M/s. St.Jude Medical India Private Limited, Hyderabad V. DCIT, Hyderabad

ITA 1626/HYD/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6618 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 20-12-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V SRINIVAS DR
• Assessee Lawyers: R VIJAYARAGHAVAN; OTHERS
• Keywords: Transfer pricing; International transaction; Arm length price; Revised return
• Section: 143(3); 234B; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.1626/HYD/2010 ASSESSMENT YEAR : 2006-07 ST. JUDE MEDICAL INDIA PVT. LTD., HYDERABAD (PAN AAICS 9821 J) VS THE DCIT, CIRCLE 3(2), HYDERABAD APPELLANT RESPONDENT APPELLANT BY : S/SHRI. R. VIJAYARAGHAVAN & OTHERS RESPONDENT BY : SHRI V. SRINIVAS, DR (CIT) ORDER PER CHANDRA POOJARI, A.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRE CTED AGAINST THE ORDER PASSED U/S 143(3) R.W.S. 144C OF THE INCO ME TAX ACT, BY THE DCIT, CIRCLE 3 (2) HYDERABAD DATED 25.10.2 010 AND PERTAINS TO THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS IN IT S APPEAL: 1. THAT THE ORDER OF THE DCIT, HYDERABAD IS IN PURSUA NCE OF THE DIRECTIONS OF THE DISPUTE RESOLUTION PANEL IS C ONTRARY TO LAW, FACTS AND CIRCUMSTANCES OF THE CASE. 2. TRANSFER PRICING ADJUSTMENTS: 2.1 THAT THE DRP ERRED BY NOT ACCEPTING THE PRICE O F INTERNATIONAL TRANSACTION OF PURCHASE OF MEDICAL DE VICES OF RS.35,61,05,687 SHOWN BY THE ASSESSEE AND DETERMINI NG THE ARMS LENGTH PRICE AT RS.42,11,11,027 AND THEREBY M AKING TRANSFER PRICING ADJUSTMENT OF RS.6,50,05,340/- TO THE TOTAL INCOME OF THE ASSESSEE. 2.1.2 : THAT THE DRP ERRED IN REJECTING THE ECONOM IC ANALYSIS UNDERTAKEN BY THE ASSESSEE IN ACCORDANCE WITH THE P ROVISIONS OF THE IT ACT, READ WITH IT RULES, 1962 AND CONSEQU ENTLY ITA NO.1626/H/2010 ST. JUDE MEDICAL INDIA PVT. LTD. =========================== 2 MAKING ADJUSTMENT U/S 92CA OF THE ACT TO THE TOTAL INCOME OF THE ASSESSEE. WITHOUT PREJUDICE TO THE ABOVE, THE ASSESSEE SUBMIT TED THAT DRP HAS NOT PROPERLY APPRECIATED THE SUBMISSIONS OF THE ASSESSEE THAT THE TPO HAD NOT CONSIDERED PROPER COM PARABLES AND NOT APPLIED THE PROPER ADJUSTMENTS TO ARRIVE AT THE ALP, MORE SPECIFICALLY : 2.2.1 : THAT THE DRP ERRED IN THE CONFIRMING THE AC TION OF THE TPO BY REJECTING THE COMPARABLES SELECTED BY THE AS SESSEE IN ACCORDANCE WITH THE PROVISIONS OF THE ACT READ WITH THE RULES. 2.2.2. THAT THE DRP ERRED IN REJECTING MULTIPLE YE AR DATA OF COMPARABLE COMPANIES AD ADOPTED BY THE ASSESSEE AND USING DATA FOR THE FINANCIAL YEAR 2005-06 ONLY IN DETERMI NATION OF ALP. 2.2.3: THAT THE DRP ERRED IN IGNORING THE KEY REQU IREMENTS OF FUNCTIONAL COMPARABILITY UNDER THE ACT READ WITH RU LES BY CONFIRMING THE TPOS CONSIDERATION OF COMPANIES HAV ING MANUFACTURING OPERATIONS AS COMPARABLE COMPANIES WI THOUT APPRECIATING THE FACT THAT THE ASSESSEE IS INTO TRA DING ACTIVITIES ONLY. 2.2.4: THAT THE DRP OUGHT TO HAVE APPRECIATED THAT THE TPO HAD COMPUTED GROSS MARGINS OF THE ALLEGED COMPARABL E COMPANIES INCORRECTLY. 2.3 RESALE PRICE METHOD(RPM) 2.3.1 THAT THE ENTIRE APPROACH/METHODOLOGY ADOPTED BY DRP FOR COMPUTING THE ALP UNDER RPM IS NOT AS PER THE P ROVISIONS OF RULE 10B(B) AND THEREFORE, THE COMPUTATION OF ALP O F RS.42,11,11,027 IS NOT CORRECT. 2.3.2: THAT THE DRP HAVE ERRED IN CONFIRMING THE O RDER OF THE TPO WHEREIN PURCHASE PRICE WAS TAKEN AS BASE TO DET ERMINE ALP UNDER RPM, INSTEAD OF RESALE PRICE OF SUCH PURC HASES WITHOUT APPRECIATING THAT AS PER RULE 10B(B), THE R ESALE PRICE AS REDUCED BY THE NORMAL GROSS PROFIT IS SIMILAR UNCON TROLLED TRANSACTION AND OTHER ADJUSTMENTS SHOULD BE CONSIDE RED AS ALP FOR THE INTERNATIONAL TRANSACTIONS. 2.4 ARMS LENGTH RANGE OF 5% 2.4.1. THAT THE DRP ERRED IN NOT GRANTING THE BENE FIT OF +5% OF THE PROFIT MARGIN DETERMINED IN THE CASE OF COMPARA BLE COMPANIES AS PRESCRIBED UNDER THE PROVISO TO SECTIO N 92C(2). 2.4.2. THAT THE DRP ERRED BY REJECTING THE CONTENT ION OF THE ASSESSEE THAT IF THE DIFFERENCE BETWEEN ALP AND VAL UE OF INTERNATIONAL TRANSACTION OF THE ASSESSEE EXCEEDS 5 % OF THE ITA NO.1626/H/2010 ST. JUDE MEDICAL INDIA PVT. LTD. =========================== 3 ALP, THE TP ADJUSTMENTS CAN BE MADE ONLY WITH RESPE CT TO THE REMAINING DIFFERENTIAL AMOUNT AFTER CONSIDERING THE BENEFIT OF 5% RANGE. 2.5 OTHERS: 2.5.1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADJUSTMENTS OF 1% OF ALP GIVEN ON ACCOUNT OF START UP COMPANY/ECONOMIC DIFFERENCES IS NOT SUFFICIENT 2.5.2. THAT THE DRP ERRED IN IGNORING THE FACT THA T THE VALUATION OF THE IMPORT OF GOODS BY THE ASSESSEE FROM THE AE WAS ACCEPTED BY THE CUSTOM AUTHORITIES OF INDIA IN TERM S OF CUSTOM VALUATION RULES, 1988. 2.5.3 THAT THE DRP ERRED IN HOLDING THAT GROSS PRO FIT MARGIN OF 16.84% OF THE ASSESSEE IS NOT RELIABLE. 3. OTHER ADJUSTMENTS: 3.1.1. THAT THE DRP ERRED IN DISALLOWING THE AMOUN T OF RS.47,250 PAID TO KARNATAKA VAT AUTHORITIES ON BEHA LF OF THE ASSESSEES CUSTOMER WITHOUT APPRECIATING THAT THE P AYMENT IS NOT PENAL IN NATURE. 3.1.2: THE DRP ERRED IN IMPOSITION OF INTEREST UND ER SECTION 234B SECTION 234C AND SECTION 234D. 3. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE HAS SUBMITTED THAT THE ASSESSING OFFICER HAS NOT TAKEN INTO ACCOUNT THE CLOSING STOCK OF UNSOLD GOODS. THE ASSE SSEE HAS PURCHASED FROM M/S ASSOCIATE ENTERPRISES, AT RS.35. 61 CRORES. THE CLOSING STOCK WAS RS.9.26 CRORES. THE SALE PR ICE REALISED WAS RS.33.56 CRORES. AS A RESULT, THE COMPANY HAD MADE GROSS OPERATING PROFIT OF RS.6.33 CRORES OR 23.25% ON THE COST OF GOODS SOLD. THE TPO HAS TAKEN OPERATING PROFITS AS MINUS FIGURE. 