Fresenius Kabi India Private Limited, Pune V. Assistant Commissioner of Income tax,

ITA 2572/PUN/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4037 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 11-11-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PUN A; NANDITA KANCHAN CIT ITA NOS
• Keywords: Depreciation; Transfer pricing; International transaction; Retrospective amendment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI VIKAS AWASTHY, JM . / ITA NO. 2572/PUN/2016 / ASSESSMENT YEAR : 2011-12 FRESENIUS KABI INDIA PRIVATE LIMITED. 5 TH FLOOR, A WING, ASHOKA PLAZA, PUNE- NAGAR ROAD, S. NO.32/2, VADGAON SHERI, VIMANNAGAR PUNE-411 014 PAN : AAACF2614E .... / APPELLANT / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(2), PUNE. / RESPONDENT . / ITA NO. 2573/PUN/2016 / ASSESSMENT YEAR : 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1(2), PUNE. .... / APPELLANT / V/S. FRESENIUS KABI INDIA PRIVATE LIMITED. 6-E, HERITAGE HOUSE, RAMABAI AMBEDKAR ROAD, PUNE-411 001 PAN : AAACF2614E / RESPONDENT ASSESSEE BY : SHRI KETAN VED REVENUE BY : SMT. NANDITA KANCHAN (CIT) 2 ITA NOS. 2572 & 2573/PUN/2016 A.Y.2011-12 / DATE OF HEARING : 31.10.2018 / DATE OF PRONOUNCEMENT : 02.11.2018 / ORDER PER R.S. SYAL, VP : THESE TWO CROSS APPEALS, VIZ., ONE BY THE ASSESSEE AND THE OTHER BY THE REVENUE ARE DIRECTED AGAINST THE ORDER PASSED BY LD. C IT (APPEALS)-13, PUNE ON 12.08.2016 IN RELATION TO THE ASSESSMENT YEAR 2011-12. 2. THE ASSESSEE IS, FIRSTLY, AGGRIEVED BY THE APPLICATION OF THE TRANSACTIONAL NET MARGIN METHOD (TNMM) IN RESPECT OF ITS INTERNATIONAL TR ANSACTION OF TRADING ACTIVITY AS AGAINST ITS SELECTION OF RESALE PRICE MET HOD (RPM) AS THE MOST APPROPRIATE METHOD. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A 100 % INDIAN SUBSIDIARY OF FRESENIUS KABI AG GERMANY. IT IS ENGAGED IN THE FIELD OF I NFUSION THERAPY AND CLINICAL NUTRITION. IT IS ALSO ACTIVE IN THE FIELD OF TRANSFUS ION TECHNOLOGY, SUPPLYING BLOOD PROCESSING SYSTEMS AS WELL AS BLOOD BAGS AND FILTERS. THE ASSESSEE FILED ITS AUDIT REPORT IN FORM NO. 3CEB DECLARING E IGHT INTERNATIONAL TRANSACTIONS. THE ASSESSING OFFICER (AO) REFERRED THE MATTE R TO TRANSFER PRICING OFFICER (TPO) FOR DETERMINING THE ARMS LENGTH PRICE (ALP) OF THE INTERNATIONAL TRANSACTIONS. THE ASSESSEE APPLIED THE TNMM IN RESPECT OF THREE INTERNATIONAL TRANSACTIONS; COMPARABLE UNCONTROLLED PRICE (C UP) METHOD IN RESPECT OF ONE INTERNATIONAL TRANSACTION; AND THE RPM IN R ESPECT OF ONE INTERNATIONAL TRANSACTION, AS THE MOST