DCIT RG 8(2), MUMBAI V. PIZER LTD, MUMBAI

ITA 1567/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3594 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2016
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 27-01-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 23-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M DAYASAGARDR
• Keywords: Depreciation; Transfer pricing; Opportunity of being heard; International transaction; Question of law
• Section: 92C

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.1567/MUM/2011 ASSESSMENT YEAR: 2003-04 DCIT CIR-8(2), R. NO.216-A AAYAKAR BHAVAN M.K.ROAD, MUMBAI-400020 VS M/S PFIZER LTD. PFIZER CENTRE 5, PATEL ESTATE, OFF. S.V. ROAD, JOGESHWARI (W), MUMBAI-400102 ( / REVENUE) ( ! /ASSESSEE) PAN. NO. AAAC P3334M ' # $ ! % / DATE OF HEARING : 12/05/2016 $ ! % / DATE OF ORDER: 12/05/2016 / REVENUE BY SHRI M. DAYASAGAR-DR ! / ASSESSEE BY SHRI DHANESH BAFNA ITA NO.1567/MUM/2011 M/S PFIZER LTD. 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 03/12/2010 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED IN THIS APPEAL PERTAINS TO D ELETING THE PENALTY OF RS.1,82,52,644/- IMPOSED U/S 271(1)(C) O F THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING OF THIS APPEAL, SHRI DHANESH BA FNA ALONG WITH MS. FORUM MEHTA, LD. COUNSEL FOR THE ASS ESSEE, CONTENDED THAT THE QUANTUM ADDITION ON THE BASIS OF WHICH PENALTY WAS IMPOSED WAS DELETED BY THE TRIBUNAL WIT H RESPECT TO TRANSFER PRICING ADJUSTMENT AND DEPRECIA TION ON ANKLESHWAR PLANT. SO FAR AS, THE ISSUE OF IMPORT OF FINISHED DIRECT FORMULATION FOR RESALE IN INDIA IS CONCERNED , THE MATTER WAS RESTORED TO THE FILE OF THE TPO WITH A DETAILED FINDING. THE LD. COUNSEL INVITED OUR ATTENTION TO PARA 26 TO 33 (PAGES 19 TO 27 OF THE ORDER OF THE TRIBUNAL). THIS FACTUAL ASSE RTION WAS NOT CONTROVERTED BY SHRI M. DAYASAGAR, LD. CIT-DR. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND T HAT SO FAR ITA NO.1567/MUM/2011 M/S PFIZER LTD. 3 AS, THE ADDITION OF RS.2,01,87,000/- ON ACCOUNT OF PROVISION OF CLINICAL STUDY MANAGEMENT AND MONITORING SUPPORT SERVICES IS CONCERNED, THE TRIBUNAL VIDE ORDER DATE D 06/11/2015 (ITA NO.3729 AND 3424/MUM/2008), WHILE ADJUDICATING THE QUANTUM APPEAL OF THE ASSESSEE, DE LIBERATED UPON THE ISSUE AND DELETED THE ADDITION. THE RELEVA NT PARA 17 TO 19 OF THE AFORESAID ORDER IS REPRODUCED HEREUNDE R:- 17. THUS, KEEPING IN VIEW THE PRINCIPLE LAID DOWN BY THE HON'BLE DELHI HIGH COURT AS ABOVE, IN OUR VIEW, SIR O CLINPHARM PVT. LTD. CANNOT BE CONSIDERED AS A COMPA RABLE TO THE ASSESSEE AS THE BUSINESS MODEL OF THIS COMPANY IS NOT ONLY DIFFERENT BUT IT IS NOT FUNCTIONALLY SIMILAR TO THE ASSESSEE IN ALL RESPECT AS THIS COMPANY RENDERS THE SERVICES ON ITS OWN WITHOUT OUTSOURCING, UNLIKE THE ASSESSEE. THOUGH, IT MAY BE A FACT THAT TRIBUNAL IN THE PRECEDING ASSESSMENT YEAR HAS ACCEP TED THIS COMPANY AS COMPARABLE TO THE ASSESSEE, BUT THE TRIB UNAL DID NOT HAD THE BENEFIT OF PRINCIPLE LAID DOWN BY THE H ON'BLE DELHI HIGH COURT IN RAMP GREEN SOLUTIONS PVT. LTD. (SUPRA ). IN VIEW OF THE AFORESAID, RESPECTFULLY FOLLOWING THE DECISI ON OF THE HON'BLE DELHI HIGH COURT IN RAMP GREEN SOLUTIONS PV T. LTD. (SUPRA), WE DIRECT EXCLUSION OF THIS COMPANY AS A C OMPARABLE. 