4. HE FURTHER SUBMITTED THAT THE ASSESSEE AND THE TPO HAD AGREED THAT MOST APPROPRIATE METHOD IS RESALE PRICE METHOD. UNDER RULE 10B(1)(B) OF INCOME TAX RULE 1962, FOR D ETERMINING THE ALP (ARM LENGTH PRICE) UNDER THE RESALE PRICE M ETHOD, THE PRICE AT WHICH THE GOODS ARE SOLD IS TO BE TAKEN AN D FROM THE RESALE PRICE THE AVERAGE GROSS PROFIT MARGIN OF COM PARABLE ITA NO.1626/H/2010 ST. JUDE MEDICAL INDIA PVT. LTD. =========================== 4 ENTERPRISES IS TO BE REDUCED. THE PRICE SO ARRIVED AT, IS TO BE FURTHER REDUCED BY THE EXPENSES INCURRED BY THE ENT ERPRISE AND ALSO ADJUSTMENT TAKEN INTO ACCOUNT FUNCTIONAL A ND OTHER DIFFERENCES. THE DRP ARRIVED AT THE COMPARABLE GRO SS MARGIN AT 29.51% AND HAS MADE AN ADJUSTMENT OF RS.2.71 CRO RES TOWARDS MARKETING EXPENSES AND A FURTHER 3% ADJUSTM ENT ON ACCOUNT OF START UP COMPANY AND WORKING CAPITAL ADJ USTMENTS. 5. HE FURTHER SUBMITTED THAT BOTH THE TPO AND DRP INSTEAD OF FOLLOWING RULE 10B(1)(B), STARTED WITH THE GROSS PURCHASE VALUE FROM THE AE AND APPLIED THE GROSS PROFIT MARG IN. AFTER MAKING ADJUSTMENT OF MARKETING EXPENSES AND 3% ADJU STMENT AND ARRIVED AT RS.42.11 CRORES AS ALP. THIS AMOUNT AGAIN COMPARED WITH THE PURCHASE PRICE OF IN RS.35.61 CRO RES AND ADJUSTMENT OF RS.6.50 CRORES WAS CONFIRMED BY THE D RP. THERE IS NO REFERENCE UNSOLD STOCK, SALE PRICE OR T HE PROFITS MADE BY THE ASSESSEE. THE METHOD ADOPTED BY THE DR P IS AGAINST THE PROVISIONS OF THE ACT. 6. WITHOUT PREJUDICIAL TO THE ASSESSEES OBJECTION S TO THE CHOICE OF COMPARABLES AND OTHER ADJUSTMENTS, THE LE ARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT ADOPTING P ERCENTAGE OF GP AND OTHER ADJUSTMENTS ADOPTED BY THE DRP AND APPLYING THE CORRECT METHOD OF COMPUTATION UNDER RULE 10B(1) (B) THERE WOULD BE NO ADJUSTMENT REQUIRED. THUS, IF THE PATE NT MISTAKES MADE BY THE TPO/DRP ARE CORRECTED AND THE FIGURE AD OPTED BY THE DRP IS TAKEN THEN THERE WILL BE NO ADJUSTMENTS IS REQUIRED. 7. WITHOUT PREJUDICE TO THE CONTENTION OF THE ASSE SSEE THAT THE COMPARABLE COMPANIES TAKEN BY THE TPO AND THE COMPARABLE OF THE COMPANY REJECTED BY THE TPO IS NO T ON THE BASIS OF THE CORRECT FAR ANALYSIS AND COMPARABLE VE RTICALS, HE SUBMITTED THAT CONSEQUENTLY THE GP RATE ADOPTED BY DRP IS ON THE HIGHER SIDE. THE ASSESSEE IS ENTITLED TO TH E BENEFIT OF ITA NO.1626/H/2010 ST. JUDE MEDICAL INDIA PVT. LTD. =========================== 5 5% ADJUSTMENTS ON THE ALP ARRIVED AT ON THE BASIS O F AVERAGE PROFIT MARGIN. 