Appeal details
Counselvise Citation
[2017] 127 COUNSELVISE.COM (IT) 3939 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
10 month(s) 3 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
03-11-2017
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
I2
Next Hearing Date
19-07-2017
Assessment Year
2012-2013
Appeal Filed On
30-12-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : I-2 : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.6706/DEL/2016 ASSESSMENT YEAR: 2012-13 STAY APPLN. NO.601/DEL/2016 (ITA NO.6706/DEL/2016) ASSESSMENT YEAR : 2012-13 TEVA API INDIA PVT. LTD. (FORMERLY KNOWN AS TEVA API INDIA LTD.), M-34, SAKET, NEW DELHI. PAN: AACCR0679R VS. ADDL. CIT, SPECIAL RANGE-9, NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HIMANSHU SINHA & MS VRINDA TULSHAN, ADVOCATES DEPARTMENT BY : MRS Y.S. KAKKAR, CIT, DR DATE OF HEARING : 01.11.2017 DATE OF PRONOUNCEMENT : 03.11.2017 ITA NO.6706/DEL/2016 SA NO.601/DEL/2016 2 ORDER PER R.S. SYAL, VP: SINCE THE APPEAL HAS ALSO BEEN TAKEN UP FOR HEARIN G TODAY ALONG WITH THE STAY APPLICATION AND THE SAME IS BEING DIS POSED OF, THE STAY APPLICATION IS DISMISSED AS HAVING BECOME INFRUCTUO US. 2. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE FINAL ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER (A O) ON 30.11.2016 U/S 143(3) READ WITH SECTION 144C OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2012-13. 3. THE ONLY ISSUE ASSAILED IN THIS APPEAL IS AGAINS T THE ADDITION ON ACCOUNT OF TRANSFER PRICING ADJUSTMENT MADE BY THE ASSESSING OFFICER AMOUNTING TO RS.40,91,86,032/-. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS ENGAGED IN MANUFACTURING OF APIS, OTHER INTERMEDIARIES AND BULK DRUGS AND IS ALSO PROVIDING CONTRACT R&D SERVICES FOR IN-HOUSE U SE AND FOR GROUP COMPANIES. IT IS UNDISPUTED THAT MANUFACTURING WAS DONE ON CONTRACT ITA NO.6706/DEL/2016 SA NO.601/DEL/2016 3 BASIS WITH COST PLUS MARK UP OF 8.7% AND CONTRACT R&D ACTIVITIES WERE CARRIED OUT WITH COST PLUS MARK UP OF 19.95%. THE ASSESSEE REPORTED NINE INTERNATIONAL TRANSACTIONS IN ITS REPORT IN FO RM NO. 3CEB, WHICH HAVE BEEN REPRODUCED ON PAGE 5 OF THE TRANSFER PRIC ING OFFICER (TPO)S ORDER. THE AO REFERRED THE MATTER OF DETERMINATION OF THE ARMS LENGTH PRICE OF THE INTERNATIONAL TRANSACTIONS TO THE TPO. THE TPO OBSERVED THAT THE ASSESSEE USED TRANSACTIONAL NET MARGIN MET HOD (TNMM) TO BENCHMARK ITS INTERNATIONAL TRANSACTIONS PERTAINING TO SALE OF BULK DRUGS/BULK DRUG INTERMEDIATES; PURCHASE OF RAW MATE RIAL; SALE OF RAW MATERIAL; AND PROVISION OF CONTRACT R&D SERVICES WI TH PROFIT LEVEL INDICATOR (PLI) OF OPERATING PROFIT TO OPERATING CO ST (OP/OC). ON ANALYSIS OF THE TRANSFER PRICING APPROACH OF THE AS SESSEE, THE TPO OBSERVED THAT THERE WERE TWO