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Shri Pharmaceuticals Ltd. Versus Asst. Commissioner of Income-tax, Circle – 3 (2) , Hyderabad.

2015 (5) TMI 465 - ITAT HYDERABAD

Determination of Arm's length price - Method of determining the price - Non consideration of issues - Held that:- Grievance of the assessee is limited to the fact that submissions made before DRP on 29/08/11 on the merits of various issues raised against the determination of ALP by TPO has not at all been considered by DRP. On a perusal of the material on record, we find that though the DRP has considered part of the written submissions filed by assessee, which has been incorporated in the o .....

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he Assessee : Shri Girish Dave for The Revenue : Shri D. Sudhakar Rao ORDER PER SAKTIJIT DEY, J.M.: This appeal by the assessee is directed against assessment order dated 10/12/2010 passed u/s 143(3) read with section 144C of the Act at the directions of Dispute Resolution Panel (DRP), Hyderabad pertaining to AY A.Y. 2007-08. 2. Briefly the facts are, assessee an Indian company is engaged in the business of manufacture and sale of various pharmaceutical products. Assessee is a subsidiary of Apot .....

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to the following international transactions: Sl. No. Classification Paid/Received Amount involved (in Rs.) 1 Sale of finished goods Received 127,61,72,170 2 Purchase of raw material Paid 46,79,99,841 3 Purchase of lab materials Paid 8,22,060 He further noticed that for establishing arm s length margin of the price charged, assessee has undertaken TP study through an external consultant by adopting Transaction Net Margin Method (TNMM) as the most appropriate method with operating profit to sales .....

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searching data bases, TPO selected eight comparables with average OP to sales of 17.47%. However, while computing arm s length margin, TPO applying the OP to cost ratio determined the ALP of the international transactions at ₹ 144.34 crores as against ₹ 127.61 crores. As a result, the shortfall of ₹ 16.73 crores was treated as the transfer pricing adjustment to be made to the ALP shown by assessee. As per the order passed by TPO, AO proposed a draft assessment order incorporati .....

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itten submissions on the merits of various issues raised against the determination of ALP as well as additional evidences, however, while disposing of the objections of assessee, DRP has totally ignored the submissions made on merits while selectively considering a part of it by incorporating the additional submissions. In this context, ld. AR drawing our attention to pages 34 to 46 of the paper book submitted before us, the submissions made on merit were totally ignored whereas additional submi .....

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was not at all considered there is gross violation of rules of natural justice. Ld. AR therefore requested that the matter may be remitted to the DRP for deciding afresh after considering all the submissions of assessee as submitted in the written submissions filed on 29/08/11. 5. Ld. DR, though, raised a doubt whether assessee at all has filed any written submissions on 29/08/11 considering the fact that the last date of hearing before the DRP was 09/08/2011, but, he nevertheless submitted, dep .....

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