M/s Dabur Pharma Limited, New Delhi V. ACIT, New Delhi

ITA 4556/DEL/2010

• Counselvise Citation: 455620114 RSA 2010
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 13-10-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND SENIOR
• Assessee Lawyers: M FAHAD KHALID
• Keywords: Transfer pricing; Opportunity of being heard; International transaction; Bad and doubtful debts
• Section: 143(3); 115JB

Judgement Text

BEFORE THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH B, NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.4556/DEL.2010 (ASSESSMENT YEAR : 2006-07) M/S. DABUR PHARMA LIMITED, VS. ADDL.CIT, RANGE 10 , (NOW FRESENIUS KABI ONCOLOGY LTD.), NEW DELHI. B 310, SOM DUTT CHAMBERS I, NEW DELHI 110 066. (PAN NO.AABCD7720L) (APELLANT) (RESPONDENT) ASSESSEE BY : SHRI HIMANSHU SINHA, ADVOCATE & SHRI M. FAHAD KHALID, CA DEPARTMENT BY : SHRI N.K. CHAND, SENIOR DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE ASSESSING OFFICER PASSED U/S 143(3) READ WITH SECTI ON 144C OF THE INCOME- TAX ACT DATED 09.08.2010. 2. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSE E COMPANY WAS ENGAGED IN THE BUSINESS OF SPECIALTY PHARMACEUTICAL S THAT DEVELOPS AND MARKETS PRODUCTS FOR TREATMENT OF CANCER GLOBALLY A ND IS A LEADING COMPANY IN THE FIELD OF THERAPEUTIC CATEGORY. 3. AT THE OUTSET OF THE HEARING, LEARNED AR SUBMITT ED THAT THE LEARNED DRP HAS DISMISSED THE ASSESSEES OBJECTION IN A SUM MARY MANNER AND ITA NO.4556/DEL/2010 2 HAS NOT DECIDED ALL THE OBJECTIONS RAISED BY THE AS SESSEE. HE PRAYED THAT THE MATTER MAY BE RESTORED TO THE FILE OF THE DRP. 4. ON THE OTHER HAND, THE LEARNED DR WAS ALSO NOT H AVING ANY SERIOUS OBJECTION TO THIS PROPOSITION. 5. WE HAVE HEARD BOTH THE SIDES AND ALSO GONE THROU GH THE ORDER OF THE DRP. THE LEARNED DRP HAS DEALT THE ISSUE AS UN DER :- 2.4 WE HAVE CONSIDERED THE ARGUMENTS OF THE ASSESS EE COMPANY. THE TPO HAS GIVEN DETAILED REASONS IN THE ORDER U/S 92CA(3) FOR COMPUTING THE ARM'S LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS. THE ASSESSEE COULD NOT JUSTIFY THE FILTERS APPLIED BY IT AND THE TPO HAS CARRIED O UT A FRESH SEARCH AND APPLIED LOGICAL FILTERS TO ARRIVE AT A C OMPARABLE ON THE BASIS OF THE SAME HE HAS COMPUTED OP / OC AT 19.60%. IN THE MATTER OF CHARGING OF INTEREST @ 6% ON THE LOAN OF RS.46.37 CRORES FROM ITS AE, THE ASSESSEE C OULD NOT DISCLOSE THE DETAILS OF CUP. IT WAS NOTICED THAT TH E ASSESSEE HAS ALSO TAKEN LOAN FROM BANKS TO THE EXTENT OF RS. 52.68 CRORES, HOWEVER THE RATE OF INTEREST ON THE LOANS T AKEN WAS NOT AVAILABLE IN THE AUDITED ANNUAL ACCOUNTS. THE T PO HAS OBSERVED THAT IN THIS CASE THE ISSUE FOR DETERMINAT ION IS NOT ABOUT ALLOWABILITY OF INTEREST PAYMENT U/S 36(1)(II I) BUT TO DETERMINE ARM'S LENGTH PRICE OF INTEREST CHARGED BY THE ASSESSEE FROM ITS AE. THEREFORE THE TPO HAS DETERMI NED THE CUP FOR THE RATE OF INTEREST CHARGED BY THE ASS ESSEE ON LOAN GIVEN TO AE @ 10%. THIS APPEARS REASONABLE. IN THESE CIRCUMSTANCES, WE FIND NO COMPELLING REASONS TO INTERFERE WITH THE ORDER OF TPO AND THE ASSESSING O FFICER ON THIS ISSUE. 3. PROVISION FOR DOUBTFUL BAD DEBTS OF RS.21,48,564 /-: IN THE DRAFT ASSESSMENT ORDER, THE ASSESSING OFFIC ER HAS DISALLOWED RS.21,48,564/- BEING THE PROVISION F OR DOUBTFUL / BAD DEBTS. THE ASSESSING OFFICER HAS OBS ERVED THAT VIDE PROVISIONS OF FINANCE ACT, 2009 AS INSERT ED IN CLAUSE (I) TO EXPLANATION -I OF SECTION 1L5JB (APPL ICABLE W.E.F. 01.04.2001 RETROSPECTIVELY), THE PROVISIONS CANNOT BE ITA NO.4556/DEL/2010 3 CLAIMED AGAINST THE BOOK PROFIT FOR THE PURPOSE OF ARRIVING AT THE INCOME FOR TAXATION U/S 115JB OF I.T. ACT, 1 961. IN THIS ISSUE THE OBSERVATION OF THE ASSESSING OFFICER APPEARS TO BE CORRECT HENCE WE FIND NO REASON TO INTERFERE WITH THE ORDER OF ASSESSING OFFICER ON THIS ISSUE. SINCE BOTH THE SIDES HAD AGREED TO RESTORE THE ISSU E TO THE FILE OF THE DRP FOR MAKING A SPEAKING ORDER, WE RESTORE THE ISSUE T O THE FILE OF DRP WITH A DIRECTION THAT THE DRP MAY PASS A FRESH SPEAKING ORDER U/S 144C OF THE INCOME-TAX ACT AFTER MEETING OUT ALL THE OBJECTIONS PREFERABLY WITHIN A YEAR FROM THE DATE OF THE SERVICE OF THE ORDER AFTE R PROVIDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 18 TH DAY OF AUGUST, 2011. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE 18 TH DAY OF AUGUST, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.DRP-I, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT