Sabic Research and Technologies Pvt. Ltd., Baroda V. The ACIT.,Circle-4, Baroda

ITA 890/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8704 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 02-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 26-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VASUNDHRA UPMANYU
• Assessee Lawyers: ROHIT MAHESH PANSARI
• Keywords: Depreciation; Transfer pricing
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 890/AHD/2014 (ASSESSMENT YEAR: 2009-10) SABIC RESEARCH AND TECHNOLOGY PRIVATE LIMITED PLOT NO 5 & 6, SAVLI, GIDC ESTATE, MANJUSAR,BARODA-391175 V/S ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-4, BARODA (APPELLANT) (RESPONDENT) PAN: AABCS7650L APPELLANT BY : SHRI DHINAL SHAH & ROHIT MAHESH PANSARI, A.R . RESPONDENT BY : SHRI VASUNDHRA UPMANYU, CIT/ D.R. ( )/ ORDER DATE OF HEARING : 16 -08-201 7 DATE OF PRONOUNCEMENT : 18 -08-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER DATED 13.01.2014 FRAMED U/S. 143(3) R.W.S 92CA R.W.S. 144 C OF THE ACT. ITA NO. 890/ AHD/2014 . A.Y. 2009-10 2 2. REPRESENTATIVES OF BOTH THE SIDES WERE HEARD AT LEN GTH. HAVING HEARD THE RIVAL SUBMISSIONS, WE HAVE CAREFULLY PERUSED THE ORDERS O F THE AUTHORITIES BELOW. THE DISPUTE OF THE ASSESSEE CAN BE SUMMARIZED AS FOLLOW S:- (I) FIRSTLY, THE ASSESSEE CONTENDS THAT THE PROFIT LEVEL INDICATOR OF THE APPELLANT SHOULD BE TAKEN AT PROFIT BEFORE DEPRECIATION. (II) AND SECONDLY, THE ASSESSEE IS AGGRIEVED BY THE INCLUSION OF CERTAIN COMPARABLE COMPANIES. 3. INSOFAR AS THE DETERMINATION OF THE PROFIT LEVEL IN DICATOR IS CONCERNED, WE FIND THAT THIS ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN ITS ORDER DATED 01.05.2017 IN ITA NO. 1065 & 11 OTHERS FOR A.Y.2004-05 TO 2008 -09. THE RELEVANT FINDING OF THE TRIBUNAL CAN BE FOUND AT PARA 13.23 OF ITS O RDER WHICH CONCLUDES AS UNDER: IN THE RESULT, WE ALLOW THE ASSESSEES GROUND OF AP PEAL FOR CALCULATING THE PROFIT LEVEL INDICATOR OF ASSESSEE AND COMPARABLE AFTER EXCLUDIN G DEPRECIATION FROM THE OPERATING COST. 4. AS THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESS EE, RESPECTFULLY FOLLOWING THE FINDINGS OF THE TRIBUNAL IN ASSESSEES OWN CASE (SU PRA), WE DIRECT THE A.O. TO CONSIDER THE PLI AFTER EXCLUDING DEPRECIATION FROM THE OPERATING COST. GROUND NO. 1 IS ALLOWED. 5. THE OTHER GRIEVANCE OF THE ASSESSEE RELATES TO THE INCLUSION OF THE FOLLOWING COMPARABLES :- (I) BIOTECH CONSORTIUM INDIA LTD. (II) ALPHAGEO (INDIA) LTD. (III) IDC INDIA LTD. ITA NO. 890/ AHD/2014 . A.Y. 2009-10 3 6. IT IS THE SAY OF THE LD. COUNSEL THAT COMPARABLES A T SERIAL NO. 1 & 2 SHOULD NOT BE TREATED AS COMPARABLES AND COMPARABLE AT SERIAL NO.3 SHOULD BE ACCEPTED AS COMPARABLE. 7. INSOFAR AS ALPHAGEO (INDIA) LTD IS CONCERNED, THE S AME HAS BEEN REJECTED AS A COMPARABLE IN ASSESSEES OWN CASE IN EARLIER ASSESS MENT YEARS BY THE TRIBUNAL IN ITA NOS. 1065 & 11 OTHERS. THE FINDINGS OF THE CO-O RDINATE BENCH CAN BE FOUND AT PARA 9.14 OF ITS ORDER AND THE SAME READS AS UNDER:- 9.14. WE ARE, THEREFORE, OF THE VIEW THAT THE ASSES SEE-COMPANY SRPTL IS INTO THE FIELD OF RESEARCH AND DEVELOPMENT, WHEREAS, ALPHAGE O (INDIA) LTD. IS NOT INTO RESEARCH AND DEVELOPMENT BUT ONLY ENGAGED IN PROVIS ION OF DATA INTO ORGANIZED FORMS. IT CANNOT BE TAKEN AS A COMPARABLE FOR CALCU LATING ARMS LENGTH PRICE WITH ASSOCIATE ENTERPRISE BY APPLYING TNMM METHOD. WE, THEREFORE, RESPECTFULLY FOLLOWING THE DECISIONS REFERRED ABOVE, DIRECT THE LD. TPO TO EXCLUDE M/S. ALPHAGEO (INDIA) LTD. FROM THE LIST OF COMPARABLE C OMPANIES FOR A.Y. 2004-05 TO A.Y. 2008-09. IN THE RESULT, THIS GROUND OF THE ASS ESSEE IS ALLOWED . 8. INSOFAR AS THE REMAINING TWO COMPANIES TO BE TAKEN AS COMPARABLES, WE FIND THAT THE CO-ORDINATE BENCH IN THE APPEALS FOR EARLI ER ASSESSMENT YEARS I.E. A.YS. 2004-05 TO 2008-09 IN ITA NOS. 1065 & 11 OTHERS HAV E ACCEPTED THE SAME AS COMPARABLES AND THE LD. COUNSEL HAS FAIRLY ADMITTED TO THIS FACT. THEREFORE, WE DO NOT FIND ANY REASON TO EXCLUDE THE SAME FROM THE LIST OF COMPARABLES. 9. IN THE LIGHT OF THE AFOREMENTIONED OBSERVATIONS, TH E MARGINS OF THE APPELLANT COMPANY STANDS AS UNDER:- SABIC RESEARCH AND TECHNOLOGY PRIVA TE LIMITED WORKING CAPITAL ADJUSTED MARGINS OF COMPARABLES USI NG PBDIT AS A PLI ITA NO. 890/ AHD/2014 . A.Y. 2009-10 4 COMPARABLES MARGINS USING PBDIT AS A PLI BIOTECH CONSTRUCTION 7.28% RESEARCH SUPPORT 4.36% JUBILANT CHEMSYS LTD. -7.25% VIMTA LABS 12.61% IDC INDIA -5.70% AVERAGE 2.26% SRTPL MARGINS 4.03% NOTE: ALPHAGEO INDIA HAS BEEN REJECTED A S A COMPARABLE 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 18 - 08- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 18/08/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD