the Act an....
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....ve a categorical finding of fact that there is no such order was passed under section 120(4)(b) or 127 of the Act by the CIT or DCIT or Pr.CIT, etc., and therefore assessment order should be declared invalid. 14. Now, whether the benefit can be given to the assessee because the department could not trace the records after a lapse of 16 years for the reason that due to restructuring and change in several jurisdictions the records are not traceable. If such a plea or legal issue would have been raised after a reasonable time, perhaps the records would have been verified by the First Appellate Authority itself and given some kind of finding, so as to decide the issue. 15. We are of the opinion that, such an inordinate delay and in absence of records being available, the "Principle of Estoppel of Latches" can be applied in such a situation, which lays down an equitable doctrine, where the court could deny the relief to claimant who has unreasonably delayed the claim or has been negligent in ascertaining the claim. Can the claim of claimant be condoned to raise the issue after lapse of 16 years. In our opinion it cannot be. 16. Further, doctrine of "Estoppel of Acquiescence" which....
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....admitted due to inadvertent delay and accordingly, the petition for admission of additional ground is rejected. 3. In view of the above decision of the Hon'ble ITAT, it is gathered that the facts of the above case and the facts of the case under consideration is identical. Further, the assessment order passed in the case of the assessee on 31.12.2008 and the assessee has challenged the jurisdiction of passing order u/s 143(3) in the year 2022 i.e after 14 years of passing assessment order. Thus, there is inadvertent delay of raising this ground on the part of the assessee. Hence, in view of the decision of Hon'ble ITAT in the case of Novartis India Ltd, the ground raised by the assessee vide C.O NO. 40/Mum/2022 needs not to be entertained." 16. Heard both sides and perused the written submission filed by the Ld.AR of the appellant company and Ld. DR. The Bench finds considerable force in the argument of Ld. DR where reliance was placed on the decision of M/s. Novartis India Ltd., passed by the ITAT Mumbai which is a co- ordinate Bench. The Bench is of the opinion that the question relating to assumption of jurisdiction by the officer who passed an order 14 year back, espe....