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TMI Blog2022 (1) TMI 1034X X X X Extracts X X X X X X X X Extracts X X X X ..... 03 and revenue while accepting the decision of the Tribunal deleted the identical expenses in AY 2000-01 which has been accepted, we find no reason to interfare into the findings returned by CIT(A) while following the rule of consistency - market expenses are incredible part of the business in the pharmaceutical field and it is not the case of the revenue that any new product has been introduced by the assessee during the year under consideration. So, the findings rendered by CIT(A) are hereby upheld. Depreciation claimed by the assessee on plant and machinery of Ankleshware Plant - HELD THAT:- We are of the considered view that this contention of the Ld. DR is not tenable because once the asset is purchased and enters into a particular block of assets, the same is not individually identifiable as depreciation is available on the entire block of assets in view of section 32 of the Act. Moreover, this issue has been successively decided in favour of the assessee from AY 2001-02 to 2003-04 [ 2010 (3) TMI 1268 - ITAT MUMBAI] . Correct head of income - Rental income received from subleasing of commercial properties as income from business as against claim of the assessee bein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ALP and deciding the issue solely on the basis of the submission made by the assessee . 5. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance related to Market Research Expenses of ₹ 73,29,752/-, without appreciating the facts of the case. 6. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding to Market Research Expenses as revenue expenditure, without appreciating the fact that the expenses in the nature of Marketing Research yield enduring benefit to the assessee, spread over several years . * 7. On the facts and in the circumstances of the case and-in-law, the Ld. CIT (A) erred in directing the A.O to allow depreciation on plant and machinery of Ankleshwar Plant solely on the basis of the decision of ITAT in A. Y. 2001-02, disregarding the fact that the said unit had stopped operations in F. Y. 99-2000 . 2. The appellant prays that the order of the CIT (A) on the above ground be set aside and that of the A.O. be restored. 3. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparable companies was 3.47% on sales and claimed economical adjustment by eliminating the difference created on account of marketing and distribution expenses. However, TPO in order to benchmark this transaction compared margin of comparable companies @ 3.47% with operating loss incurred by the assessee at (-) 16.9% and made adjustment of ₹ 234,00,000/-. 3. In order to benchmark the international transactions qua provision of clinical study management and monitoring sport services, Ld. TPO accepted TNMM with Operating Profit /Total Cost (OP/TC) applied by the assessee, however rejected 7 comparables out of 9 comparables chosen by the assessee by following AY 2002-03 and 2003-04 and thereby introduced 1 additional company as comparable namely Choksi Labs Ltd. and finally selected 3 comparables as under:- SI Company Name Operating margin on operating costs. 1 Vimta Labs Ltd. 26.08% 2 Choksi Labs Ltd. 27.98% 3 Siro Clinpharm Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. Ld. CIT(A) directed the TPO to treat the adjustment of ₹ 3.71 crores at NIL. 9. Ld. DR for Revenue to support his arguments relied upon the order passed by ld. TPO. However, Ld. AR for the assessee brought to our notice that this identical issue as to pass-through cost to be removed from the cost base for computing operating margin has already been decided in favour of the assessee in its case for AY 2002-03 in ITA No. 3098/Mum/2006 order dated 08.03.2013 and AY 2003-04 in ITA No. 3729 3424/Mum/2008 order dated 06.11.2015. 10. When we examine Gr. No. 1 2 raised by revenue qua TP adjustment of ₹ 3.17 crores pertaining to provision of clinical study management and monitoring sport services in the light of the findings rendered by Ld. CIT(A) in para 2.5.19 in the impugned order, it is apparently clear that when the issue as to removing the pass-through cost from the cost base in order to compute the operating margin decided in assessee s own case in A.Y.2002-03 in its favour has not been further challenged by the revenue, Ground No. 1 2 raised by the assessee have become infrucutous. Because even by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... back to the file of the Assessing Officer for deciding matter afresh in terms with the direction of the co ordinate bench (supra) after providing adequate opportunity of being heard to the assessee. This ground is allowed for statistical purposes. 12. So, we are of the considered view when issue as to removing the pass-through cost from the cost base for computing operating margin has already been decided by the Coordinate Bench of Tribunal in assessee s own case in its favour no adjustment in the given circumstances, even by taking comparables chosen by the TPO as correct one is warranted. However, AO is directed to verify the facts as to the claim of the assessee qua pass-through cost , if correct to allow the same. Consequently, we are of the considered view that Ld. CIT(A) has legally and validly decided the issue in favour of the assessee, hence ground no. 1 2 are determined against revenue. Ground No. 3 4 13. Transfer price adjustment made by the TPO to the tune of ₹ 2,34,00,0000/- qua international transaction pertaining to import of Finished Drugs Formulations (FDF) i.e. Minipress for trading purposes, deleted by Ld. CIT(A) is under challeng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e various commercial and business reasons like marketing cost needs to be considered as the assessee performed greater marketing and sales functions vis- -vis comparables. Even the cost incurred by the assessee is 21.74% on sales as compared to average marketing expenses incurred by comparables of 4.31% on sales only and as such the difference created on account of marketing and distribution expenses needs to be eliminated. 18. Ld. AR for the assessee further contended that since the assessee acts in the capacity of normal risk distributor and re-sale price method (RPM) is most appropriate method to benchmark the transactions in case of normal risk distributor. The gross margin earned by the assessee from import and resale of Minipress was 7.94% of sales while gross margin earned by comparable companies was 11.41% giving +/- 5% range as provided u/s 92C(2) of the Act. Ld. AR also brought on record profitability trend in a tabulated form which is as under FY 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f appeal is allowed. 21. We have perused the order passed by Coordinate Bench of Tribunal in assessee s own case for AY 2002-03 and 2003-04 which is on identical facts. When the identical expenses claimed by the assessee have already been allowed by the Tribunal in AY 2002-03 and revenue while accepting the decision of the Tribunal deleted the identical expenses in AY 2000-01 which has been accepted, we find no reason to interfare into the findings returned by Ld. CIT(A) while following the rule of consistency. Moreover, market expenses are incredible part of the business in the pharmaceutical field and it is not the case of the revenue that any new product has been introduced by the assessee during the year under consideration. So, the findings rendered by Ld. CIT(A) are hereby upheld. Consequently, Ground No. 5 6 are determined against revenue. Ground No. 7 22. AO by relying on the order passed in preceding years order disallowed the depreciation of ₹ 27,623,376/- claimed by the assessee on plant and machinery of Ankleshware Plant. However, Ld. CIT(A) allowed the depreciation by following the decision rendered by Coordinate Bench of Tribunal in assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss and examination of usage of individual assets forming block of assets does not arise on the legal principles discussed above. In view of this we direct the A.O. to allow the depreciation. 24. So, following earlier years order passed by the Co-ordinate Bench of Tribunal in assessee s own case, we find no scope to interfare into the findings rendered by Ld. CIT(A). Consequently, Ground No. 7 is determined against revenue. Ground No. 8 (Additional Ground) 25. AO treated the rental income of ₹ 5,47,89,000/- received by the assessee from subleasing of commercial properties as income from business as against claim of the assessee being income from house property on the ground that renting out of premises amounts to commercial exploitation for business purpose by the assessee. However, Ld. CIT(A) by relying on the order passed by Tribunal in assessee s own case for AY 1998-99, 1999-00, 2000-01 and 2001-02 qua identical issues deleted the additions. 26. We have perused the order passed by Ld. CIT(A) who has duly thrashed the facts that when the period of lease exceeds 12 years (including renewal period), it could be considered as the deemed owner of the p ..... 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