TMI Blog2019 (4) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion it did, at variance with and opposed to the conclusion of the Tribunal on the earlier occasion, Enhancing the addition made on account of TP adjustments - Sales made to AE - TPO by issuing show cause notice to apply the profit-sharing method in the ratio of 50% each after considering the function, assets and the risk involved between the assessee and its AE - Assessee submitted that the AE being the owner of IPR is a very complex entity whereas the assessee being a mere contract manufacturer is a less complex entity. Therefore the assessee should be treated as the test party - whether the TPO verified the details furnished by the assessee in determining the ALP of the impugned transaction using TNMM during the assessment proceedings? - HELD THAT:- As decided in the own case of the assessee’s ITAT deleted the addition made by the TPO/AO [2017 (9) TMI 1804 - ITAT AHMEDABAD]. A query was raised from the bench to the learned counsel for the assessee who replied that all the necessary details were available with the TPO and no defect of whatsoever was pointed out therein. Similarly, the ITAT in the earlier year because no defect was pointed out by the TPO in the details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s substantial stake holders in firm - research and development expenses incurred to the other partnership firms - HELD THAT:- The appellant company had assisted the partnership firm in carrying on its business by using its network for marketing the pharmaceuticals products successively. Since the assessee is holding 97.5% of share in the partnership firm, SPI it becomes the duty of the assessee to promote the business of the partnership firm in the capacity of the majority stake holders. Incidentally, the revenue authorities have not brought anything on record which could suggest that the expenditures have not been incurred for the purposes of business. Be it assessee's business or the business of the partnership firm where the assessee is a majority stake holder. In our understanding of the law an expenditure is allowable if it is incurred for the purposes of the business of the assessee. Finding that the assessee is having 97.5% share in the profits of the firm SPI, we do not find any merit in the disallowance made by the A.O Adjustment u/s 115JB - remuneration received from the partnership firms and credited to Profit and Loss account - HELD THAT:- Section 115JB is a compl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to avoid the multiple proceeding, we are inclined to restore the issue to the file of AO to adjudicate afresh as per the direction of ITAT as discussed above. Hence the ground of appeal of the assessee is allowed for statistical purpose. Disallowance u/s 14A of the Act for computing the book profit u/s 115JB - HELD THAT:- We direct the AO accordingly to delete the addition of expenses disallowed u/s 14A while computing the book profit u/s 115JB of the Act. Hence the ground of appeal of the assessee is allowed. Addition for selling and distribution expenses incurred on behalf of SPI u/s 14A - HELD THAT:- it is equally true that a reasonable disallowance of expenditure should be made for earning the exempt income so far as the share of profit from the partnership firm SPI is concerned. We are conscious about the fact that Rule 8D is not applicable for the year under consideration but at the same time for the computation of disallowance for administrative expenditures, the formula given under Rule 8D is the most appropriate method for the computation of the disallowance. We accordingly direct the A.O. to compute the disallowance so far as administrative expenditures are concern ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Guarantee provided to associated enterprises is not covered under the definition of international transaction as envisaged under sec. 92B. 2.2 Without prejudice to the above, the learned CIT(A) has grossly erred in upholding the addition made by the Assessing Officer/TPO for benchmarking the Guarantee fees without appreciating that the Appellant giving corporate guarantee is shareholder's activity and not a service transaction. 2.3 Without prejudice to the above, the learned CIT(A) grossly erred in upholding the addition made by the Assessing Officer/TPO who has applied the yield method not being a prescribed method under the Indian Transfer Pricing provisions for benchmarking the transaction. 2.4 Without prejudice to the above, the learned CIT(A) grossly erred in rejecting the Comparable Uncontrolled Price method followed by the Appellant whereby the Appellant benchmarked the guarantee transaction @ 0.25% as commission charged by the banks for issue of guarantees obtained by the Appellant in its regular business activity and the same view is supported by case law of M/s Everest Kanto Cylinder DCIT [2015] 58 taxmann.com 254 (Bom HC). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, the learned CIT(A) grossly erred in upholding the order of Assessing Officer/TPO who made addition without appreciating the fact the full infringement loss ought to be deducted against the profits of the AE derived from the sale of Para IV products and only the profits / loss after such adjustment, if any should be split between the Appellant and the AE. 3.8 Without prejudice to the above, the learned CIT(A) grossly erred in not allowing the relief of infringement claim of ₹ 1,42,52,16,938/- given by TPO while working out the profit from the transaction for the purpose of profit split. 3.9 Without prejudice to the above, if profit split method is to be followed, the ratios of 50:50 ought to be adopted for benchmarking of sales of products. 4. Re: Addition on account of Sale of Para IV products other than Pantoprazole to Sun Pharma Global BVI and Sun Pharma Global FZE - ₹ 1,16,85,18,972/-: 4.1 The learned CIT(A) has grossly erred in upholding the order of TPO who erred in rejecting the benchmarking done by the Appellant as a contract manufacturer having regard to the functions carried, the assets deployed and risks undertaken by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d without referring to any external comparable benchmarks. 