M/S. HIMALAYA WELLNESS COMPANY (FORMERLY KNOWN AS THE HIMALAYA DRUG COMPANY),BENGALURU vs. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 6(1)(1), BENGALURU

ITA 259/BANG/2022Status: DisposedITAT Bangalore14 June 2022AY 2017-1866 pages
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What did the Tribunal hold?

The Tribunal held that the royalty adjustment was not justified as the foreign AEs only marketed products and did not exploit any product registration/license obtained by the assessee. The Tribunal also directed the AO to pass a speaking order on the disallowance of deduction under Section 80G, as the assessee had no opportunity to contest it.

What were the facts?

The assessee, engaged in manufacturing and selling herbal pharmaceutical products, filed its return of income. The Assessing Officer (AO) referred the case to the Transfer Pricing Officer (TPO) for determining the Arm's Length Price (ALP) of international transactions. The TPO suggested significant adjustments, which were incorporated by the AO in the draft assessment order.

What were the issues?

Whether the transfer pricing adjustment for royalty on product registration/licenses is justified, and whether disallowances made without providing an opportunity for objection are valid.

Which sections of the Income-tax Act were involved?

Section 92CA,Section 143(3),Section 144C,Section 80G

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Income Tax Appellate Tribunal, BANGALORE BENCHES “A”, BANGALORE

Before: Shri George George K, JM & Ms.Padmavathy S, AM

Hearing: 03.06.2022Pronounced: 14.06.2022

Per George George K, JM : This appeal at the instance of the assessee is directed against final assessment order dated 17.02.2022 passed u/s 143(3) r.w.s. 144C(13) of the I.T.Act. The relevant assessment year is 2017-2018. 2. The brief facts of the case are as follows: The assessee is a partnership firm engaged in the business of manufacture and sale of herbal pharmaceutical products (Ayurvedic medicaments and preparations), consumer / personal care products and animal health care products. The return of income was filed on 30.11.2017 declaring total income of Rs.179,64,23,840. The return was processed u/s 143(1) of the I.T.Act

The order continues below.

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