8. ON THE OTHER HAND, THE DR HAS SUBMITTED THAT TH E SALE PRICE OF THE GOODS SOLD TO NON AE I.E. RS.33,56,53, 652/- SHOULD BE ADOPTED AS RESALE PRICE UNDER THE RPM, WHEREAS T HE TPO HAS STARTED THE COMPUTATION ON THE BASIS OF THE VAL UE OF TOTAL PURCHASE FROM THE AE I.E. RS.35,61,05,687/-. THE F ACTS APPEAR TO BE OPPOSED TO THE ASSESSEES CONTENTION AS RECOR DED BY THE TPO. THE OPERATING PROFIT IS A MINUS FIGURE I.E. ( -) RS.67,21,027/-. THE OPERATING PROFIT TO COST RATIO AS WELL AS OPERATING PROFIT TO REVENUE RATIO ARE NEGATIVE. FU RTHER, THE ASSESSEE COMPANY MARKETS AND SALES THE PRODUCTS IN INDIA MAINLY THROUGH DISTRIBUTORS AND ONLY TO A LIMITED E XTENT THROUGH DIRECT SALES TO HOSPITALS. HE SUBMITTED TH AT IN VIEW OF THIS, THERE IS DIFFICULTY IN ASCERTAINMENT OF RESAL E PRICE ON THE BASIS OF RESALE TO UNRELATED ENTERPRISE. THUS, IN THE GIVEN FACTUAL MATRIX, THE APPROACH OF THE TPO IS RATIONAL . THE RESALE PRICE CAN BE DETERMINED BY APPLYING THE DETERMINED RATE OF MARGIN TO THE BASE OF TOTAL VALUE OF INTERNATIONAL TRANSACTION I.E. PURCHASE FROM AE. FURTHER, WHAT IS AT STAKE I S THE DETERMINATION OF ALP IN RESPECT OF THE ENTIRE VALUE OF INTERNATIONAL TRANSACTION WHICH COMPRISES OF PURCHA SES FROM THE AE TO THE EXTENT OF RS.35,61,05,687/-. OUT OF THIS TOTAL PURCHASE, GOODS TO THE EXTENT OF RS.9,62,38,847/- C ONSTITUTE CLOSING STOCK. HENCE THE ASSESSEES STAND TO DO TH E BENCH MARKING EXERCISE ADOPTING THE SALES FIGURE REFLECTE D IN THE P&L ACCOUNT I.E. RS.33,56,53,652/- IS UNTENABLE AS IT I GNORES A SUBSTANTIAL AMOUNT OF PURCHASE FROM AE REPRESENTED BY THE CLOSING STOCK AS AT 31.3.2006. ANY BENCH MARKING E XERCISE HAS TO NECESSARILY TAKE THE ENTIRE VALUE OF INTERNA TIONAL TRANSACTION INTO ACCOUNT. THIS EXERCISE HAS TO BE DONE AT THE ENTERPRISE LEVEL. HENCE THE ASSESSEES CANVASSING THAT THE ITA NO.1626/H/2010 ST. JUDE MEDICAL INDIA PVT. LTD. =========================== 6 EXERCISE SHOULD BEGIN WITH THE SALES FIGURE FROM TH E PROFIT AND LOSS ACCOUNT IS PREPOSTEROUS. 9. THE DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITT ED THE RELEVANT PROVISIONS RELATING TO RESALE PRICE METHOD UNDER THE IT RULE 10B STIPULATE A REDUCTION OF THE NORMAL GROSS PROFIT MARGIN ACCRUING TO THE ENTERPRISES FROM THE IDENTIF IED RESALE PRICE TO UNRELATED ENTERPRISE. A SERIOUS DIFFICULT POSED IN THE CASE OF THE PRESENT ASSESSEE AS REGARDS NORMAL GROS S PROFIT, IS THAT THE ASSESSMENT YEARS UNDER CONSIDERATION I.E. 2006-07 HAPPENS TO BE THE VERY FIRST YEAR OF EXISTENCE OF T HE ASSESSEE COMPANY. IT STARTED ITS BUSINESS OPERATION ONLY FR OM AUGUST, 2005. HENCE THE BUSINESS OPERATION RESULTS ARE NOT AVAILABLE FOR THE ENTIRE YEAR, BUT ONLY FOR A PART OF THE YEA R I.E. LESS THAN 8 MONTHS. HENCE, THE STATUTORY IDEA OF NORMAL GROS S PROFIT MARGIN ACCRUING TO THE ENTERPRISE WOULD NOT BE APPL ICABLE HERE AS THE RESULT RELATING TO THE