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2019 (9) TMI 1506 - HC - Income TaxTP Adjustment - adjustment of 10% on account of quality difference and deleting the addition made by TPO / AO by applying CUP to arrive at ALP in respect of Bisoprolol Fumerate without giving adjustment for quality as claimed by the assessee - HELD THAT:- The application of CUP method was what was canvassed by the Revenue and accepted by the Tribunal. Thus, there could be no grievance with regard to the application of CUP method. Similarly, the adjustment on account of quality as claimed by the assessee was allowed. This adjustment was in terms of Rule 10B(1) (a)(ii) of the Income Tax Rules. It is a fact of which judicial note can be taken that wherever even two products are identical, yet on account of perception there could be difference of the price in the open market. This has to be factored in while determining the ALP as has been recognized in the aforementioned rule 10B(1)(a)(ii) of the Income Tax Rules. TPO himself has accepted this price adjustment on account of perception of quality by allowing the adjustment at 10% in the Assessment Year 2010-11.In the above view, the question (a) as proposed does not give rise to any substantial question of law. Thus, not entertained. Adjustments in respect of technical consultancy fees - HELD THAT:- It is an agreed position between the parties that in the respondent’s own case for Assessment Year 2003-04, a similar issue had arisen viz. package of services being available under the agreement on as and when required basis. This Court by an order in Merck Ltd. [2016 (8) TMI 561 - BOMBAY HIGH COURT] held the fees paid for on bouquet of services as and when required, would be similar to retainer agreement. It is agreed by the Revenue that the above order dated 8th August, 2016 of this Court in the respondent’s own case will equally apply to the present facts. Disallowance on share buyback expenditure without appreciating that it is a capital expenditure and not allowable u/s. 37 - HELD THAT:- Following the decision of Delhi High court in CIT Vs. Selan Exploration Technology Ltd. [2009 (9) TMI 989 - DELHI HIGH COURT] as held that share buyback expenditure incurred by the respondent did not result in a benefit of an enduring nature as after the buyback the capital employed had gone down. Thus, the expenditure incurred has not resulted in bringing into existence any new asset, thus was not in the nature of the capital expenditure. On the aforesaid basis, the Delhi High Court held that once it is held that the expenditure is not capital in nature, then, the expenditure is allowable under Section 37 of the Act as a revenue expenditure as it was incurred for the benefit of existing shareholders in the ordinary course of business. Disallowance in respect of sales promotion and conference expenses incurred without appreciating that these expenses does not render any benefit to the assessee company and are against ethics - CIT-A deleted the addition - HELD THAT:- It is for the assessee to decide whether the expenditure should be incurred in the course of his business and once it is found that it is incurred wholly and exclusively for the purposes of business, then it is deductible under Section 37 of the Act. It further records that it is relevant to note that an attempt was made to introduce the word “necessity” in Section 37 of the Income Tax Bill of 1961. However, this had led to public protest and resulted in dropping the word “necessity” when the Income Tax bill of 1961 was passed into the Income Tax Act, 1961. Thus, the view of the Tribunal on this issue cannot be faulted Disallowance in respect of sales promotion and conference expenses incurred prior to date of amendment in the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 i.e. 10-12-2009 without adjudicating the issue - HELD THAT:- We did not think it fit to adjudicate the issue. In fact, the impugned order of the Tribunal records that the Revenue has not contested the issue before it. As the Revenue has not urged this issue of disallowance of expenses before the Tribunal, it cannot now be urged by the Revenue before us. This Court in Commissioner of Income Tax Vs. Mahalaxmi Glass Works Co. [2009 (4) TMI 182 - BOMBAY HIGH COURT] held that if a concession is made before the Tribunal, then on that issue no substantial question of law arises.
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