18. AS FAR AS CHOKSI LTD. IS CONCERNED, IT IS SEEN THAT THIS COMPANY IS ALSO DOING CLINICAL RESEARCH TRIAL ACTIV ITY WITHOUT OUTSOURCING TO OTHERS. THEREFORE, THE BUSINESS MODE L OF THE ITA NO.1567/MUM/2011 M/S PFIZER LTD. 4 ASSESSEE IS DIFFERENT. ON A PERUSAL OF THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN RAMP GREEN SOLUTIONS PV T. LTD. (SUPRA), IT IS SEEN THAT THE HON'BLE DELHI HIGH COU RT HELD M/S. VISHAL ENTERPRISE NOT COMPARABLE TO THE ASSESSEE AS IT WAS OUT SOURCING ITS ACTIVITIES. HENCE, THE BUSINESS MODEL IS DIFFERENT. REVERSE IS THE CASE WITH THE ASSESSEE. WHILE THE AS SESSEE IS OUT SOURCING ITS CLINICAL RESEARCH TRIAL ACTIVITIES, TH E COMPARABLE COMPANY IS DOING THE ACTIVITY ITSELF. THUS, THE BUS INESS MODEL OF THE ASSESSEE AND COMPARABLE COMPANY ARE NOT SAME. T HOUGH, LEARNED DEPARTMENTAL REPRESENTATIVE HAS RAISED SERI OUS OBJECTION WITH REGARD TO EXCLUSION OF THIS COMPANY BY SUBMITTING THAT ASSESSEE ITSELF IN ITS TRANSFER PRI CING STUDY HAS SELECTED THIS COMPANY, BUT, IN OUR VIEW THAT CANNOT BE THE SOLE CRITERIA TO RETAIN THIS COMPANY AS A COMPARABLE IF IT IS ULTIMATELY FOUND THAT THE COMPANY IS NOT AT ALL A C OMPARABLE. WE FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE TH AT ON THE BASIS OF LIMITED DATA AVAILABLE IN PUBLIC DOMAIN WH EN THE TRANSFER PRICING STUDY WAS PREPARED THE ASSESSEE HA S SELECTED THIS COMPANY AS A COMPARABLE. HOWEVER, WHEN COMPLET E DATA RELATING TO THIS COMPANY SUBSEQUENTLY CAME TO THE P UBLIC DOMAIN, IT WAS FOUND THAT THIS COMPANY IS NOT A COM PARABLE. IN OUR VIEW, THE AFORESAID EXPLANATION OF THE ASSESSEE DESERVES TO BE ACCEPTED. WE, THEREFORE, DIRECT THE ASSESSING OF FICER TO EXCLUDE THIS COMPANY AS COMPARABLE. 19. AS FAR AS VIMTA LAB LTD. IS CONCERNED, APART FR OM THE FACT THAT BUSINESS MODEL OF THIS COMPANY IS DIFFERENT FR OM ASSESSEE AS DEMONSTRATED BY THE LEARNED COUNSEL FOR THE ASSE SSEE, FROM ITA NO.1567/MUM/2011 M/S PFIZER LTD. 5 THE MATERIAL ON RECORD IT IS ALSO SEEN THAT THE TRA NSFER PRICING OFFICER HIMSELF IN ASSESSMENT YEAR 2005-06, HAS REJ ECTED THIS COMPANY AS COMPARABLE BY OBSERVING THAT NOT ONLY IT IS ENGAGED IN DIVERSIFIED ACTIVITY BUT THE BUSINESS MO DEL IS DIFFERENT. WE, THEREFORE, HOLD THAT THIS COMPANY CA NNOT BE CONSIDERED AS COMPARABLE. 