SEGMENTS, NAMELY, MANU FACTURING SEGMENT AND SERVICE SEGMENT. THE TPO DID NOT APPROVE SEPAR ATE BENCHMARKING OF THESE TWO MAJOR INTERNATIONAL TRANSACTIONS OF MA NUFACTURING AND R&D. FOR THE REASONS GIVEN IN THE ORDER, THE TPO C OMBINED THESE TWO SEGMENTS AND THEN PROCEEDED TO DETERMINE THE ALP ON AN AGGREGATE BASIS. HERE, IT IS PERTINENT TO MENTION THAT ALBEI T A GROUND HAS BEEN TAKEN ITA NO.6706/DEL/2016 SA NO.601/DEL/2016 4 IN THE APPEAL BEFORE THE TRIBUNAL AGAINST THE COMBI NING OF MANUFACTURING SEGMENT WITH SERVICE SEGMENT BY THE T PO, BUT THE LD. AR DID NOT PRESS THE SAME. AS SUCH, WE ARE NOT REFERRI NG TO THE REASONS AND JUSTIFICATION GIVEN BY THE TPO FOR AGGREGATING THES E TWO SEGMENTS. THE TPO DETERMINED THE ASSESSEES COMBINED OP/OC AT 7.1 0%. IN DETERMINING SUCH PLI, THE TPO REDUCED EXCHANGE LOSS OF RS.112.40 MILLION FROM TOTAL EXPENSES FOR CALCULATING `OPERAT ING COSTS. THE ASSESSEE HAD SELECTED 22 COMPANIES AS COMPARABLES, WHICH HAVE BEEN LISTED ON PAGES 9 TO 11 OF THE TPOS ORDER. THE TP O CARRIED OUT A FRESH SEARCH AND, EVENTUALLY, SHORTLISTED NINE COMPANIES AS COMPARABLE, WHICH INCLUDE TWO COMPANIES FROM THE ASSESSEES LISTS, NA MELY, SHILPA MEDICARE LTD. AND SRI KRISHNA PHARMACEUTICALS LTD. AVERAGE OP/OC OF SUCH NINE COMPANIES WAS COMPUTED AT 13.02%. BY APP LYING THIS PLI AS A BENCHMARK, THE TPO WORKED OUT TRANSFER PRICING AD JUSTMENT OF RS.42,87,51,255/-. THE ASSESSEE APPROACHED THE DIS PUTE RESOLUTION PANEL (DRP) WHICH GAVE CERTAIN DIRECTIONS. THE TPO , WHILE GIVING EFFECT TO SUCH DIRECTIONS, COMPUTED THE FRESH AMOUN T OF TRANSFER PRICING ADJUSTMENT AT RS.40,91,86,032/-, WHICH AMOUNT STOO D ADDED BY THE ITA NO.6706/DEL/2016 SA NO.601/DEL/2016 5 ASSESSING OFFICER IN THE FINAL ASSESSMENT ORDER. T HE ASSESSEE IS AGGRIEVED AGAINST SUCH TRANSFER PRICING ADDITION. 5. THE FIRST ISSUE CHALLENGED BEFORE THE TRIBUNAL I S THE EXCLUSION OF EXCHANGE LOSS OF RS.112.40 MILLION FROM TOTAL EXPEN SES. THE TPO TREATED SUCH AMOUNT AS OF NON-OPERATING NATURE AND, HENCE, EXCLUDED IT FROM THE AMBIT OF TOTAL EXPENSES FOR WORKING OUT OP ERATING COSTS. THE DRP DIRECTED THE TPO TO VERIFY: IF THERE IS FOREIG N EXCHANGE GAIN ON ACCOUNT OF SALE OF THE ASSESSEE (NOT ON ACCOUNT OF CAPITAL EXPENDITURE) IT SHOULD BE TREATED AS OPERATING GAINS. THE TPO REC ORDED IN HIS ORDER DATED 22.11.2016 GIVING EFFECT TO THE DIRECTIONS OF THE DRP THAT: THE TPO HAS BEEN DIRECTED TO TAKE FOREIGN EXCHANGE FLUC TUATION AS OPERATING WHILE COMPUTING MARGINS OF THE COMPANY. 