VERY FIRST YEAR, THAT TOO, RELATING A PART OF THE YEAR CANNOT FORM A RATIONAL BASIS FOR A SCERTAINMENT OF NORMAL GROSS PROFIT MARGIN AN IDEA WHICH PRESUPP OSES A TREND OF RESULT INVOLVING AT LEAST 2 TO 4 YEARS OF BUSINESS ACTIVITY. THIS CONCLUSION IS REINFORCED BY THE ASS ESSEES OWN CONDUCT IN THE VERY FIRST YEAR OF ASSESSMENT AS UND ER: I) THE ASSESSEES RETURN THAT IN DECEMBER 2005 IT HAD ESTIMATED AND PAID AN ADVANCE TAX OF RS.50 LAKHS. THIS PAYMENT CERTAINLY PRESUPPOSES ESTIMATE OF TAXABLE PROFITS IN THE NEIGHBOURHOOD OF MORE THAN RS.1.5 CRORES. BUT THE ASSESSEE FILED A RETURN AND A REVISED RETURN CLAIMING A REFUND OF RS.44,37,755/-. THUS, IT IS EVIDENT THAT THE DIVERGENCE BETWEEN DECEMBER ESTIMATE FOR ADVANCE TAX LIABILITY AND THE TOTAL INCOME DECLARED IN THE INCOME TAX RETURN WAS UNUSUALLY WIDE. II) FURTHER, IN THE PROFIT AND LOSS ACCOUNT FOR THE ASSESSMENT YEARS UNDER CONSIDERATION I.E. 2006-07 THE ASSESSEE HAD DEBITED A SUBSTANTIAL AMOUNT OF RS.88,63,870/- TOWARDS PROVISION FOR PRODUCT REPLACEMENTS. THE ASSESSEE CAME TO FILE A REVISED ITA NO.1626/H/2010 ST. JUDE MEDICAL INDIA PVT. LTD. =========================== 7 RETURN FOR THE ASSESSMENT YEARS 2006-07 DECLARING THE SAID PROVISION TO BE EXCESSIVE BY A SUBSTANTIAL MARGIN OF RS.73,09,498/-. BUT THIS EXCESS PROVISION OF RS.73.09 LAKHS WAS WRITTEN BACK ONLY IN THE SUCCEEDING FINANCIAL YEAR I.E. 2007-08. THI S WOULD EVIDENTLY SUGGEST UNWARRANTED REDUCTION OF PROFIT AND PROFIT MARGIN FOR THE ASSESSMENT YEARS 2006-07 WHICH IS UNDER CONSIDERATION. III) THE OVERALL BUSINESS RESULTS AS RECORDED BY THE TPO TEND TO BE NEGATIVE I.E. OPERATING PROFIT IS NEGATIVE, OPERATING PROFIT TO COST RATIO IS NEGATI VE, OPERATING PROFIT TO REVENUE RATIO IS NEGATIVE. THE GP MARGIN OF 16.84% SHOWN IS NOT RELIABLE. 10. HE SUBMITTED THAT THE BASIC APPROACH ADOPTED BY THE TPO TOWARDS COMPUTATION OF ALP APPEARS TO BE RATION AL IN THE GIVEN SITUATION OF FACTS AS THE ENTIRE VALUE OF INT ERNATIONAL TRANSACTION HAS TO BE BENCH MARKED FOR ALP. THE RE SALE PRICE CAN ONLY BE DETERMINED BY APPLYING THE GROSS PROFIT MARGIN OF 29.51% TO THE BASE FIGURE OF VALUE OF PURCHASE FROM THE AE AND THE COMPUTATION OF ALP IS AS UNDER: PURCHASE PRICE FROM THE AES BY THE TAX PAYER COMPANY AS PER 3CEB REPORT RS.35,61,05,687 ADD: NORMAL AVERAGE GP MARGIN ON SALES @ 29.51% OF THE INDEPENDENT COMPARABLES AS WORKED OUT ABOVE RS.35,61,05,687 X 29.51% RS.46,11,92,475 LESS: MARKETING EXPENSES INCURRED BY THE TAX PAYER WITH THE PURCHASE OF GOODS ARMS LENGTH PRICE RS.2,71,46,889 -------------------- RS.43,40,45,586 LESS; ADJUSTMENTS 1) NO ADJUSTMENT IS BEING GIVEN FOR FUNCTIONAL DIFFERENCES AS RIGHTLY CONTENDED BY THE TPO SINCE THE TWO COMPARABLES ARE FUNCTIONALLY