2.2. SO FAR AS, THE ADDITION OF RS.32,87,058/- WIT H RESPECT TO DEPRECIATION ON ANKLESHWAR PLANT IS CONC ERNED, THE TRIBUNAL IN THE AFORESAID ORDER (PARA 35 TO 40) DATED 06/11/2015 HELD AS UNDER:- 35. IN GROUND NO.7, THE ASSESSEE HAS CHALLENGED DI SALLOWANCE OF DEPRECIATION CLAIMED ON ASSETS OF ANKLESHWAR PLA NT. 36. BRIEFLY STATED THE FACTS ARE, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT ASS ESSEE HAS CLAIMED DEPRECIATION ON ASSETS OF ANKLESHWAR PLANT WHICH HAS CLOSED DOWN ITS OPERATION. HE, THEREFORE, CALLED UP ON THE ASSESSEE TO EXPLAIN WHY THE CLAIM OF DEPRECIATION S HOULD NOT BE DISALLOWED. THOUGH, THE ASSESSEE SUBMITTED THAT ONCE THE ASSETS FORM PART OF THE BLOCK, IT LOSSES ITS INDIVI DUAL CHARACTER, HENCE, DEPRECIATION ON SUCH INDIVIDUAL ASSET CANNOT BE DISALLOWED BUT THE ASSESSING OFFICER MENTIONING THA T SIMILAR DISALLOWANCE WAS MADE IN ASSESSMENT YEAR 200001 DISALLOWED DEPRECIATION RELATING TO ANKLESHWAR PLAN T AT ` 32,87,058. THE ASSESSEE CHALLENGED THE DISALLOWANCE BEFORE THE FIRST APPELLATE AUTHORITY. ITA NO.1567/MUM/2011 M/S PFIZER LTD. 6 37. THE LEARNED COMMISSIONER (APPEALS) ALSO SUSTAIN ED THE DISALLOWANCE. 38. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US, THE ISSUE IN DISPUTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSE ES OWN CASE FOR THE ASSESSMENT YEAR 200203 AND OF THE HON'BLE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CASE FO R THE ASSESSMENT YEAR 200102. RESPECTIVE ORDERS WERE ALS O PLACED BEFORE THE BENCH. 39. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS NOT CONTROVERTED THE AFORESAID FACTUAL POSITION. 40. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS FAR AS THE FACTUAL ASPECT OF THE ISSUE IS CONCERNED, THERE IS NO DISPU TE THAT ASSESSEE HAS CLAIMED DEPRECIATION ON BLOCK OF ASSET WHICH ALSO INCLUDES ASSETS OF ANKLESHWAR PLANTS. IT IS OBSERVE D, WHEN IDENTICAL ISSUE OF DISALLOWANCE OF DEPRECIATION ON THE ASSETS OF ANKLESHWAR PLANTS CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL, MUMBAI BENCH, IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 200203, THE TRIBUNAL IN ORDER DATE D 8TH MARCH 2013, IN ITA NO.3098/MUM./2006, ALLOWED ASSES SEES CLAIM BY FOLLOWING ITS OWN ORDER FOR THE ASSESSMENT YEAR 200102 IN ITA NO.8821/MUM./2004. IT IS ALSO RELEVA NT TO OBSERVE, THE HON'BLE JURISDICTIONAL HIGH COURT DISM ISSED REVENUES APPEAL ON THE ISSUE OF CLAIM OF DEPRECIAT ION ON PLANT AND MACHINERY OF ANKLESHWAR UNIT IN ITA NO.67 76/2010 ITA NO.1567/MUM/2011 M/S PFIZER LTD. 7 FOR THE ASSESSMENT YEAR 200001. IN VIEW OF THE AFO RESAID, WE ALLOW ASSESSEES CLAIM OF DEPRECIATION BY DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. 2.3. THE THIRD ADDITION OF RS.2,61,93,000/- WITH RESPECT TO IMPORT OF FINISHED DIRECT FORMULATION FO R SALE IN INDIA, THE TRIBUNAL DELIBERATED UPON THE ISSUE (PAR A 26 TO 33) PAGES 19 TO 27 OF THE AFORESAID ORDER DATED 06/11/2 015. THE RELEVANT PORTION OF THE SAME IS REPRODUCED HEREUNDE R FOR READY REFERENCE: 26. THE NEXT ISSUE ON TRANSFER PRICING ADJUSTMENT WHICH ARISE FOR CONSIDERATION IS WITH REGARD TO ADJUSTMENT MADE TO THE ARM'S LENGTH PRICE OF INTERNATIONAL TRANSACTION INVOLVING IMPORT OF FINISHED DIRECT FORMULATION (FDF) FOR RESALE IN IN DIA, WHICH IS RAISED IN GROUNDS NO.4 AND 5 OF CONCISE GROUND. HOW EVER, SUBSEQUENTLY, THE ASSESSEE ON 20TH APRIL 2010, HAS SOUGHT PERMISSION TO RAISE FOLLOWING ADDITIONAL GROUNDS RE LATED TO THIS ISSUE. WITHOUT PREJUDICE TO GROUND NO.4 TO 6 OF THE CONCI SE GROUND FILED ON MAY 18, 2010, APPELLANT SUBMITS THA T RESALE PRICE METHOD BE CONSIDERED AS MOST APPROPRIA TE METHOD FOR DETERMINING THE ARMS LENGTH PRICE. THE APPELLANT PRAYS THAT THE INTERNATIONAL TRANSACTION OF IMPORT OF FDFS FOR RESALE OF INDIA BE CONSIDERED AT ARM'S LENGTH AND THE ADDITION OF ` 2,61,93,000 BE DELETED. 