6. HAVING HEARD BOTH THE SIDES ON THE POINT AND PER USED THE RELEVANT MATERIAL ON RECORD, IT IS SEEN THAT THE DRP DIRECTE D THE TPO TO EXAMINE IF FOREIGN EXCHANGE GAIN WAS ON ACCOUNT OF SALES, A ND IF YES, THEN THAT SHOULD BE TREATED AS OPERATING GAIN. IMPLIEDLY, TH E DIRECTION OF THE DRP WAS THAT FOREIGN EXCHANGE GAIN/LOSS FROM TRADING TR ANSACTIONS SHOULD BE ITA NO.6706/DEL/2016 SA NO.601/DEL/2016 6 TAKEN AS AN ITEM OF OPERATING NATURE AND IN OTHER C ASES IT SHOULD BE CONSIDERED AS NON-OPERATING. THIS VIEW OF THE DRP A CCORDS WITH THE RATIO OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN CIT VS. WOODWARD GOVERNOR INDIA P. LTD. (2009) 312 ITR 254 (SC). THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE EXCHANG E LOSS OF RS.112.40 MILLION PERTAINS TO LOAN TAKEN BY THE ASSESSEE FROM TEVA PHARMACEUTICALS FINANCE, NETHERLANDS B.V., ITS HOLD ING COMPANY. REFERRING TO THE BALANCE SHEET OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION, THE LD. AR SUBMITTED THAT THE ASSESS EE EFFECTED LONG-TERM BORROWINGS AMOUNTING TO RS.992.1 MILLION FROM ITS H OLDING COMPANY AND THE EXCHANGE LOSS PERTAINED TO SUCH BORROWING A LONE. WE HAVE GONE THROUGH THE ASSESSEES BALANCE SHEET, A COPY OF WHI CH IS AVAILABLE ON PAGE 242 OF THE PAPER BOOK. IT CAN BE SEEN FROM SU CH BALANCE SHEET THAT THERE ARE CERTAIN TRADE RECEIVABLES AS WELL AS TRAD E PAYABLES. ADMITTEDLY, SOME OF THE TRADE RECEIVABLES AND TRADE PAYABLES AR E ON ACCOUNT OF IMPORT AND EXPORT TRANSACTIONS OF THE TRADING NATUR E. THE LD. COUNSEL FOR THE ASSESSEE COULD NOT LINK EXCHANGE LOSS OF RS.112 .40 MILLION WITH THE BORROWINGS EFFECTED BY THE ASSESSEE FROM ITS HOLDIN G COMPANY. IT IS ITA NO.6706/DEL/2016 SA NO.601/DEL/2016 7 PATENT THAT FOREIGN EXCHANGE LOSS ON ACCOUNT OF TRA DE RECEIVABLES AND PAYABLES HAS TO BE TAKEN AS AN ITEM OF OPERATING EX PENDITURE AND EXCHANGE LOSS ON ACCOUNT OF FINANCING TRANSACTIONS WILL BE CONSIDERED AS NON-OPERATING. SINCE THE LD. AR COULD NOT LINK THE AMOUNT OF FOREIGN EXCHANGE LOSS OF RS.112.40 MILLION WITH THE TRANSAC TION OF BORROWING FROM THE ASSESSEES AE, WE CANNOT UPHOLD THE ARGUME NT PUT FORTH BEFORE US WITHOUT VERIFICATION. UNDER THESE CIRCUMSTANCES , WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF ASSESSING OFFICER/TPO FOR ASCERTAINING IF EXCHANGE LOSS OF RS .112.40 MILLION PERTAINS TO LOAN TRANSACTIONS FROM THE ASSESSEES A E OR TRADING TRANSACTIONS AS WELL. A PART OF SUCH EXCHANGE LOSS WHICH PERTAINS TO BORROWING MADE BY THE ASSESSEE FROM TEVA PHARMACEUT ICALS FINANCE NETHERLANDS B.V., SHOULD BE CONSIDERED AS NON-OPERA TING AND THE REMAINING AMOUNT, IF ANY, PERTAINING TO TRADING TRA NSACTIONS SHOULD BE TAKEN AS OPERATING EXPENSE. NEEDLESS TO SAY, THE AS SESSEE WILL BE ALLOWED A REASONABLE OPPORTUNITY OF HEARING BEFORE TAKING A NY DECISION FOR THE PURPOSES OF COMPUTING THE ASSESSEES `OPERATING COS TS TO FIND OUT ITS OP/OC. ITA NO.6706/DEL/2016 SA NO.601/DEL/2016 8 7. THE NEXT ISSUE RAISED BEFORE THE TRIBUNAL IS ABO UT CERTAIN COMPARABLES. BEFORE PROCEEDING