5.4. Without prejudice to the above, the learned CIT(A) has erred in not appreciating that the IPR rests with the AE and the AE was exposed to significant risks inherent in the transaction and accordingly the profit allocation for the IPR to the AE was extremely low and unjustified. 5.5. Without prejudice to the above, the learned CIT(A) has grossly erred in upholding the order of TPO who has benchmarked the sales of Non-Para IV products in ratio of 80:20 without appreciating that Appellant is merely a contract manufacturer. 5.6. Without prejudice to the above, if profit split method is to be followed, the ratios of 50:50 ought to be adopted for benchmarking of sales of products. 6. Re: Non-allowance of weighted deduction u/s 35(2AB): 6.1. On the facts arid in the circumstances of the case the learned CIT(A) grossly erred in not allowing the claim of the Appellant of weighted deduction u/s 35(2AB) on the ground that Appellant had not claimed the deduction in the return of income without appreciating that the jurisdiction of the appellate authorities to consider a fresh or new ground or cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sidered that since the Appellant already has its infrastructure in place, only the incremental expenditure incurred by the Appellant after partnership firm came into existence ought to be disallowed. 7.4 Without prejudice to the above, the CIT(A) grossly erred in computing the amount of research and development expenditure attributable to the development of formulation drugs for the domestic market at ₹ 6343.53 lakhs against the correct amount of ₹ 2332.84 lakhs 7.5 Without prejudice to the above, similar issue has been considered by the Assessing Officer at the time of tax assessment of partnership firms SPI and SPS wherein the disallowance was restricted to ₹ 35.13 lakhs in case of SPI and Nil in case of SPS, and accordingly in the case of Appellant disallowance ought to be restricted on the same. * 7.6 Without prejudice to the above, the R D expense should not be allocated on the basis of domestic formulation turnover as both the entities operate in different market segments with different underlying facts. 7.7 Without prejudice to the above and without accepting any disallowance of the expenses, the Assessing Officer shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endently. The learned CIT(A) ought to have appreciated that the expenditure on repairs has been incurred to maintain existing assets and not for creating new assets or results in benefit of enduring nature. 11. Re: Disallowance u/s 14A read with Rule 8D - 11.1 On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the action of the Assessing Officer of making disallowance u/s.!4A read with rule 8D, without appreciating that: 1 The income earned by the appellant on its investment in partnership firm was not exempt and hence was not to be considered for disallowance under section 14A; 2 Section 14A was not applicable in instant case since Assessing Officer failed to Establish satisfaction as to how the claim of the Appellant was incorrect; 3 Provisions of section 14A could not be made applicable to investments which are capable of generating taxable income; 4 The Appellant had sufficient interest free funds to carry out investments and hence no borrowed funds were utilized for purpose of investments; 5 Provisions of section 14A could not be made applicable to the investments in partnership firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PI ) disallowed u/s 14A: 13.1 On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in disallowing Selling and Distribution expenditure incurred by the Appellant u/s. 14A on the ground that the said expenditure is directly incurred by the Appellant for the partnership firm without appreciating that: 1 Selling and distribution expenditure were directly incurred by the Appellant for the purposes of its business activities and it could not be termed and categorized to be directly incurred for earning the exempt income under Rule 8D; 2 The selling and distribution expenditure to be disallowed as worked out by the Assessing Officer is determined arbitrarily in the ratio of turnover and has no direct nexus towards the exempt income earned by the Appellant; 3 The CIT(A) has failed to substantiate and demonstrate its claim that the said expenditure is directly incurred by the Appellant towards earning of exempt income; 4 The said expenditure was incurred by the Appellant for the purpose of the business of the Appellant and not merely for the purposes of earning profit; 5 The provisions of section 14A could not be made ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sun Pharma Bangladesh Ltd. 13.44 2.32 279.33 However, only one associate enterprise of the assessee has availed the loan against the corporate guarantee provided by the assessee namely sun pharmaceutical (Bangladesh) Ltd. But the assessee has not charged any commission/fees from such associated enterprise. The assessee for not charging commission/fees has submitted that: i) It has not incurred any expense for providing the corporate guarantee to the banks on behalf of the associated enterprise. As such the corporate guarantee was provided as a measure of long-term commitment towards the subsidiary companies. Accordingly, the assessee has shifted its burden of providing financial resources to its associated enterprise to the banks. ii) It is an undisputed fact that the subsidiary company availing the loan from the bank is an associated concern of the assessee. Thus there exist an implicit guarantee which is always available to the associated enterprise. As such there was no impact on the loan provided by the bank on account of explicit guarantee provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2%. 