APPROPRIATE METHOD S FOR DEMONSTRATING THEM TO BE AT ALP. THERE IS NO DISPUTE ON THE DETERMINA TION OF THE ALP OF ANY OF THE INTERNATIONAL TRANSACTIONS EXCEPT THE TRANSACTION REPORTED AT SR. NO. 2, THAT IS, `IMPORT OF FINISHED GOODS WITH TRANSACTED VALUE OF RS.58,12,31,464/- 3 ITA NOS. 2572 & 2573/PUN/2016 A.Y.2011-12 . THE ASSESSEE APPLIED THE RPM TO DEMONSTRATE THAT THIS INTERNATIONAL TRANSACTION WAS AT ALP. THE TPO OBSERVED THAT THE ASS ESSEE UNDER THIS TRANSACTION WAS ENGAGED IN THE `DISTRIBUTION ACTIVITY. THE ASSESSEE IMPORTED FINISHED GOODS UNDER THIS TRANSACTION FROM ITS ASSOCIATED E NTERPRISES (AES) AND RESOLD THE SAME TO NON-AES WITHOUT ANY VALUE ADDITIO N. THE TPO REJECTED THE ASSESSEES CONTENTION FOR THE APPLICATION OF THE RPM AS MOST APPROPRIATE METHOD AND RESORTED TO THE TNMM FOR BENCHMARKING THE INTERNATIONAL TRANSACTION. AS AGAINST THE ASSESSEES LIST OF CERTAIN C OMPARABLES, THE TPO FINALLY SELECTED NINE COMPANIES AS COMPARABLE BY MAKING CER TAIN INCLUSIONS /EXCLUSIONS IN/FROM THE ASSESSEES LIST. HE WORKED OUT AVE RAGE PROFIT LEVEL INDICATOR (PLI) OF SUCH FINALLY SELECTED COMPARABLE COMPANIES AT 6.97% AND PROPOSED THE AMOUNT OF TRANSFER PRICING ADJUSTMENT AT RS.12,28,68,248/-. THE ASSESSING OFFICER PASSED THE FINAL ASSESSMENT ORDER GIV ING EFFECT TO THE RECOMMENDATION OF THE TPO. THE ASSESSEE APPROACHED THE LD. CIT(APPEALS), INTER ALIA, ON THE SELECTION OF THE TNMM AS MOST APPROPRIATE METHO D. THE LD. FIRST APPELLATE AUTHORITY APPROVED THE VIEW OF THE AUTHORIT IES BELOW BY RELYING ON THE ORDER PASSED BY HIS PREDECESSOR IN THE CASE OF THE ASSESSEE ITSELF FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. THE ASSESSE E IS AGGRIEVED BY THE APPLICATION OF THE TNMM AS MOST APPROPRIATE METHOD. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE RELE VANT MATERIAL ON RECORD. IT IS SEEN THAT LD. CIT(APPEALS) RELIED ON THE ORDER PASSED BY HIS PREDECESSOR FOR A PRECEDING ASSESSMENT YEAR FOR APPLYIN G THE TNMM AS MOST APPROPRIATE METHOD IN RELATION TO INTERNATIONAL TRANSACTION OF DISTRIBUTION ACTIVITIES DEPICTED BY THE ASSESSEE AS `IMPORT OF FINISHED GOODS. SUCH ORDER OF THE LD. CIT(APPEALS) CAME UP FOR CONSIDERATION BEFORE THE PU NE BENCH OF THE TRIBUNAL. WE HAVE GONE THROUGH THE SAID ORDER OF THE TRIB UNAL DATED 22.09.2007 IN RELATION TO THE ASSESSMENT YEARS 2009-10, 2 010-11, A COPY OF 4 ITA NOS. 2572 & 2573/PUN/2016 A.Y.2011-12 WHICH IS PLACED IN THE PAPER BOOK. THE TRIBUNAL HAS APPROV ED THE APPLICATION OF THE RPM AS MOST APPROPRIATE METHOD. IN DOING SO, IT