27. AT THE OUTSET, WE PROPOSE TO DEAL WITH THE ISSU E WHETHER ADDITIONAL GROUND CAN BE ENTERTAINED AT THIS STAGE. ITA NO.1567/MUM/2011 M/S PFIZER LTD. 8 28. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US, UNDER AN AGREEMENT WITH A.E. ASSESSEE IMPORTS FDFS FROM ITS A.E. AND SELLS THEM TO CUSTOMERS IN INDIA WITHOUT MAKING ANY VALUE ADDITION. IT WAS SUBMITTED, THE ASSESSEE SIMPLY ACT S AS A DISTRIBUTOR / TRADER OF THEFDFS HENCE, THE MOST APP ROPRIATE METHOD FOR COMPUTING THE ARM'S LENGTH PRICE IS RES ALE PRICE METHOD (RSPM). HE SUBMITTED, THOUGH, THE ASSESSEE I N TRANSFER PRICING STUDY HAS ADOPTED TNMM AS THE MOST APPROPRI ATE METHOD BUT THAT WILL NOT PRECLUDE THE ASSESSEE FROM RAISIN G THE PLEA THAT THE MOST APPROPRIATE METHOD FOR COMPUTING THE ARM'S LENGTH PRICE IS RESALE PRICE METHOD, IF OTHERWISE IT IS APPLICA BLE TO THE PARTICULAR INTERNATIONAL TRANSACTION AND IS IN CONF ORMITY WITH THE RELEVANT STATUTORY PROVISIONS. THE LEARNED COUNSEL FOR THE ASSESSEE DRAWING A PARALLEL BETWEEN THE ASSESSEES CASE AND THE CASE OF MATTEL TOYS INDIA PVT. LTD. V/S CIT, ITA NO.2476/MUM./2008, DATED 12TH JUNE 2013, SUBMITTED, IN THE REFERRED CASE ALSO THOUGH THE ASSESSEE HAD SELECTED TNMM AS THE MOST APPROPRIATE METHOD BUT CONSIDERING THE NATURE OF TRANSACTION BETWEEN THE ASSESSEE AND ITS A.E., THE TRIBUNAL ALL OWED ASSESSEES CLAIM WITH REGARD TO ADOPTION OF RESALE PRICE METH OD AS THE MOST APPROPRIATE METHOD EVEN AT THE SECOND APPELLATE STA GE. HE SUBMITTED, AS PER THE RELEVANT PROVISIONS CONTAINED UNDER THE INCOME TAX ACT, AND THE RULES, THE MOST APPROPRIATE METHOD IN CASE OF THIS PARTICULAR TRANSACTION BETWEEN THE ASS ESSEE AND ITS A.E. IS RESALE PRICE METHOD AS THE ASSESSEE SIMPLY IMPORTS THE GOODS FROM ITS A.E. AND SELLS THEM TO CUSTOMERS IN INDIA. FOR THE AFORESAID PROPOSITION, HE RELIED UPON A NUMBER OF D ECISIONS OF THE ITA NO.1567/MUM/2011 M/S PFIZER LTD. 9 TRIBUNAL AS WELL AS HON'BLE JURISDICTIONAL HIGH COU RT WHICH ARE AS UNDER: I) CT V/S LREAL INDIA PVT. LTD., ITA NO.1046 OF 2 012 (BOM.) II) ITO V/S LREAL INDIA PVT. LTD., 53 SOT 0263 (U RO) (2012) (MUM.); III) LUXOTTICA INDIA EYEWEAR PVT. LTD. V/S DCIT, IT A NO.1115/ DEL./2014 (DEL.) 29. AS FAR AS THE ISSUE WHETHER THE ADDITIONAL GROU ND CAN BE ADMITTED AT THIS STAGE, THE LEARNED COUNSEL FOR THE ASSESSEE RELYING UPON THE DECISION OF THE HON'BLE SUPREME CO URT IN NATIONAL THERMAL POWER CO. LTD. V/S CIT, [1997] 229 ITR 383 (SC), SUBMITTED WHEN ALL THE BASIC FACTS RELATING T O ASSESSEES TRANSACTION WITH THE A.E. IN RESPECT OF IMPORT OF F DFS ARE AVAILABLE ON RECORD, AND THE ISSUE RAISED CAN BE DE CIDED ON THE BASIS OF SUCH AVAILABLE MATERIAL THE ADDITIONAL GRO UND CAN BE ENTERTAINED. 