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2014 (9) TMI 160 - AT - Income TaxTransfer pricing adjustment sale of MycoMofteil to AE Held that:- The assessee is engaged in the business of manufacturing and Consultancy of Biotechnology based products and bulk drugs - the assessee sold 7005 kgs. of Mycophenolate Mofetil to its AE situated in USA for ₹ 17,37,87,525.00 i.e. at an average rate of ₹ 24,809.00 per kg - The TPO observed that though the same products were sold to non-associate enterprises situated in India and in Mexico at a price lesser then the price at which it was sold to AE but those prices cannot be compared because those sales were in an uncontrolled market whereas sale to associated enterprise was in USA which is controlled market - the sale of Mycophenolate Mofetil to AE is at a price which is more than the price at which the same product was sold to non-associated enterprise situated in India and Mexico - the cost of Mycophenolate Mofetil is ₹ 18,840.00 per kg whereas the cost of Pencillin G Amidase Enzyme and Lovastatin is ₹ 6,011.00 per kg - as because the latter product is of lesser value - more profit in terms of percentage is earned on the latter product - the lower authorities have not examined the issue from this angle - No material has been brought by both the parties to show what was the profit earned in Pencillin G Amidase Enzyme and Lovastatin in its sale in India or other uncontrolled markets - no material has been brought by both the parties to show that sale of same products to associated enterprises situated in USA at the same profit margin at which disclosed during the year was accepted by the department in earlier years or succeeding years thus, the matter is to be remitted back to the TO for fresh adjudication Decided in favour of assessee. Disallowance u/s 14A r.w. Rule 8D Held that:- The AO made disallowance of interest expenditure and administrative expenses for earning interest free dividend income of assessee by invoking the provisions of section 14A of the Act which was confirmed in appeal by the DRP following the decision in CIT Vs. Hitachi Home and Life Solutions (I) Ltd. [2013 (7) TMI 359 - GUJARAT HIGH COURT] - where the assessees interest free funds exceed investment made for earning dividend income, disallowance u/s. 14A was not justified disallowance of interest expenses deleted Decided partly in favour of assessee.
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