AL SO RELIED ON THE ORDER PASSED BY IT FOR THE ASSESSMENT YEAR 2008-09. TH E LD. DR FAILED TO POINT OUT ANY DISTINGUISHING FEATURE IN THE INTERNATIONAL TRA NSACTION UNDER DISPUTE FOR THE YEAR UNDER CONSIDERATION VIS--VIS THE PRECEDING YEARS. RESPECTFULLY FOLLOWING THE PRECEDENTS, WE HOLD THE RPM TO B E THE MOST APPROPRIATE METHOD IN RESPECT OF DISTRIBUTION ACTIVITIES UN DERTAKEN BY THE ASSESSEE UNDER THE INTERNATIONAL TRANSACTION OF `IMPORT OF FINISHED GOODS. ACCORDINGLY, THE IMPUGNED ORDER IS OVERTURNED TO THIS EXTENT . 5. NEXT GROUND TAKEN BY ASSESSEE IN ITS APPEAL IS AGAINS T NOT GRANTING FUNCTIONAL ADJUSTMENT RELATING TO FOREIGN EXCHANGE (FOREX) LO SS. THE ASSESSEE TREATED FOREX LOSS OF THE COMPARABLES AS NON-OPERATIONAL AND COMPUTED THEIR PLI ACCORDINGLY. THE TPO WHILE DETERMINING THE ALP OF THE INTERNATIONAL TRANSACTION DID NOT CONCUR WITH THE ASSESSEE THAT THE FOREIGN EXCHANGE LOSS SHOULD BE TAKEN AS AN ITEM OF NON-OPERATING NATURE. THE LD. CIT(A) APPROVED THE TPOS STAND THAT SUCH FOREIGN EXCHANGE LOSS SHOULD BE TAKEN AS OPERATING IN NATURE, AGAINST WHICH THE ASSESSEE HAS COME UP BEFORE THE TRIBU NAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. THE SPECIAL BENCH OF THE TRIBUNAL IN ACIT VS PRAKASH I. SHAH (2008) 115 ITD 167 (MUM)(SB) HAS HELD THAT THE GAIN DUE TO FLUCTUATIONS IN THE FOREIGN EXCHANGE RATE EMANATING FROM EXPORT IS ITS INTEGRAL PART AND CANNOT BE DIFFERENTIATED FROM THE EXPORT PROCEEDS SIMPLY ON THE GROUND THAT THE FOREIGN CURRENCY RATE HAS INCREASED SUBSEQUENT TO SALE BUT PRIOR TO REALIZATION. IT WENT ON TO ADD THAT WHEN GOODS ARE EXPO RTED AND INVOICE IS RAISED IN A CURRENCY OF THE COUNTRY WHERE SUCH GOODS A RE SOLD AND SUBSEQUENTLY WHEN THE AMOUNT IS REALIZED IN THAT FOREIGN CURRENCY AND THEN 5 ITA NOS. 2572 & 2573/PUN/2016 A.Y.2011-12 CONVERTED INTO INDIAN RUPEES, THE ENTIRE AMOUNT IS RELAT ABLE TO THE EXPORTS. IN FACT, IT IS ONLY THE TRANSLATION OF INVOICE VALUE FROM THE FORE IGN CURRENCY TO THE INDIAN RUPEES. THE SPECIAL BENCH HELD THAT THE EXCHANGE RATE GAIN OR LOSS CANNOT HAVE A DIFFERENT CHARACTER FROM THE TRANSACTION T O WHICH IT PERTAINS. THE BENCH FOUND FALLACY IN THE SUBMISSION MADE ON BEHALF OF T HE REVENUE THAT THE EXCHANGE RATE DIFFERENCE SHOULD BE DETACHED FRO M THE EXPORTS AND BE CONSIDERED AS AN INDEPENDENT TRANSACTION. EVENTUALLY, THE SPECIAL BENCH HELD THAT SUCH EXCHANGE RATE FLUCTUATION GAIN/LOSS ARISING FROM EXPORTS CANNOT BE VIEWED DIFFERENTLY FROM THE SALE PROCEEDS. 7. IN THE CONTEXT OF TRANSFER PRICING, THE BANGALORE BENC H OF THE TRIBUNAL IN SAP LABS INDIA PVT. LTD. VS ACIT (2011) 44 SOT 156 (BANG ALORE) HAS HELD THAT FOREIGN EXCHANGE FLUCTUATION GAIN IS PART OF OPERATING PROFIT OF THE COMPANY AND SHOULD BE INCLUDED IN THE OPERATING REVENUE. SIMILAR VIEW HAS BEEN TAKEN IN TRILOGY E BUSINESS SOFTWARE INDIA (P) LTD. VS DCIT (2011 ) 47 SOT 45 (URO) (BANGALORE) . THE MUMBAI BENCH OF THE TRIBUNAL IN S. NARENDRA VS ADDTL. CIT (2013) 32 TAXMAN.COM 196 HAS ALSO LAID DOWN TO THIS EXTENT. 8. IT IS PERTINENT TO MENTION THAT THE LATER AMENDMENT TO SAFE HARBOUR RULES PROVIDES FOR TAKING FOREIGN EXCHANGE GAIN OR LOSS AS NON -OPERATING. HOWEVER IT IS RELEVANT TO NOTE THAT SUCH RULES ARE NOT APPLICABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE HONBLE DELHI HIGH COURT IN PR. CIT VS. CASHEDGE INDIA PVT. LTD. , VIDE ITS JUDGMENT DATED 4.5.2016 IN ITA 279/2016, HAS H ELD THAT : `SO FAR AS THE QUESTION OF FLUCTUATION OF FOREIGN EXC HANGE WAS CONCERNED, THE ITAT RULED THAT THE RELEVANT PROVISION, I.E. `SAFE HARBOUR RULES HAD NOT BEEN NOTIFIED FOR THE CONCERNED ASSESSMEN T YEAR AND WERE, THEREFORE, INAPPLICABLE. THUS THE HONBLE HIGH COURT DID NOT DISTURB THE OPERATING NATURE OF FOREX GAIN/LOSS AS HELD BY THE TRIBUNA L. IN VIEW OF THE FOREGOING DISCUSSION, WE ARE OF THE CONSIDERED OPINION THAT THE AMOUNT OF 6 ITA NOS. 2572 & 2573/PUN/2016 A.Y.2011-12 FOREIGN EXCHANGE GAIN/LOSS ARISING OUT OF REVENUE TRANSACT IONS IS REQUIRED TO BE CONSIDERED AS AN ITEM OF OPERATING REVENUE/COST, BOTH FOR THE ASSESSEE AS WELL AS THE COMPARABLES. THE GROUND TAKEN BY THE ASSES SEE IS, THEREFORE, DISMISSED. 9. THE NEXT ISSUE RAISED BY ASSESSEE IS AGAINST NOT ALLOWIN G IMPORT DUTY ADJUSTMENT. THE ASSESSEE DID NOT RAISE SUCH AN ISSUE BE FORE THE TPO. IT WAS ONLY BEFORE THE LD. CIT(APPEALS) THAT THE ASSESSEE REQUES TED FOR GRANTING ADJUSTMENT ON ACCOUNT OF IMPORT DUTY PAID BECAUSE IT INC URRED HIGHER IMPORT DUTY IN COMPARISON WITH THE COMPARABLE COMPANIES. THE LD. CIT(A) REJECTED THE ASSESSEES CONTENTION BY RELYING ON THE ORDER PAS SED BY DELHI HIGH COURT IN THE CASE OF SONY INDIA (P) LTD. VS. DCIT (2008) 118 TTJ (DEL) 865. NOW THE ASSESSEE IS AGGRIEVED BY THE REJECTION OF SUCH A CLAIM. 