30. THE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGL Y OPPOSING THE CONTENTION OF ADMITTED THAT RELIABLE DATA IS NO T AVAILABLE RELATING TO COMPARABLES FOR APPLYING RSPM IN PUBLIC DOMAIN, HOW, AT THE SECOND APPEAL STAGE, ADDITIONAL GROUND CAN BE ENTERTAINED WHEN BASIC FACTS RELATING TO COMPARABIL ITY ANALYSIS ARE NOT AVAILABLE. REFERRING TO THE DECISION OF THE HON'BLE SUPREME COURT IN NATIONAL THERMAL POWER CO. PVT. LT D. (SUPRA), THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED, ONLY WHEN THE BASIC FACTS RELATING TO THE ISSUE RAISED IN THE ADDITIONAL GROUND ARE AVAILABLE ON RECORD BEFORE THE ASSESSING OFFICER, ITA NO.1567/MUM/2011 M/S PFIZER LTD. 10 THEN ONLY IT CAN BE ENTERTAINED. HE SUBMITTED, AS P ER THE PRINCIPLE LAID DOWN BY HON'BLE SUPREME COURT ONLY PURE QUESTI ON OF LAW CAN BE ADMITTED AS ADDITIONAL GROUND. HE SUBMITTED, WHEN THE BASIC FACTS RELATING TO COMPARABLES ARE NOT AVAILAB LE ON RECORD, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE FOR SE LECTING RSPM AS THE MOST APPROPRIATE METHOD CANNOT BE ENTERTAINE D AS IT REQUIRES EXAMINATION OF FRESH FACTS RELATING TO COM PARABLES. 31. THE LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE IN RELATION TO IMPORT OF FDFS HAS ALSO RECEIVED ADVERTISEMENT AND MARKET EXPENSES WHICH SUGGEST THA T IT IS CREATING MARKETING INTANGIBLE BY INCURRING SUBSTANT IAL EXPENSES ON MARKETING. REFERRING TO CERTAIN OECD GUIDELINES, THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED, AS ENQUIRY I NTO MARKETING FUNCTIONS IS A FACTUAL ENQUIRY THIS ISSUE CANNOT BE ENTERTAINED AT THIS STAGE. HE THE ASSESSEES COUNSE L SUBMITTED, WHILE PREPARING THE TRANSFER PRICING STUDY, THE ASS ESSEE ITSELF HAS REJECTED RESALE PRICE METHOD BY GIVING CERTAIN REA SONS WHICH ARE SPECIFICALLY MENTIONED IN THE TRANSFER PRICING STUDY. IN THIS CONTEXT, HE REFERRED TO THE TRANSFER PRICING STUDY SUBMITTED IN THE PAPER BOOK. HE SUBMITTED, THE ASSESSEE WHILE REJECT ING RSPM AS MOST APPROPRIATE METHOD HAS STATED THAT RELIABLE DA TA IS NOT AVAILABLE IN PUBLIC DOMAIN AND IT IS DIFFICULT TO F IND COMPARABLE. HE, THEREFORE, SUBMITTED, WHEN THE ASSESSEE ITSELF HASSUBMITTED, THOUGH THE TRANSFER PRICING OFFICER HAS NOT DEALT W ITH THE ISSUE OF ADVERTISEMENT AND MARKETING EXPENSES INCURRED BY THE ASSESSEE SEPARATELY BUT STILL THIS HAS TO BE KEPT I N MIND WHILE TAKING A DECISION AS TO WHETHER OR NOT THE ASSESSEE HAS MADE ITA NO.1567/MUM/2011 M/S PFIZER LTD. 11 VALUE ADDITION TO THE PRODUCTS IMPORTED FOR RESALE / DISTRIBUTION. HE, THEREFORE, SUBMITTED, THE ADDITIONAL GROUND SHO ULD NOT BE ENTERTAINED. 