TO DEAL WITH THE CO MPARABLES, IT IS SIGNIFICANT TO NOTE THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURING OF APIS, OTHER INTERMEDIARIES AND BULK DRUGS. THE FIR ST INTERNATIONAL TRANSACTION IS SALE OF BULK DRUGS/BULK DRUG INTERME DIATES. THE TPO AGGREGATED PROVISION OF CONTRACT R&D SERVICES WITH THE MANUFACTURING SEGMENT AND WE HAVE NOTED ABOVE THAT THE LD. AR DID NOT AGITATE SUCH COMBINING OF TWO SEGMENTS. IN A NUTSHELL, THE ASSE SSEES AGGREGATED INTERNATIONAL TRANSACTION UNDER CONSIDERATION IS MA NUFACTURING AND CONTRACT R&D. WITH THIS BACKGROUND, NOW WE TAKE UP THE COMPANIES CHALLENGED BEFORE US. (I) AURO LABORATORIES LTD . 8. THE ASSESSEE TREATED THIS COMPANY AS COMPARABLE. THE TPO EXCLUDED IT BY NOTICING THAT IT FAILED THE SALES FI LTER AND, HENCE, COULD NOT BE CONSIDERED AS COMPARABLE. THE DRP OBSERVED ON P AGE 6 OF ITS DIRECTION THAT THIS COMPANY IS FUNCTIONALLY SIMILAR . HOWEVER, THE TPO WAS: DIRECTED TO INCLUDE THIS IF IT PASSES ALL THE FILTERS. THE TPO, IN HIS ITA NO.6706/DEL/2016 SA NO.601/DEL/2016 9 ORDER GIVING EFFECT TO THE DIRECTION GIVEN BY THE D RP EXCLUDED THIS COMPANY BY NOTICING THAT IT: FAILS THE SALES FILTE R. THE ASSESSEE MOVED AN APPLICATION U/S 154 OF THE ACT. THE TPO VIDE OR DER DATED 20.06.2017, OBSERVED THAT THIS COMPANY WAS PASSING THE SALES FI LTER. HOWEVER, IT WAS NOTICED THAT: THE NET ASSETS OF THE COMPANY IS RS. 6,38,14,663/- AND THE SALES IN THE SAME YEAR IS RS.26,39,77,179/-. THUS, NET FIXED ASSETS TO SALES RATIO OF THE COMPANY IS 24.17%. HENCE, THIS COMPANY FAILS NET FIXED ASSETS TO SALES FILTER APPLIED BY THIS OFFICE . 9. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD, IT IS NOTICED THAT THE DRP TREA TED THIS COMPANY AS FUNCTIONALLY SIMILAR. HOWEVER, DIRECTION WAS GIVEN TO THE TPO TO INCLUDE THIS COMPANY IF IT WAS PASSING OTHER FILTER S. THE TPO IN HIS ORDER U/S 154 OF THE ACT HAS HELD THAT THE COMPANY WAS NOT PASSING THE FILTER OF NET ASSET TO SALES, WHICH WAS ADOPTED BY HIM AT 25% AND IN THE CASE OF AURO LABORATORIES, IT WAS ONLY 24.17%. WE HAVE GONE THROUGH THE ANNUAL ACCOUNTS OF THIS COMPANY FOR THE YEAR UN DER CONSIDERATION, WHOSE COPY IS AVAILABLE ON PAGE 769 OF THIRD PAPER BOOK FILED BY THE ITA NO.6706/DEL/2016 SA NO.601/DEL/2016 10 ASSESSEE. IT CAN BE SEEN THAT THE BALANCE SHEET OF THE COMPANY GIVES FIGURE OF FIXED ASSETS AT RS.10,81,52,547/-, WHICH IS TOTAL OF `TANGIBLE ASSETS AT RS.6,36,14,663/- AND `CAPITAL WORK IN PR OGRESS AT RS.4,43,37,884/-. THE TPO DID NOT INCLUDE THE AMOU NT OF `CAPITAL WORK IN PROGRESS AND CONSIDERED ONLY `TANGIBLE ASSETS FOR COMPUTING THE RATIO OF FIXED ASSETS TO TURNOVER. WE ARE UNABLE T O APPRECIATE THE REASONS FOR NOT INCLUDING AMOUNT OF `CAPITAL WORK I N PROGRESS IN THE TOTAL AMOUNT OF FIXED ASSETS