10. AFTER CONSIDERING RIVAL SUBMISSIONS AND PERUSING RELEVANT MATERIAL ON RECORD, WE FIND THAT THE CONTENTION OF THE ASSESSEE FOR A LLOWING SEPARATE ADJUSTMENT IN RESPECT OF HIGHER PAYMENT OF IMPORT DUTY IS NOT TENA BLE. 11. THERE CAN BE NO DISPUTE ON THE PRINCIPLE THAT CALCU LATION OF GROSS PROFIT AS ENVISAGED UNDER RULE 10B(1)(B) EMBRACES CUMULATIVE EFFECT OF ALL THE ITEMS OF INCOME AND EXPENSES LEADING TO THE DETERMINATION OF THE AMOUNT OF GROSS PROFIT. ORDINARILY, THERE CAN BE NO QUESTION OF CONSIDERING EACH ITEM OF SUCH EXPENSES OR REVENUE IN ISOLATION DE HORS THE OTHER CORRESPONDING EXPENSES OR ITEMS OF REVENUE TO CLAIM ADJUSTMENT ON THE GROUND OF AN Y PARTICULAR ITEM OF EXPENDITURE OR INCOME OF THE ASSESSEE ON THE HIGHER SIDE SEEN INDIVIDUALLY OR AS A PERCENTAGE OF OTHER OPERATING EXPENSE/INCOMES IN C OMPARISON WITH ITS COMPARABLES. THE REASON IS OBVIOUS THAT WHEN WE CONSIDER THE GROSS PROFIT MARGIN, THE EFFECT OF ALL THE INDIVIDUAL HIGHER OR LOWER ITEMS O F EXPENSES OR INCOMES GETS SUBSUMED IN THE OVERALL GROSS PROFIT MARGIN, RULING OUT THE NEED 7 ITA NOS. 2572 & 2573/PUN/2016 A.Y.2011-12 FOR ANY SEPARATE ADJUSTMENT ON COMPARISON OF ONE BY ON E ITEMS RESULTING INTO THE DETERMINATION OF THE GROSS PROFIT MARGIN UNDER THE R PM OR THE OPERATING PROFIT UNDER THE TNMM. A COMPANY MAY HAVE TAKEN A BUILD ING ON RENT FOR CARRYING ON ITS BUSINESS, IN WHICH CASE, IT WILL PAY RENT WHICH WILL FIND ITS PLACE IN THE OPERATING COSTS. FOR THE PURPOSES OF MAKING COMPARISON, ONE CANNOT CONTEND THAT THE PAYMENT OF RENT BY ONE ENTER PRISE IN COMPARISON WITH A NON-PAYMENT OF RENT BY ANOTHER SHOULD BE NEUTRA LIZED BY GIVING PROPER ADJUSTMENT FROM THE OPERATING PROFIT OF THE COMPARABLE. TH E MANIFEST REASON IS THAT THE OTHER ENTERPRISE MAY HAVE ITS OWN OFFICE PREM ISES AND IN THAT CASE, THE AMOUNT OF DEPRECIATION ON SUCH PREMISES WILL ALSO FORM P ART OF ITS OPERATING COSTS. WHEN WE CONSIDER THE OPERATING PROFIT OF THE FIRST ENTERPRISE WHICH IS PAYING RENT AND THEN COMPARE IT WITH THE SECON D ENTERPRISE WHICH IS NOT PAYING ANY RENT BUT IS CLAIMING DEPRECIATION ON ITS OW N PREMISES, THE OVERALL EFFECT OF RENT IN ONE CASE GETS COUNTERBALANCED WIT H DEPRECIATION ON PREMISES OF THE OTHER. SIMILAR IS THE POSITION OF A COMPANY HAVING PURCHASED NEW ASSETS CHARGING HIGHER AMOUNT OF DEPRECIATION ALLOWAN CE IN ITS BOOKS OF ACCOUNTS VIS-A-VIS ANOTHER COMPARABLE COMPANY USING OLD ASSETS WITH LOWER AMOUNT OF DEPRECIATION. NO ADJUSTMENT ON ACCOUNT OF DIFFERE NCE IN THE AMOUNT OF DEPRECIATION OF TWO COMPANIES IS CALLED FOR WHEN T HE OPERATING PROFITS ARE DETERMINED BECAUSE IN THE CASE OF A COMPANY HAVING PURCHASED NEW ASSET, THERE WILL BE LOWER REPAIR COST AND VICE VERSA . THE EFFECT OF ALL THE INDIVIDUAL ITEMS OF DIRECT OR OPERATING EXPENSES AND INCOMES CULMINATES INTO THE OVERALL GROSS OR OPERATING PROFIT MARGIN. THAT IS WHY, T HE