32. IN THE REJOINDER, THE LEARNED COUNSEL FOR THE A SSESSEE SUBMITTED THOUGH THE ASSESSEE IN ITS TRANSFER PRICI NG STUDY MIGHT HAVE REJECTED RSPM AS THE MOST APPROPRIATE METHOD K EEPING IN VIEW THE DATA AVAILABLE IN PUBLIC DOMAIN AT THE REL EVANT TIME, BUT, IF SUBSEQUENTLY ENOUGH DATA HAVE COME INTO THE PUBLIC DOMAIN TO CONSIDER RSPM AS THE MOST APPROPRIATE MET HOD, THE ASSESSEE CANNOT BE PRECLUDED FROM RAISING ITS PLEA FOR CONSIDERING RSPM AS MOST APPROPRIATE METHOD. IT WAS SUBMITTED, AS PER THE TRANSFER PRICING PROVISIONS, ARM'S LENGTH PRICE HAS TO BE DETERMINED BY APPLYING THE MOST APP ROPRIATE METHOD. CONSIDERING THE NATURE OF TRANSACTION, IF I T IS FOUND THAT RSPM IS THE MOST APPROPRIATE METHOD EVEN IF THE ASS ESSEE HAD SELECTED SOME OTHER METHOD THE ASSESSING OFFICER / TRANSFER PRICING OFFICER IS ENTITLED TO APPLY THE CORRECT ME THOD. IN THIS CONTEXT, HE RELIED UPON A DECISION OF THE TRIBUNAL, MUMBAI BENCH, IN ACIT V/S CHEMTECH GLOBAL ENGINEERS PVT. L TD., ITA NO.3590/MUM./ 2010, ORDER DATED 12TH JUNE 2013. HE SUBMITTED, ALL BASIC AND PRIMARY FACTS RELATING TO THE NATURE OFTRANSACTION INVOLVING IMPORT OF FDFS BETWEEN THE ASSESSEE AND I TS A.E. IS ALREADY AVAILABLE ON RECORD BEFORE THE ASSESSING OF FICER / TRANSFER PRICING OFFICER, THEREFORE, THE ISSUE RELA TING TO SELECTION OF MOST APPROPRIATE METHOD WHICH IS A PURELY LEGAL ISSUE CAN BE ENTERTAINED BY WAY OF ADDITIONAL GROUND. HE SUBMITT ED ONLY AFTER APPLICABILITY OF MOST APPROPRIATE METHOD IS DECIDED , ISSUE OF ITA NO.1567/MUM/2011 M/S PFIZER LTD. 12 SELECTION OF COMPARABLE WILL COME WHICH CAN BE EXAM INED BY THE TRANSFER PRICING OFFICER BY VERIFYING THE DATA AVAI LABLE IN PUBLIC DOMAIN. 33. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES, PERUSED THE ORDERS OF THE DEPARTMENTAL AUTHORITIES AS WELL AS THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY APPLIED OUR MIND TO THE DECISIONS RELIED UPON BY BOTH THE PARTIES. AT T HE OUTSET, WE PROPOSE TO DEAL WITH THE PRELIMINARY OBJECTION RAIS ED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE OPPOSING ADMISS ION OF ADDITIONAL GROUNDS. IT IS THE CONTENTION OF THE LEA RNED DEPARTMENTAL REPRESENTATIVE THAT AS THE ISSUE RAISE D BY THE ASSESSEE IN THE ADDITIONAL GROUND IS A MIXED QUESTI ON OF FACT AND LAW AND NOT PURELY A QUESTION OF LAW ARISING FROM T HE FACTS ALREADY ON RECORD IT CANNOT BE ENTERTAINED. HOWEVER , WE ARE UNABLE TO ACCEPT THE OBJECTION OF THE LEARNED DEPAR TMENTAL REPRESENTATIVE. ON A PERUSAL OF THE ORDER PASSED BY THE TRANSFER PRICING OFFICER UNDER SECTION 92CA, AS WELL AS OTHE R MATERIAL ON RECORD, IT IS VERY MUCH EVIDENT THAT THE ASSESSEE H AS PRODUCED ALL RELEVANTDOCUMENTS SUCH AS AGREEMENT, INVOICES AND A LL OTHER RELEVANT DETAILS IN RELATION TO ITS TRANSACTIONS WI TH A.E. FOR IMPORT OF FDFS FOR RESALE / DISTRIBUTION IN INDIA. ON A PERUSAL OF THE PROVISIONS CONTAINED UNDER SECTION 92C R/W R ULE 10B, IT IS CLEAR THAT THE ARM'S LENGTH PRICE IN RELATION TO A PARTICULAR INTERNATIONAL TRANSACTION HAS TO BE DETERMINED BY F OLLOWING ANY ONE OF THE MOST APPROPRIATE METHODS PRESCRIBED THER EIN. THEREFORE, THE FIRST STAGE IS SELECTION OF MOST APP ROPRIATE METHOD. FOR DOING SO ALL RELEVANT DETAILS RELATING TO A PAR TICULAR ITA NO.1567/MUM/2011 M/S PFIZER LTD. 13 