SIMILAR AND ONE OF WHICH AHS BEEN PROPOSED AND ACCEPTED BY THE TAX PAYER 2) HOWEVER, ADJUSTMENT 1% OF ALP IS GIVEN ON ACCOUNT OF START UP COMPANY, ECONOMIC DIFFERENCES ETC. (RS.43,40,45,586 X 1% 3) WORKING CAPITAL ADJUSTMENT AT 2% ON NET ALP AS DONE BY THE TPO (I.E. 42,97,05,131 X 2% RS.43,40,455 RS.85,94,102 ADJUSTED ARMS LENGTH PRICE AS PER THE DRP RS.42,11, 11,027 ITA NO.1626/H/2010 ST. JUDE MEDICAL INDIA PVT. LTD. =========================== 8 10.2 ACCORDING TO THE DR, THE PRICE CHARGED BY TH E TAX PAYER TO ITS ASSOCIATED ENTERPRISES IS COMPARED TO ARMS LENGTH PRICE AS UNDER: ADJUSTED ARMS LENGTH PRICE WORKED ABOVE RS.42,11,11,027 PURCHASE PRICE SHOWN IN THE INTERNATIONAL TRANSACTIONS RS.35,61,05,687 SHORTFALL BEING ADJUSTMENT U/S 92CA RS.6,50,05,340/ - 11. HE SUBMITTED THAT THE ADDITION AT RS.6,50,05, 340/- IS JUSTIFIED. 12. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND FORCE IN TH E ARGUMENTS OF THE ASSESSEES COUNSEL. THERE IS NO DISPUTE HER EIN WITH REGARD TO THE FACT THAT THE ENTIRE PURCHASES WERE M ADE FROM M/S ASSOCIATE ENTERPRISES AT RS.35.16 CRORES WAS NO T SOLD. THERE WERE UNSOLD GOODS. THE UNSOLD GOODS CANNOT B E CONSIDERED IN THE ASSESSMENT YEAR UNDER CONSIDERATI ON FOR DETERMINING THE ARMS LENGTH PRICE. ONLY THE GOODS THAT WHICH WAS SOLD HAS TO BE CONSIDERED FOR DETERMINING THE A LP. AFTER CONSIDERING THE PURCHASE PRICE FROM THE AE IN RESPE CT OF THE GOODS SOLD, THE ADDITION HAS TO BE MADE TOWARDS NOR MAL AVERAGE GP MARGIN ON SALES AND THEREAFTER DEDUCTION IS TO BE MADE TOWARDS MARKETING EXPENSES AND OTHER ADJUSTMEN TS I.E., TOWARDS FUNCTIONAL, ECONOMIC DIFFERENCES AND WORKIN G CAPITAL AT 3% OF THE ALP AS DETERMINED BY THE DRP. ACCORD INGLY, WITH THESE DIRECTIONS, WE SET ASIDE THE ORDER OF THE ASS ESSING OFFICER AND REMIT BACK THE ENTIRE ISSUE TO THE FILE OF ASSE SSING OFFICER TO RE-DETERMINE THE ALP IN ACCORDANCE WITH RULE 10B (1) (B) OF THE IT RULES AND THEREAFTER COMPUTE THE ADDITIONS I F ANY REQUIRED TO BE MADE U/S 92C(A) WITH REGARD TO THE D IFFERENCE BETWEEN ALP AND PURCHASE PRICE OF INTERNATIONAL TRA NSACTIONS AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO.1626/H/2010 ST. JUDE MEDICAL INDIA PVT. LTD. =========================== 9 13. THE OTHER GROUNDS ARE NOT SERIOUSLY PRESSED BY THE AR BEFORE US AND HENCE DISMISSED AS NOT PRESSED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 30.6.2011 SD/- SD/- G.C. GUPTA VICE PRESIDENT CHANDRA POOJARI ACCOUNTANT MEMBER DATED THE 30 TH JUNE, 2011 COPY FORWARDED TO: 1. M/S ST. JUDE MEDICAL INDIA PRIVATE LIMITED, A&B, 2 ND FLOOR, BRIJ TARANG, GREENLANDS, BEGUMPET, HYDERABAD - 500 016. 2. THE DCIT, CIRCLE 3(2), HYDERABAD 3. THE DRP, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP