Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding
  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2019 (9) TMI HC This

  • Login
  • Cases Cited
  • Referred In
  • Summary

Forgot password       New User/ Regiser

⇒ Register to get Live Demo



 

2019 (9) TMI 1506 - HC - Income Tax


Issues:
1. Adjustment on account of quality difference for imported pharmaceutical ingredient.
2. Deletion of adjustments in respect of technical consultancy fees.
3. Disallowance on share buyback expenditure.
4. Disallowance in respect of sales promotion and conference expenses.
5. Disallowance in respect of sales promotion and conference expenses incurred before a specific date.

Adjustment on account of quality difference for imported pharmaceutical ingredient:
The respondent imported Bisoprolol Fumarate from an Associate Enterprise in Switzerland and sought to determine the Arms Length Price (ALP) based on Transactional Net Margin Method (TNMM). However, the Transfer Pricing Officer (TPO) applied the Comparable Uncontrolled Price (CUP) method and made adjustments. The Tribunal upheld the application of CUP method and allowed a quality adjustment of 10% based on Rule 10B(1)(a)(ii) of the Income Tax Rules. The Court found no substantial question of law in this regard and dismissed the appeal.

Deletion of adjustments in respect of technical consultancy fees:
The respondent had a consultancy agreement with an Associate Enterprise for technical consultancy services but did not avail the services. The TPO determined the ALP at Nil, but the Tribunal held that the respondent had the right to receive the services as per the agreement. Relying on previous decisions, the Court found no substantial question of law and dismissed the issue.

Disallowance on share buyback expenditure:
The Tribunal deleted the disallowance of expenses incurred in share buyback, following a Delhi High Court decision. The expenditure was considered revenue expenditure under Section 37 of the Act. The Court noted that similar issues had been decided in favor of the respondent in previous cases, leading to the dismissal of this issue.

Disallowance in respect of sales promotion and conference expenses:
The Assessing Officer disallowed sales promotion and conference expenses citing lack of evidence of benefit to the assessee. However, the Tribunal allowed the expenses as they were incurred for the purpose of business. The Court supported the Tribunal's decision based on Supreme Court precedents, emphasizing that expenses incurred for commercial expediency are deductible under Section 37 of the Act. No substantial question of law was found, leading to the dismissal of this issue.

Disallowance in respect of sales promotion and conference expenses incurred before a specific date:
The Tribunal chose not to adjudicate on this issue due to the small amount involved and the lack of contestation by the Revenue. The Court held that since the Revenue did not raise this issue before the Tribunal, it cannot be entertained later. Citing precedent, the Court dismissed this issue as it did not give rise to any substantial question of law.

In conclusion, the appeal challenging the Tribunal's order was dismissed by the Court based on the detailed analysis and findings on each issue raised by the Revenue.

 

 

 

 

Quick Updates:Latest Updates