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2016 (5) TMI 1306 - AT - Income TaxAddition on account of interest on loans given given to Sun Pharma Global Inc. & Sun Pharmaceutical Industries Inc. as well as Optionally Fully Convertible Debentures subscribed to in Sun Pharma Global Inc. - Reference to TPO - Held that:- The revenue has no power to re-characterize the transaction. The Hon’ble High Court of Delhi in the case of Cotton Naturals India Pvt. Ltd. [2015 (3) TMI 1031 - DELHI HIGH COURT] has held that Chapter X and Transfer Pricing rules do not permit the Revenue authorities to step into the shoes of the assessee and decide whether or not a transaction should not be entered. It is for the assessee to take commercial decisions and decide how to conduct and carry on its business. Actual business transactions that are legitimate cannot be restructured. Also see EKL Appliances Ltd.[2012 (4) TMI 346 - DELHI HIGH COURT ]. Thus we direct the A.O to delete the impugned additions. - Decided in favour of assessee Weighted Deduction u/s. 35(2AB) on Trade Mark Charged, Overseas Product Registration Charges - Held that:- We direct the A.O to delete the disallowance. See Sun Pharmaceutical Industries Ltd Versus Asst. Commissioner of Income Tax Central Circle-1, Baroda and Vica-varsha [2017 (1) TMI 1109 - ITAT AHMEDABAD]. Allocation of R & D expenses for determining profits of the new industrial undertaking u/s. 80IB - Held that:- The question related to the raw materials and not to all the items of expenditure and, therefore, the revenue authorities have erred in generalizing the statement of the Senior Vice President. We have given a thoughtful consideration to the findings of the lower authorities. We have also considered the statement of Dr. T. Rajamannar. Undisputedly, the question related to the raw materials and not to all the items of expenditure under this head. In our considered opinion one cannot carry out the allocation on the basis of pick and choose method. We accordingly direct the A.O to restrict the re-allocation only to the raw material, assessee gets partial relief. Provision for doubtful debts and advances while calculating book profits u/s. 115JB - Held that:- We restore this issue to the files of the A.O to be decided afresh in the light of the decision given by the Hon’ble High Court of Gujarat in the case of Vodafone Essar Gujarat Ltd [2012 (6) TMI 415 - ITAT, Ahmedabad] Non consideration of book profits for deduction u/s. 10B for determining of book profits u/s. 115JB - Held that:- The issue stands covered in favour of the assessee by the decision of the Hon’ble Supreme Court given in the case of Ajanta Pharma [ 2010 (9) TMI 8 - SUPREME COURT ]. We do not find any justifiable reason given by the ld. CIT(A). We accordingly direct the A.O to consider the deduction u/s. 10B for determination of book profit. Ground no. 6 is accordingly allowed. Additions made on account of sales made to Sun Pharmaceutical Industries - Held that:- We direct the A.O to delete the impugned additions on account of sales made to Sun Pharmaceutical Industries. Disallowance of expenses incurred on behalf of Sun Pharmaceutical Industries - Held that:- We direct the A.O to delete the impugned additions Reduction of unrealized export proceeds from export turnover for the purpose of deduction u/s. 10B - Held that:- This issue has also to go back to the A.O for fresh consideration in the light of the provisions of Section 155(11A) of the Act.
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