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2023 (2) TMI 189 - ITAT MUMBAITP Adjustment on account of technical consultancy fees - HELD THAT:- A.Y. 2009-10 and 2010-11 the order of the co-ordinate bench [2016 (3) TMI 1105 - ITAT MUMBAI] wherein the Hon"ble Bombay High Court in its order [2019 (9) TMI 1506 - BOMBAY HIGH COURT] in Question No. 2(b) the deletion of the adjustment on account of payment of technical fees aggregated with other international transaction and applying TNMM was upheld. We also find that for A.Y. 2003-04 this issue is decided in favor of the assessee. In view of the above, no infirmity in the direction of the ld. Dispute Resolution Panel in deleting the adjustment of ₹3,03,90,000/- on account of technical consultancy fees. Thus, Ground No. 1 of appeal of AO is dismissed. Disallowance u/s. 2(24)(x) r.w.s. 36(1)(va) - late payment of employees contribution to the credit of respective authorities - HELD THAT:- We find that now this issued is squarely covered against the assessee by decision of the Hon"ble Supreme Court in case of Checkmate Services Private Limited [2022 (10) TMI 617 - SUPREME COURT] Therefore, now the direction of the ld. Dispute Resolution Panel is not correct. The ld. AO is correct in disallowing the above sum. Addition in respect of purchase of raw material bisoprolol - assessee has adopted Transactional Net Margin Method but the ld. TPO applied CUP Method and obtained data from Unichem Laboratory and worked out the external CUP price ₹33,086 Per.Kg. - HELD THAT:- We find that identical issue arose in the case of the assessee for A.Y. 2009-10, 2010-11 and [2016 (3) TMI 1105 - ITAT MUMBAI] wherein for order dated 31.03.2016 has upheld the applicability of CUP Method, confirming the rejecting of TNMM as the most appropriate method. The co-ordinate Bench also considered the reasonable quantity of 20kg only. In view of this, principally Co-ordinate Bench decision in respect of the assessee is required to be followed. The Co-ordinate Bench also agreed with the simple average of the prices. The Coordinate bench [2016 (3) TMI 1105 - ITAT MUMBAI] in case of assessee deserves to be followed. We direct the AO/TPO to restrict the adjustment following the order of the co-ordinate bench for A.Y. 2009-10. Accordingly, Ground No. 2 of the appeal is partly allowed. Allowability of sample distributed expenses - AO restricted the disallowance of 50% and with respect to the sales promotion, conference expenses the disallowance was made accordingly - HELD THAT:- For free samples we do not find that same is covered against the assessee by the decision of Honourable SC or it is prohibited by MCI Guidelines. Free sample of medicines supplied to doctors is for promotion of the product of the pharmaceutical company. When a new product is launched, the doctors through the free sample provided, test marketability of new drug launched in the market, give necessary inputs regarding its acceptability etc. of the product. Provision of free samples help impart knowledge to other doctors about the new medicine/product coming into the relevant practice of their profession. Therefore, distribution of free samples is directly related to business promotion activity of the pharmaceutical company. Thus it is wholly and exclusively for the purposes of the business of the company. Providing samples of pharmaceutical products is not prohibited under either the Indian Medical Council (Professional Conduct, Etiquette and Ethics), Regulations 2002 (MCI Code) or the Uniform Code of Pharmaceutical Marketing Practices by the Department of Pharmaceuticals, 2014 (UCPMP) or 2019 Organization of Pharmaceutical Producers of India (OPPI) Code of Practice. UCPMP prescribes guidelines under which medical samples should be dispensed which ensure that they are used strictly for clinical evaluation purposes and each sample shall be marked “free medical sample – not for sale”. Even the draft Uniform Code for Medical Device Marketing Practices (UCMDMP) published for stakeholder consultation on March 16, 2022 lays down guidelines to ensure that medical devices are distributed as samples for evaluation purposes only. The Drugs and Cosmetics Rules, 1945 also recognizes the practice of providing drugs for distribution to medical professionals as a free sample by providing specific labelling requirements, requiring such samples to be labelled with the words “Physician"s Sample – Not to be sold,” . Further assessee has submitted the complete details of such expenses therefore disallowing it to the extent of 50 % is not justified when the same issue is covered in favour of the assessee by the decision of the coordinate bench in earlier years. Thus, we direct lower authorities to delete the disallowance of expenses on free samples. Ground no 4 is allowed. Allowability of conference expenses - HELD THAT:- We find that the issued is squarely covered against the assessee by the decision of Apex Laboratories Limited [2022 (2) TMI 1114 - SUPREME COURT] Accordingly, Ground No. 5 is dismissed.
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