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Facts
The assessee filed appeals against the orders of the Assistant Commissioner of Income-tax concerning Assessment Years 2006-07 and 2007-08. The appeals primarily related to the re-computation of arm's length price for international transactions involving import of APIs and formulations.
Held
The assessee opted to settle the dispute under the DTVSV Scheme, 2024 and requested permission to withdraw the appeals. The Revenue did not object to this request. Consequently, the appeals were allowed to be withdrawn and dismissed as withdrawn.
Key Issues
Whether the assessee's request to withdraw the appeals under the DTVSV Scheme, 2024, should be granted, leading to the dismissal of the appeals.
Sections Cited
143(3), 144C(13), 144B, 92C(2)
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Before: SMT. BEENA PILLAI & SMT. RENU JAUHRI
Assessee by : Shri Madhur Agrawal Revenue by : Ms. Neena Jeph Date of Hearing 27.02.2025 Date of Pronouncement 28.02.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- These appeals are filed by the assessee against the orders of the Learned Assistant Commissioner of Income-tax, Circle 4(2)(1), Mumbai passed u/s. 143(3) r.w.s 144C(13) read with section 144B of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Years [A.Ys.] 2006-07 & 2007- 08.
The assessee has raised the following grounds of appeal: AY 2006-07 415/Mum/2015 A.Y. 2006-07 & 2007-08 Fulford (India) Pvt. Ltd.
1. Import of Active Pharmaceutical Ingredients ('APIs') Re-computation of the arms' length price of the international transaction in relation to import of by making an adjustment of Rs.3,09,21,351/- (a) On the facts and circumstances of the case and in law, the Ld. Assessing Officer ('the Ld. AO') and the Ld. Transfer Pricing Officer ('the Ld. TPO') erred in ascertaining the arm's length price of the international transaction of import of APIs from the Associated Enterprises ('AEs') at Rs. 41,44,486/- instead of Rs. 3,50,65,837/- as determined by the Appellant. (b) The Ld. AO/ Ld. TPO erred in disregarding the economic characterisation of the Appellant without giving due regard to the functional analysis carried out by the Appellant. (c) The Ld. AO/ Ld. TPO erred in disregarding the transfer pricing analysis carried out by the Appellant and in rejecting the Transaction Net Margin Method ('TNMM') as the most appropriate method adopted by the Appellant and in selecting the Comparable Uncontrolled Method ('CUP') as the most appropriate method, which requires stringent comparability.
2. Import of formulations Re-computation of the arms' length price of the international transaction by making an adjustment of Rs. 4,13,72,000/- (a) On the facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO erred in ascertaining the arm's length price of the international transaction of import of formulations from the AEs at Rs. 20,74,56,463/- instead of Rs. 24,88,28,463/- as determined by the Appellant. (b) The Ld. AO/ Ld. TPO erred in disregarding the economic characterisation of the Appellant without giving due regard to the functional analysis carried out by the Appellant for the AE-distribution segment (import of formulations from AE's and their sale in the local market) with the operating margin of the manufacturing segment of the Appellant. (c) Without prejudice to the above, the Ld. AO/ Ld. TPO erred in law and on facts, in disregarding the transfer pricing analysis carried out by the Appellant and also by confirming the reallocation of the expenses on Net Sales ratio between the AE distribution segment and the manufacturing segment as against the actual expense identified, to the extent possible, by the Appellant.
3. Benefit of (+/-) 5% range. (a) On the facts and circumstances of the case and in law, the benefit of (+/-) 5% A range available under proviso to section 92C(2) of the Act, be granted to the Appellant. Each of the above grounds of appeal
is without prejudice to the other grounds of appeal.” AY 2007-08
1. Import of Active Pharmaceutical Ingredients ('APIs') Re-computation of the arms' length price of the international transaction in relation to import of API by making an adjustment of Rs.6,44,29,287/- (a) On the facts and circumstances of the case and in law, the Ld. Assessing Officer ('the Ld. AO') and the Ld. Transfer Pricing Officer ('the Ld. TPO) erred in ascertaining the arm's length price of the international transaction of 415/Mum/2015 A.Y. 2006-07 & 2007-08 Fulford (India) Pvt. Ltd. import of APIs from the Associated Enterprises ('AEs') at Rs. 34,52,409/- instead of Rs. 6,78,81,696/- as determined by the Appellant. (b) The Ld. AO/ Ld. TPO erred in disregarding the economic characterisation of the Appellant without giving due regard to the functional analysis carried out by the Appellant. (c) The Ld. AO/Ld. TPO erred in disregarding the transfer pricing analysis carried out by the Appellant and in rejecting the Transaction Net Margin Method ('TNMM') as the most appropriate method adopted by the Appellant and in selecting the Comparable Uncontrolled Method ('CUP') as the most appropriate method, which requires stringent comparability.
2. Import of formulations Re-computation of the arms' length price of the international transaction by making an adjustment of Rs. 6,40,24,887/- (a) On the facts and circumstances of the case and in law, the Ld. AO/Ld. TPO erred in ascertaining the arm's length price of the international transaction of import of formulations from the AEs at Rs. 23,15,00,163/- instead of Rs. 29,55,25,050/- as determined by the Appellant. (b) The Ld. AO/ Ld. TPO erred in disregarding the economic characterisation of the Appellant without giving due regard to the functional analysis carried out by the Appellant for the AE-distribution segment (import of formulations from AE's and their sale in the local market) with the operating margin of the manufacturing segment of the Appellant. (c) Without prejudice to the above, the Ld. AO/ Ld. TPO erred in law and on facts, in disregarding the transfer pricing analysis carried out by the Appellant and also by confirming the reallocation of the expenses on Net Sales ratio between the AE distribution segment and the manufacturing segment as against the actual expense identified, to the extent possible, by the Appellant.
Benefit of (+/-) 5% range. (a) On the facts and circumstances of the case and in law, the benefit of (+/-) 5% range available under proviso to section 92C(2) of the Act, be granted to the Appellant. Each of the above grounds of appeal
is without prejudice to the other grounds of appeal.”
3. At the outset, Ld. AR has submitted that the assessee has opted to settle the dispute under the DTVSV Scheme, 2024 in respect of both the appeals. The declaration has been filed in form No. 1 on 17.12.2024 and Form 2 has been received on 31.12.2024. He has accordingly requested for permission to withdraw the appeals.
4. Ld. DR has not objected to the said proposition.
415/Mum/2015 A.Y. 2006-07 & 2007-08 Fulford (India) Pvt. Ltd. 5. In view of the above-stated facts, the appeal of the assessee is allowed to be withdrawn. 6. In the result, the appeals of the assessee are dismissed as withdrawn. Order pronounced in the open court on 28.02.2025.