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TMI Blog2014 (6) TMI 438X X X X Extracts X X X X X X X X Extracts X X X X ..... isai-Japan, as business income u/s. 28. How could then the expenditure on a principal activity carried out be considered, even in part (as it would only be for that incurred and claimed for A.Y. 2006-07), as toward pre-operative expenditure? In-asmuch as the expenditure by way of sponsoring the activity of the NGOs (as ARDSI) also forms part of the Agreement dated 01.01.2005, though, as explained by the ld. AR, not subject to a mark-up of 10%, as is the expenditure incurred directly by the assessee, the same cannot be considered as donation, as considered by the Revenue. There being no finding by the authorities below with regard to a direct nexus of the impugned expenditure with the receipt afore-noted - matter remanded back - decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emiological studies, Indication expansion studies, Phase IV studies, Global R D projects, Pharmacovigilance/ADR compilation and reporting for investigational new drugs, existing products, and new formulations. The assessee-company is under the agreement entitled to receive from Eisai-Japan research fee comprising: (i) agreed direct research costs, (ii) agreed operation costs and (iii) profit mark up of 10 per cent on the agreed operation costs. The ownership of the discovery, if any, resulting from the above research activities is to remain with Eisai-Japan. The assessee could under the agreement also support NGOs dedicated to dementia activity, expenditure on which, though subject to reimbursement by Eisai-Japan, is without the mark-up o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes of its business, which is manufacture and sale of medicines and, in fact, commenced only after September 1, 2005. 3. We have heard the parties, and perused the material on record, including the Agreement dated 01.01.2005 (supra) (PB pgs.21-29), giving our careful consideration to the matter. We are wholly unable to appreciate the Revenue s case. True, the assessee cannot be considered as engaged in scientific research related to its business in-as-much as the same is being undertaken in pursuance to an agreement with another, Eisai-Japan, which sponsors the same, so that the discovery, if any, resulting there-from, would vest with the latter. However, why is the same not admissible u/s. 37(1), we fail to fathom. Rather, as state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer (A.O.) to verify the assessee s claim of having in fact received the amounts in the stated sum from Eisai-Japan in pursuance to the agreement, in consideration of or against the impugned expenditure, whether incurred directly or indirectly by the assessee. If so, which aspect the A.O. shall decide upon verification, in our clear view, no case for any disallowance is made out. The A.O. shall determine the issue referred by issuing definite findings of fact after allowing proper opportunity of hearing to the assessee. We decide accordingly. 4. In the result, the assessee s appeals are allowed for statistical purposes, which result was pronounced at the conclusion of the hearing on May 20, 2014 itself. - - TaxTM ..... X X X X Extracts X X X X X X X X Extracts X X X X
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