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TMI Blog2017 (8) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... venue is aggrieved with only two comparables which have been excluded by the Dispute Resolution Panel, viz. (1) Pfizer Ltd ; and (2) Celestial Labs Ltd. 4. With regard to Pfizer Ltd, it was submitted by the learned Departmental representative that the Dispute Resolution Panel has applied RPT filter and it was found that the related party transactions were more than 90 per cent., therefore, this comparable was directed to be excluded. It was submitted that in the earlier years also, the same comparable was selected and it was not objected to by the assessee, therefore, in this year merely because the related party transactions are more than 25 per cent., the same cannot be allowed to be excluded. Further, the said comparable was excluded by the Dispute Resolution Panel also for the reason that it had a different accounting period and, therefore, cannot be included in the list of comparables. In this regard, it was submitted that merely because the accounting year of the said company was ending on 30th November, the same cannot be excluded for this reason alone. Reliance was placed by him on the decision of the Tribunal in the case of Pangea3 and Legal Database Systems P. Ltd. v. IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 732 of 2014 dated September 26, 2016) ; [2017] 395 ITR 176 (Bom). It was submitted that the judgment of the jurisdictional High Court is binding. It was also submitted that the view taken by the Tribunal in the case of Pangea3 and Legal Database Systems Pvt Ltd. v. ITO (supra) cannot be applied in a generalised manner. The said view was given by the Tribunal subject to the condition of availability of the data of the last quarter of both years. Thus, in the absence of availability of quarterly data, that too, for the relevant segment; the said company cannot be taken as part of comparables. Further, the other handicap was that Pfizer Ltd.'s financial year ends on 30th November and not on 31st December and thus, the availability of the data of the last quarter will not be sufficient. Thus, keeping in view all these difficulties, the Dispute Resolution Panel has rightly directed for exclusion of the same. 8. With regard to Celestial Labs Ltd. it was submitted by the learned counsel that the Tribunal in the assessee's own case for the assessment years 2007-08 and 2008-09 has already taken a view in favour of the assessee and the same view should be applied. Our attention ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re us. In the terms of rule 10B(4) of the Income-tax Rules, 1962, the analysis for comparison shall be on the data relating to the financial year in which the international transaction has been entered into. In the above view, the Tribunal held that as the financial period during which the international transaction was entered into is different, M/s. Transwork Ltd. could not be treated as comparable and thus not includible. (b) We find that the provisions of rule 10B(4) of the Rules are clear inasmuch as it obliges that the data to be used for comparability analysis should be of the same financial year in which the international transactions were entered into by the tested party. In fact, this principle/mandate was applied by the Transfer Pricing Officer while considering M/s. Power Soft Global Services Ltd. as a comparable because it had a financial year ending in September, 2006 and not March 31, 2007 as in the case of the respondent-assessee. The same yard stick ought to have been applied by the TPO while considering whether Transwork Ltd. was comparable. The submission on behalf of the Revenue that the mandate of rule 10B of the Rules can be ignored as the difference is only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld before it. Thus, taking into account totality of facts and circumstances of the case, we find no infirmity in the decision taken by the Dispute Resolution Panel. Therefore, the same is upheld. Celestial Labs Ltd. 12. This company has been directed to be excluded on the ground that its functional profile is different. It is noted that the Tribunal for the assessment years 2007-08 and 2008-09 as held under : "5. Celestial Labs Limited (Celestial Labs) : According to the asses see Celestial Labs as a comparable has been cheery picked by the Transfer Pricing Officer. Celestial Labs is a diversified company operating in varied fields such as rendering information technology services encompassing application development and maintenance, production support, EERP, data warehousing, SAP implementation. Celestial Labs also is into manufacturing and trading of products such as ERP package for manufacturing and has a product 'Sanjivani' which is a portal for live ayurvedic consultation. The company is also engaged in the distribution of herbal ayurvedic products. SAP Services : Celestial delivers SAP consulting, SAP implementation and post-SAP implementation services for its c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itially two Enzymes, Alpha Amylase and Alkaline Protease in India and overseas. The company is planning to set up a biotechnology facility to manufacture industrial enzymes. This facility would also include the research laboratories for carrying out further research and development activities to develop new candidates' drug molecules and licence them to interested pharma and bio companies across the globe. The proposed facility will be set up in Genome Valley at Hyderabad in Andhra Pradesh.' According to the learned Departmental representative celestial labs is also in the field of research in pharmaceutical products and should be considered as comparable. As rightly submitted by the learned counsel for the assessee, the discovery is in relation to a software for discovery of new drugs. Moreover the company also is owner of the IPR. There is however a reference to development of a molecule to treat cancer using bio-informatics tools for which patenting process was also being pursued. As explained earlier it is a diversified company and therefore cannot be considered as comparable functionally with that of the assessee. There has been no attempt made to identify and elim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directions to the Assessing Officer, after hearing the appellant's authorised representative (AR) on the specific ground of objection being the direct tax grounds. 4 On the facts and in the circumstances of the case and in law, the Assessing Officer, disregarded the claim of the appellant of Rs. 35,52,789 towards software licence fees as revenue expenditure and capitalised the same under the head computers and granted depreciation thereon, which resulted in the addition to the total income by Rs. 14,16,116." 15. In grounds 1 and 2, the assessee has requested for issuing suitable direction to the Assessing Officer for following the directions of the Dispute Resolution Panel. During the course of hearing, it was submitted that the Assessing Officer has not followed the directions of the Dispute Resolution Panel fully and, therefore, a direction should be given to the Assessing Officer to strictly follow the direction of the Assessing Officer. No objection was raised by the Departmental representative in this regard. Therefore, we direct the Assessing Officer to strictly follow the directions issued by the Dispute Resolution Panel. 16. In grounds 3 and 4, the assessee is aggr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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