PR. COMMISSIONER OF INCOME TAX- 9 vs. M/S TEVAPHARM INDIA PVT. LTD.

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ITA/816/2017HC DelhiDLHC01221320201719 September 2017Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court declined to frame questions on both issues raised by the Revenue. Regarding the first issue, the Court found that the ITAT's exclusion of Celestial Labs Ltd. was based on a detailed analysis and cogent reasoning, and the finding was not perverse. Therefore, no substantial question of law arose. Regarding the second issue, the Court held that the expenditure incurred on software licenses as revenue expenditure was a settled matter, citing the High Court's own decision in CIT v. Asahi India Safety Glass Ltd. and the dismissal of the Revenue's SLP by the Supreme Court. Consequently, no substantial question of law arose on this issue either. The appeal was dismissed.

What were the facts?

The Revenue, Pr. Commissioner of Income Tax-9, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated August 25, 2016, passed by the Income Tax Appellate Tribunal (ITAT) in ITA No. 7584/Mum/2012. The appeal pertains to Assessment Year 2008-09 and concerns the assessee, TevaPharm India Pvt. Ltd. The High Court of Delhi condoned the delay in filing and re-filing the appeal. The Revenue urged two issues for consideration by the High Court.

What were the issues?

1. Whether the ITAT erred in omitting Celestial Labs Ltd. from the list of comparables (issue of mixed law and fact, concerning transfer pricing provisions). The Revenue contended that the ITAT's decision on this comparable was not justified. The Court found that the ITAT had conducted a detailed analysis of the functional profile of the tested company and the comparable, providing cogent reasons for exclusion, and did not find this factual finding to be perverse. 2. Whether the expenditure incurred on software licenses should be treated as revenue expenditure (issue of mixed law and fact, concerning the nature of expenditure). The Revenue argued against treating the software license expenditure as revenue. The Court noted that this issue was decided against the Revenue in CIT v. Asahi India Safety Glass Ltd. [2011] 245 CTR 529 (Del), and the Supreme Court had dismissed the Revenue's Special Leave Petition against that decision.

Which sections of the Income-tax Act were involved?

Section 260A

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ITA 816/2017 Page 1 of 2 $~39 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 816/2017 PR. COMMISSIONER OF INCOME TAX- 9 ..... Appellant Through: Mr. Zoheb Hossain, Senior Standing Counsel. versus TEVAPHARM INDIA PVT. LTD. ..... Respondent Through: None. CORAM: JUSTICE S. MURALIDHAR JUSTICE PRATHIBA M. SINGH O R D E R % 19.09.2017 CM APPL. 34347/2017 (delay in filing) and CM APPL. 34348/2017 (delay in re-filing) in ITA 816/2017 1. For the reasons as stated in the applications, the delay in filing and re- filing the appeal is condoned. The applications stand disposed of. ITA 816/2017 2. This is an appeal under Section 260A of the Income Tax Act, 1961 (‘the Act’) by the Revenue against the order dated 25th August, 2016 passed by the Income Tax Appellate Tribunal (‘ITAT’) in ITA No.7584/Mum/2012 for the Assessment Year (‘AY’) 2008-09. 3. Two issues have been urged by the Revenue for consideration. The first concerns the omission by the ITAT of Celestial Labs Ltd. from the list of comparables. As far as this issue is concerned, the Court finds that the ITAT

ITA 816/2017 Page 2 of 2 has itself undertaken a detailed analysis of the functional profile of the tested company vis-a-vis that of the comparable and has given cogent reasons for excluding the said comparable. The Court is not persuaded to hold that this factual finding is perverse. It accordingly declines to frame a question on this issue. 4. The second issue concerns treating the expenditure incurred on software licenses as revenue expenditure. The decision of this Court in CIT v. Asahi India Safety Glass Ltd. [2011] 245 CTR 529 (Del) answers this very issue against the Revenue. The Supreme Court dismissed the Special Leave Petition filed by the Revenue against the said decision on 5th July, 2012. In view of that matter, the Court declines to frame a question on this issue as well. 5. The appeal is dismissed. S. MURALIDHAR, J. PRATHIBA M. SINGH, J. SEPTEMBER 19, 2017 dk

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