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2023 (1) TMI 1114 - AT - Income TaxDRP not giving opportunity of being heard to the revenue as per provision of sec. 144C(11) - HELD THAT:- AO / TPO filed rectification application before the DRP raising certain contentions on merits. DRP has noted that the notices were issued to the AO, AO failed to appear on the date of hearing. DRP rejected the rectification application vide order dated 05.01.2015. Since notice of hearing was given to the AO / TPO and he had failed to appear, we see no merit in the contention raised in grounds 1 and 2. We dismiss grounds 1 and 2 raised by the Revenue. TP Adjustment - comparable selection - objection of RPT - HELD THAT:- Lotus Labs cannot be accepted as a comparable as it has significant RPT as per the financials of Lotus Labs for December 2010 sourced from the Ministry of Corporate Affairs Website and the year ending March 2010. Working of RPT was not controverted by Revenue, even before the Tribunal. Therefore, Lotus Labs was rightly rejected by the DRP and not taken as a comparable. In this context, we would also like to state that the Tribunal in assessee’s own case for assessment year 2009-2010, has remanded the issue of Lotus Labs RPT to the files of the TPO for verification. The TPO while giving effect to the Tribunal order for assessment year 2009-2010, had excluded Lotus Labs as a comparable after verifying the facts from the financial statement and noting that the company has significant RPT transaction. Therefore, in the light of the aforesaid reasoning, the Revenue’s appeal is dismissed. Expenditure / break up incurred on the Doctors - MCI Regulations Applicabilty - assessee has filed additional evidence - HELD THAT:- It is pertinent to note that prior to the judgment of M/s.Apex Laboratories Pvt. Ltd. [2022 (2) TMI 1114 - SUPREME COURT] many of the judicial pronouncements had held that MCI Regulations are not applicable on pharmaceutical companies and expenses incurred by such companies are not violative of CBDT Circular. During this phase of assessment, there were only adhoc summary basis evaluation of expenditure. In the present case also there is no critical evaluation of the expenses and post the Hon’ble Supreme Court judgment, the dictum laid down, same needs to be followed and each of the expenditure needs to be evaluated to see if the disallowance is justified. A.O. had primarily made disallowance by referring the CBDT Circular No.5/2012 dated 01.08.2012. The A.O. has not critically examined the nature of expenditure incurred by the assessee. In the larger interest of justice, in view of the latest judgment of the Hon’ble Apex Court, which has examined the very same issue, it becomes necessary to examine the exact nature of expenses incurred by the assessee for Doctors from all angles. Therefore, for substantial question and cause, the additional evidence are taken on record. Since the additional evidence is taken on record, necessarily, the matter needs fresh verification by the A.O.
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