FOR WORKING OUT THE R ELEVANT FILTER. CAPITAL WORK IN PROGRESS REPRESENTS THE AMOUNT SPENT BY THE COMPANY ON FIXED ASSETS, BUT, WAS PENDING APPORTIONMENT TO VARIOUS F IXED ASSETS AT THE END OF THE YEAR. IF WE GO WITH THE LOGIC OF THE LD. DR JUSTIFYING THE EXCLUSION OF `CAPITAL WORK IN PROGRESS THAT ONLY THE FIXED A SSETS RESULTING IN SALES SHOULD BE CONSIDERED AND THE FIXED ASSETS WHICH DO NOT CONTRIBUTE TO SALES SHOULD BE EXCLUDED, THEN, IT WOULD REQUIRE IN DEPENDENT EVALUATION OF EACH AND EVERY ITEM OF FIXED ASSETS AS TO WHETHE R THE SAME WAS BEING USED FOR THE BUSINESS PURPOSE OR NOT. OBVIOUSLY, T HIS IS NOT A CORRECT PROPOSITION. SINCE THE FILTER TAKEN BY THE TPO HIM SELF IS SALES TO FIXED ASSETS, NOT ONLY THE APPORTIONED, BUT, NON-APPORTIO NED COST OF FIXED ASSET ITA NO.6706/DEL/2016 SA NO.601/DEL/2016 11 SHOULD ALSO BE INCLUDED. IF WE INCLUDE THE AMOUNT OF `CAPITAL WORK IN PROGRESS ALONG WITH `TANGIBLE ASSETS GIVEN UNDER THE HEAD FIXED ASSETS, THE FILTER WILL PASS. WE, THEREFORE, OVER TURN THE VIEW POINT OF THE TPO AND, ORDER FOR THE INCLUSION OF THIS COMPAN Y IN THE LIST OF COMPARABLES. (II) NEULAND LABORATORIES LIMITED 10. THE TPO EXCLUDED THIS COMPANY FROM THE ASSESSEE S LIST OF COMPARABLES BY NOTICING THAT IT WAS FUNCTIONALLY DI FFERENT. THE DRP NOTICED THAT IT WAS ALSO ENGAGED IN API MANUFACTURI NG. THE TPO WAS DIRECTED TO INCLUDE ITS API SEGMENT IF THE ASSESSEE WAS ABLE TO PROVIDE SEGMENTAL DATA AND THE SEGMENT PASSED ALL THE FILTE RS. 11. HERE, IT IS IMPORTANT TO MENTION THAT THE ASSES SEE MOVED APPLICATION U/S 154 OF THE ACT BEFORE THE DRP CONTE NDING THAT M/S NEULAND LABORATORIES LTD. WAS ENGAGED IN SALES OF B ULK DRUGS AS WAS THE ASSESSEE AND, HENCE, NO SEGMENTAL DATA WAS REQUIRED AS ORIGINALLY DIRECTED BY THE DRP. IT WAS SUBMITTED THAT THE COM PANY AS A WHOLE SHOULD BE ACCEPTED AS A GOOD COMPARABLE. THE DRP R EJECTED THIS ITA NO.6706/DEL/2016 SA NO.601/DEL/2016 12 CONTENTION. WE FIND FROM THE ASSESSEES ANNUAL ACC OUNTS AS WELL AS REPORT OF INTERNATIONAL TRANSACTIONS THAT IT WAS EN GAGED NOT ONLY IN APIS. AS NOTICED ABOVE, THE ASSESSEE WAS ENGAGED IN SALE OF BULK DRUGS/BULK DRUG INTERMEDIATES. THUS, TO SAY THAT THE ASSESSEE WAS ENGAGED ONLY IN THE BUSINESS OF APIS, IS NOT CORRECT. ONCE IT IS C LEAR FROM THE REPORT OF THE ASSESSEE AS WELL AS THE ORDER OF THE TPO THAT T HE ASSESSEE WAS ENGAGED IN THE MANUFACTURING OF BULK DRUGS AS WELL, IT WAS UNREASONABLE TO RESTRICT THE COMPARABILITY WITH THE COMPANIES DE ALING IN APIS ALONE. AT THIS JUNCTURE, IT IS RELEVANT TO MENTION THAT THE ASSESSEE INCLUDED M/S SHILPA MEDICARE LTD. IN ITS LIST OF 22 COMPARABLES AND THE TPO WAS PLEASED TO INCLUDE IT IN THE FINAL LIST OF COMPARAB LES. M/S SHILPA MEDICARE LTD. IS A COMPANY ENGAGED IN MANUFACTURING OF `BULK DRUGS AS IS EVIDENT FROM THE ASSESSEES TRANSFER PRICING STU DY REPORT WHICH MENTIONS THAT THIS COMPANY IS ENGAGED IN MANUFACTUR ING OF BULK DRUGS, INTERMEDIATES AND GENERATION OF POWER. WE HAVE GON E THROUGH THE ANNUAL ACCOUNTS OF NEULAND LABORATORIES LTD., WHOS E COPY IS AVAILABLE AT PAGE 789 ONWARDS OF THE PAPER BOOK. IT IS SEEN THAT THE SAME IS ENGAGED IN BULK DRUG MANUFACTURING. ONCE IT IS FOU ND THAT NEULAND ITA NO.6706/DEL/2016 SA NO.601/DEL/2016 13 LABORATORIES LTD. IS ALSO ENGAGED IN MANUFACTURING OF BULK DRUGS, THE SAME MATCHES WITH THE ASSESSEES FUNCTIONAL PROFILE . THUS THE REASONING GIVEN BY THE AUTHORITIES FOR EXCLUSION OF THIS COMP ANY THAT IT IS ENGAGED IN MANUFACTURING OF BULK DRUGS AND NOT APIS, AS IS THE ASSESSEE, FALLS TO THE GROUND. WE, THEREFORE, ORDER TO INCLUDE THIS CO MPANY IN THE LIST OF COMPARABLES. (III) SUVEN LIFE SCIENCES LTD. 12. THERE IS NO DISPUTE ON THE FUNCTIONAL COMPARABI LITY OR THE INCLUSION OF THIS COMPANY IN THE FINAL TALLY OF COMPARABLES. THE LD. AR SUBMITTED THAT THE TPO WENT WRONG IN COMPUTING OP/OC OF THIS COMPANY. REFERRING TO THE ORDER DATED 20.6.2017 PASSED BY TH E TPO U/S 154 OF THE ACT, THE LD. AR SUBMITTED THAT THE TPO TREATED `LOS S OF FORWARD CONTRACTS AND `MTM OF FORWARD CONTRACTS AS NON-OP ERATING ITEMS, WHICH OUGHT TO HAVE BEEN CONSIDERED AS OPERATING. 13. HAVING REGARD TO THE FACTS OF THE INSTANT CASE, WE FIND THAT THE ASSESSEE DID NOT RAISE ANY OBJECTION BEFORE THE DRP ON THIS ISSUE. SINCE THE ISSUE OF `LOSS OF FORWARD CONTRACTS AND `MTM OF FORWARD ITA NO.6706/DEL/2016 SA NO.601/DEL/2016 14 CONTRACTS HAS NOT RECEIVED CONSIDERATION AT THE HA NDS OF ANY OF THE AUTHORITIES BELOW, WE ARE OF THE CONSIDERED OPINION THAT THE ENDS OF JUSTICE WOULD MEET ADEQUATELY IF THE ASSESSING OFFI CER/TPO IS DIRECTED TO EXAMINE THIS CONTENTION OF THE ASSESSEE AND THEN DECIDE IT AS PER LAW. 14. NO OTHER ISSUE EXCEPT THE POINTS DISCUSSED ABOV E WERE ARGUED BY THE LD. AR. THE GROUNDS AGITATING OTHER ISSUES, NO T ARGUED BEFORE US, ARE, THEREFORE, DISMISSED AS NOT PRESSED. 15. TO SUM UP, WE SET ASIDE THE IMPUGNED ORDER ON T HE ISSUE OF ADDITION TOWARDS TRANSFER PRICING ADJUSTMENT AND RE MIT THE MATTER TO THE FILE OF AO/TPO FOR FRESH DETERMINATION OF THE ALP O F THE COMBINED INTERNATIONAL TRANSACTION OF MANUFACTURING AND SERV ICE SEGMENTS IN CONSONANCE WITH OUR ABOVE DIRECTIONS. NEEDLESS TO SAY, THE ASSESSEE WILL BE ALLOWED A REASONABLE OPPORTUNITY OF BEING HEARD IN SUCH FRESH PROCEEDINGS ITA NO.6706/DEL/2016 SA NO.601/DEL/2016 15 16. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 03.11.201 7. SD/- SD/- [K. NARASIMHA CHARY] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 03 RD NOVEMBER, 2017. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.