LEGISLATURE HAS PROVIDED FOR COMPARING THE RATIO OF OPERATING PROFIT MARG IN TO A SIMILAR BASE OF THE ASSESSEE WITH THAT OF ITS COMPARABLES UNDER THE T NMM, THEREBY DISPENSING WITH THE NEED FOR MAKING ANY ADJUSTMENT ON AC COUNT OF HIGHER OR LOWER AMOUNT OF INDIVIDUAL ITEMS OF EXPENSES AND INCOMES. SIM ILAR VIEW HAS BEEN TAKEN BY THE DELHI BENCH OF THE TRIBUNAL IN HONDA MOTORCYCLE & 8 ITA NOS. 2572 & 2573/PUN/2016 A.Y.2011-12 SCOOTERS INDIA PVT. LTD. VS. ACIT IN ITA NO. 1379/DEL/2011 VIDE ITS ORDER PASSED IN THE YEAR 2015. 12. REVERTING TO THE FACTS OF THE CASE, IT IS NOTICED T HAT THE ASSESSEE HAS MADE OUT A CASE THAT IT PAID IMPORT DUTY IN RESPECT OF 1 00% OF ITS GOODS PURCHASED, WHEREAS, THE COMPARABLES INCURRED IMPORT DUT Y ONLY @ 2% OF THEIR PURCHASES. IN OUR CONSIDERED OPINION THE FACT WH ETHER THE IMPORT DUTY HAS BEEN PAID OR NOT OR PAID TO LOWER EXTENT BY THE CO MPARABLES CANNOT HAVE ANY EFFECT OVER COMPUTATION OF GROSS PROFIT MARGIN OF THE C OMPARABLES. IF THE ASSESSEE HAS MADE COSTLY PURCHASES, IT WILL NATURALLY EAR N MORE REVENUE FROM THE SALES AS WELL. ONE CAN COMPARE APPLE WITH APPLE AND NO T WITH ORANGE. IF PURCHASE OF GOODS IS OF HIGHER QUALITY AND COSTLY, IT IS BU T NATURAL THAT THE SALE WILL ALSO BE CORRESPONDINGLY AT A HIGHER PRICE. IT IS IM PERMISSIBLE TO CLAIM THAT THE AMOUNT OF HIGHER IMPORT DUTY PAID BY THE A SSESSEE SHOULD BE ADJUSTED IN ISOLATION WITHOUT HAVING EFFECT ON THE HIGHER SA LES PRICE REALIZED FROM THE SALE OF SUCH IMPORTED GOODS. ONCE WE TAKE FIGURE OF GROSS PROFIT, IT TAKES INTO ACCOUNT NOT ONLY THE HIGHER DEBIT SIDE OF COS T OF PURCHASES BUT ALSO THE HIGHER CREDIT SIDE OF THE REVENUE EARNED FROM SALES. NO ADJUSTMENT ON ACCOUNT OF SEPARATE ITEMS RESULTING INTO THE COMPUTATION OF GROSS PROFIT CAN BE PERMITTED. IN OUR CONSIDERED OPINION, THE STAND TAKEN BY THE ASSESSEE FOR ALLOWING SEPARATE ADJUSTMENT IN RESPECT OF HIGHER CUSTOM DUTY PAID BY IT HAS BEEN RIGHTLY REJECTED IN THE FIRST APPEAL. 13. ANOTHER ISSUE RAISED BY ASSESSEE IN ITS APPEAL IS AGAIN ST EXCLUSION OF ROSELABS LIMITED FROM ITS LIST OF COMPARABLES AND INCLUSION BY THE TPO OF MANKIND PHARMA LIMITED AS A COMPARABLE COMPANY. THE L D. AR SUBMITTED THAT TPO WAS NOT JUSTIFIED IN MAKING SUCH AN INCLUSION/EXCLU SION. IT WAS SUBMITTED THAT SIMILAR ISSUE WAS RAISED IN THE PRECEDING Y EAR AND THE 9 ITA NOS. 2572 & 2573/PUN/2016 A.Y.2011-12 TRIBUNAL WAS PLEASED TO REMIT THE QUESTION OF COMPARABILITY OF MANKIND PHARMA LIMITED TO THE AO/TPO FOR FRESH DETERMINATION. IT W AS, THEREFORE, PRAYED THAT SIMILAR TREATMENT MAY BE GIVEN FOR THE INSTAN T YEAR AS WELL. THE LD. DR DID NOT OPPOSE THE SUGGESTION PUT FORTH ON BEHALF OF THE ASSESS EE. 14. HAVING HEARD BOTH THE SIDES AND ALSO FOLLOWING THE VIEW TAKEN BY THE TRIBUNAL IN ITS ORDER FOR THE PRECEDING YEAR IN THE CASE O F THE ASSESSEE ITSELF, WE SET ASIDE INCLUSION/EXCLUSION OF THE TWO COMPANIES MENT IONED ABOVE AND REMIT THE MATTER TO THE FILE OF ASSESSING OFFICER/TPO FOR EX AMINING THEIR COMPARABILITY OR OTHERWISE AFRESH AFTER ALLOWING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 15. THE REVENUE IN ITS APPEAL IS AGGRIEVED BY THE EXCLUSIO N OF NOVARTIS INDIA LIMITED AS COMPARABLE. THE TPO INCLUDED THE SAME IN T HE LIST OF COMPARABLE, WHICH WAS EXCLUDED BY THE LD. CIT(APPEALS). 16. BOTH SIDES ARE AGREEABLE THAT NOVARTIS INDIA LTD. WAS SUBJECT MATTER OF CONSIDERATION BY THE TRIBUNAL IN THE PRECEDING YEAR AS WE LL AND THE TRIBUNAL REMITTED SUCH ISSUE BACK TO THE FILE OF ASSESSING OFFICER/ TP O FOR FRESH DETERMINATION. FOLLOWING THE SAME VIEW, WE SET ASIDE THE IMP UGNED ORDER ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER/ TPO TO CONSIDE R THE COMPARABILITY OR OTHERWISE OF THIS COMPANY AFRESH AFTER GIVING OPPORTUNIT Y OF HEARING TO THE ASSESSEE. 17. THE ONLY OTHER GROUND WHICH SURVIVES IN THE REVENUE S APPEAL IS AGAINST GRANTING BENEFIT 5% MARGIN TO THE ASSESSEE IN DETERMINING TH E ALP. 18. IT IS FOUND THAT THE LD. CIT(A) GRANTED THE BENEFIT OF 5% WITHOUT ANY STANDARD DEDUCTION IN VIEW OF THE AMENDMENT TO SECTION 9 2C(2A) BY THE 10 ITA NOS. 2572 & 2573/PUN/2016 A.Y.2011-12 FINANCE ACT, 2012 WITH RETROSPECTIVE EFFECT. IN VIEW OF LEGIS LATIVE AMENDMENT CARRIED OUT RETROSPECTIVELY, THE ASSESSEE CANNOT CLAIM A NY STANDARD DEDUCTION. WE, THEREFORE, HOLD THAT LD. CIT(A) WAS JUSTIFIED IN GIVING BENEFIT OF 5% ON INDIVIDUAL BASIS WITHOUT ANY STANDARD DEDUCTION. 19. TO SUM UP, WE SET ASIDE THE IMPUGNED ORDER AND RE MIT THE MATTER TO THE FILE OF AO/TPO FOR A FRESH DETERMINATION OF THE ALP OF THE IN TERNATIONAL TRANSACTION OF `IMPORT OF FINISHED GOODS IN CONFORMITY WITH THE FOREGOING DISCUSSION. 20. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND THAT OF THE REVENUE APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 2 ND DAY OF NOVEMBER, 2018. SD/- SD/- (VIKAS AWASTHY) (R.S.SYAL) /JUDICIAL MEMBER / VICE PRESIDENT / PUNE; / DATED : 2 ND NOVEMBER, 2018 SB !'#$%$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-13, PUNE. 4. THE PR. CIT-1, PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE.*