TRANSACTION BETWEEN THE ASSESSEE AND ITS A.E. ARE R EQUIRED TO BE GONE INTO. IN THE PRESENT CASE, THERE IS NO DISPUTE TO THE FACT THAT ALL RELEVANT DETAILS INCLUDING DOCUMENTARY EVIDENCE PERTAINING TO IMPORT OF FDFS FROM THE A.E. ARE AVAILABLE ON RECOR D OF THE DEPARTMENTAL AUTHORITIES. THEREFORE, AS FAR AS SELE CTION OF MOST APPROPRIATE METHOD IS CONCERNED, THE PRIMARY FACTS ARE AVAILABLE ON RECORD. THEREFORE, THE ISSUE AS TO WHAT IS THE M OST APPROPRIATE METHOD IS A PURELY LEGAL ISSUE WHICH CAN BE DECIDED BY ANALYZING THE NATURE OF TRANSACTION ON THE BASIS OF PRIMARY F ACTS AVAILABLE ON RECORD BEFORE THE ASSESSING OFFICER / TRANSFER P RICING OFFICER. AS FAR AS SELECTION OF COMPARABLES AND COMPARABILIT Y ANALYSIS IS CONCERNED, IT IS AT THE SECONDARY STAGE AFTER SELEC TION OF MOST APPROPRIATE METHOD. THEREFORE, IN OUR VIEW, AS FAR AS SELECTION OF MOST APPROPRIATE METHOD IS CONCERNED, IT IS A PUREL Y LEGAL ISSUE AND CAN BE ENTERTAINED AT THIS STAGE IN THE FORM OF ADDITIONALGROUND. HAVING HELD SO, IT IS REQUIRED TO BE SEEN WHETHER RESALE PRICE METHOD IS THE MOST APPROPRIAT E METHOD AS CLAIMED BY THE ASSESSEE. ON A PERUSAL OF THE ORDER OF THE DEPARTMENTAL AUTHORITIES AS WELL AS OTHER MATERIAL ON RECORD, IT IS OBSERVED THAT THE ASSESSEE CLAIMED THAT IT RESE LLS / DISTRIBUTES THE FDFS IMPORTED FROM ITS A.E. WITHOUT MAKING ANY VALUE ADDITION. THEREFORE, IT SIMPLY ACTS LIKE A TRADER. IF THE ASSESSEE CAN PROVE THIS FACT WITH SUPPORTING DOCUMENTARY EVI DENCE, THEN IN OUR VIEW RESALE PRICE METHOD CAN BE CONSIDERED TO BE THE MOST APPROPRIATE METHOD AS ASSESSEE IS SUPPOSED TO BE ENGAGED IN A PURELY TRADING ACTIVITY. THE DECISION RELIED U PON BY THE LEARNED COUNSEL FOR THE ASSESSEE OVERWHELMINGLY SUP PORT THIS VIEW. ONLY BECAUSE THE ASSESSEE, AT THE INITIAL STA GE, WHILE ITA NO.1567/MUM/2011 M/S PFIZER LTD. 14 PREPARING TRANSFER PRICING STUDY, HAS REJECTED RSPM AND SELECTED TNMM FOR INSUFFICIENT DATA IN THE PUBLIC DOMAIN, IT CANNOT BE PRECLUDED FROM MAKING A PLEA AT A LATER STAGE BEFOR E THE APPELLATE AUTHORITIES THAT RSPM IS THE MOST APPROPR IATE METHOD FOR DETERMINING THE ARM'S LENGTH PRICE OF TRANSACTI ON RELATING TO IMPORT AND SALE OF FDFS. IN OUR VIEW, THE WHOLE INT ENT AND PURPOSE OF TRANSFER PRICING PROVISIONS IS TO DETERM INE THE CORRECT ARM'S LENGTH PRICE BY APPLYING THE MOST APPROPRIATE METHOD. HOWEVER, CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT RAISED THIS ISSUE EITHER BEFORE THE TRANSFER PRICING OFFIC ER OR BEFORE THE FIRST APPELLATE AUTHORITY, AND HAS RAISED IF FOR TH E FIRST TIME BEFORE THE TRIBUNAL BY WAY OF ADDITIONAL GROUND, TO GIVE A FAR OPPORTUNITY TO THE DEPARTMENT, WE ARE INCLINED TO R ESTORE THE ISSUE RAISED IN THE ADDITION GROUND TO THE FILE OF THE ASSESSING OFFICER / TRANSFER PRICING OFFICER FOR EXAMINING AF RESH AFTER CONSIDERING ALL MATERIALS ON RECORD AND IN THE LIGH T OF THE RELEVANT STATUTORY PROVISIONS AND JUDICIAL PRECEDEN T RELIED UPON BY THE ASSESSEE. ONLY AFTER THE ASSESSING OFFICER / TRANSFER PRICING OFFICER DECIDES THE ISSUE RELATING TO SELEC TION OF MOST APPROPRIATE METHOD, THEN HE CAN UNDERTAKE THE COMPA RABILITY ANALYSIS BY CALLING FOR INFORMATION FROM THE ASSESS EE AS WELL AS MAKING HIS OWN ENQUIRY IN THE DATA BASES OR OTHERWI SE. HOWEVER, IT IS MADE CLEAR, THE ASSESSING OFFICER / TRANSFER PRICING OFFICER MUST AFFORD REASONABLE OPPORTUNITY OF BEING HEARD T O THE ASSESSEE IN THE MATTER. WITH THE AFORESAID OBSERVAT IONS, WE ALLOW THE ADDITIONAL GROUND FOR STATISTICAL PURPOSES. ITA NO.1567/MUM/2011 M/S PFIZER LTD. 15 2.4. IT IS NOTICED THAT IN THE CONCLUDING PARA NO. 33, THE TRIBUNAL HAS MENTIONED THAT THE MATERIAL WAS VERY M UCH PRODUCED BY THE ASSESSEE BEFORE THE TPO ALONG WITH DOCUMENTS SUCH AGREEMENT, INVOICES AND ALL OTHER RE LEVANT DETAILS. SO FAR AS THE SELECTION OF MOST APPROPRIAT E METHOD IS CONCERNED, THE PRIMARY FACTS WERE AVAILABLE ON RECO RD WITH THE TPO. SO FAR AS, DECIDING THE MOST APPROPRIATE M ETHOD IS CONCERNED, IT IS PURELY A LEGAL ISSUE WHICH COULD B E DECIDED BY ANALYZING THE NATURE OF TRANSACTION ON THE BASIS OF PRIMARY FACTS AVAILABLE ON RECORD. IN VIEW OF THIS FINDING, WE ARE OF THE VIEW, NEITHER THERE WAS ANY CONCEALMENT NOR FURNISHING OF INACCURATE PARTICULARS OF INCOME. IN SUCH A SITUATION, FROM HONBLE APEX COURT IN CIT VS RELIAN CE PETRO PRODUCTS PVT. LTD. 322 ITR 158 (SC) CLEARLY COMES T O THE RESCUE OF THE ASSESSEE. HOWEVER, SINCE THE MATTER W AS RESTORED BY THE TRIBUNAL TO THE FILE OF THE TPO, IN ALL FAIRNESS, WE ARE RESTORING THIS ISSUE TO THE FILE OF THE TPO. 2.5. TO SUM UP, SO FAR AS, THE ADDITION WITH RESPE CT TO PROVISION OF CLINICAL STUDY MANAGEMENT AND MONITOR ING SUPPORT SERVICES AND DEPRECIATION ON ANKLESHWAR PLA NT WAS ITA NO.1567/MUM/2011 M/S PFIZER LTD. 16 DELETED BY THE TRIBUNAL, THEREFORE, ON BOTH THESE I SSUES, PENALTY U/S 271(1)(C) WILL NOT SURVIVE, THEREFORE, DELETED. 2.6. SO FAR AS, THE ADDITION OF IMPORT OF FINISHED DIRECT FORMULATION FOR RESALE IN INDIA IS CONCERNED, WE RE STORE THE ISSUE OF PENALTY ON THIS COUNT TO THE FILE OF THE L D. TPO, WHO SHALL DECIDE THE ISSUE ON THE BASIS OF THE OUTCOME OF THE QUANTUM ADDITION, WHICH WAS RESTORED TO HIS FILE BY THE TRIBUNAL VIDE ORDER 06/11/2015. THE ASSESSEE BE GIV EN OPPORTUNITY OF BEING HEARD WITH FURTHER LIBERTY TO FURNISH EVIDENCE, IF ANY, IN SUPPORT OF ITS CLAIM, THUS, ON THIS COUNT, THIS ISSUE IS ALLOWED FOR STATISTICAL PURPOSES ONLY . FINALLY, THE APPEAL OF THE REVENUE IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 12/05/2016. SD/- SD/- ( RA MIT KOCHAR ) (JOGINDER SINGH) ! ' / ACCOUNTANT MEMBER # ' /JUDICIAL MEMBER ' # MUMBAI; ' DATED : 12/05/2016 F{X~{T? P.S/. .. ITA NO.1567/MUM/2011 M/S PFIZER LTD. 17 $#%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / ' 0! ( )* ) / THE CIT, MUMBAI. 4. / / ' 0! / CIT(A)- , MUMBAI 5. 23 -! , / )*% ) 4 , ' # / DR, ITAT, MUMBAI 6. 5 6# / GUARD FILE. / BY ORDER, .2*! -! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ' # / ITAT, MUMBAI