9.1 The ground of appeal raised by the Revenue read as under: 2. On the facts and in the circumstances of the case, Ld.CIT (A) erred in law and facts in reducing the adjustment on account of ALP for Corporate Guarantee Fees from 2.96% to 2% since ALP for each year is assessed on the basis of risk factor of that particular year and said ALP was worked out on the basis of Country and foreign exchange risk. 10. The Ld. AR before us filed a paper book running from pages 1 to 253 and submitted that in the identical facts and circumstances in the own case of the assessee and Revenue bearing ITA Nos. 1666/AHD/2016 and 1663/AHD/2016 pertaining to AY 2009-2010, the ITAT was pleased to restore the issue to the Ld. CIT (A) for fresh adjudication vide order dated 08-09-2017. Accordingly, the Ld. AR before us prayed to restore the issue to the file of Ld.CIT(A) for fresh adjudication as per the provision of Law. 11. On the other hand, the Ld. DR did not raise any objection if the matter is restored to the file of Ld. CIT(A) for fresh adjudication as per the provision of Law. 12. Both the parties before us relied on the order of authorities below as favorable to them. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ution. If it is to be conceded that simply because of the change in the personnel of the officers who manned the Tribunal, it is open to the new officers to come to a conclusion totally contradictory to the conclusion which had been reached by the earlier officers manning the same Tribunal on the same set of facts, it will not only shake the confidence of the public in judicial procedure as such, but it will also totally destroy such confidence. The result of this will be conclusions based on arbitrariness and whims and fancies of the individuals presiding over the Courts or the Tribunals and not reached objectively on the basis of the facts placed before the authorities. If a Bench of a Tribunal on the identical facts is allowed to come to a conclusion directly opposed to the conclusion reached by another Bench of the Tribunal on an earlier occasion, that will be destructive of the institutional integrity itself. That is the reason why in a High Court, if a single Judge takes a view different from the one taken by another Judge on a question of law, he does not finally pronounce his view and the matter is referred to a Division Bench. Similarly if a Division Bench differs fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a high profit margin on the manufacturing of drug for its AE as it is acting in the capacity of a manufacturing contractor. vii. The assessee also submitted that the drug falls under Chapter IV of federal food, drug, and Cosmetic Act, (in short FD C Act) which is subject to legal risk which is to be borne by the AE. As such the assessee is not subject to such legal risk as it is acting merely as a contract manufacturer. The assessee further submitted that its AE had suffered a huge loss on account of patent infringement. 15.2 However, the TPO during the proceedings observed certain facts as enumerated below: i. The drug, Pantoprazole falls under chapter IV of the FD C Act, in the preceding year. But in the year under consideration, it was sold as a generic drug. Therefore there was no risk to the AE in the year under consideration on account of the infringement of the patent. ii. The assessee has earned a margin at the rate of 13.86% on the sale to AE as per the accounts of the AE whereas the AE has earned profit margin at the rate of 87.45% on sale which is representing 4186% on the cost of the drug. As per the TPO, such a huge margin is not natural considering the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... license manufacture the products. 15.7 The AE was carrying significant risk for getting the product manufactured at the premises of the assessee. These risks can be categorized as under: Risks borne:- Since the owner of the IPRs is the SPG FZE, the substantial risks related to the product are borne by the SPG FZE The risks borne by the SPG FZE are as follows: Litigation risks and cost Penalties Chargebacks Shelf Stock Adjustments Product Returns and Other Allowances Infringement issues Loss of profit claims by the original patent holder in the event the patent claim is rejected. In the present case since the product is para IV product the same is subjected to huge litigations. The expenses/damage that can arise out of the litigations are as follows:- Lost profits due to diminished sales because of infringement of patents Lost profits due to the necessity of having to reduce price to compete with the infringing party Lost profits due to overall reduction in business attributable to the need to divert resources because of infringement Lost future profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee. 15.11 Regarding the agreement with the Caraco dated 29th of January 2008, the assessee submitted that it was made on behalf of its associated companies and there was a necessary disclosure made by the Caraco in its annual report for carrying out the transactions with the assessee and its associated enterprise sun BVI/FZE. 15.12 However, the TPO disagreed with the contention of the assessee by observing as under: i. The assessee is not acting as a mere contract manufacturer as claimed by it. The Sun BVI/FZE while making an application for the registration of the technology under ANDA has to furnish the details of the factories where such technology was developed. As the assessee has sufficient infrastructure facilities which have been approved by the US FDA, therefore it is implied that there was an active role of the assessee in getting the product approved from ANDA. ii. The agreement between the assessee and Caraco dated 29th of January 2008 further evidence that there was the active role of the assessee in the distribution and sale of the product. iii. The loss incurred by the AE-Sun BVI/FZE on account of infringement of a patent is routine business a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y these two entities is reproduced below: Sr. No. Particulars Sun Pharma [SPIL] Sun FZE [@] Amount in Rs. Amount in US$ Amount in US$ 1 Sale Value 24,67,71,030 51,99,345 24,88,69,605 2 Cost 15,44,53,988 51,99,345 3 Manufacturing Overheads 4,91,07,435 0 4 Gross Profit 4,32,09,607 24,36,70,260 5 Other expenses ( R D, corporate other exs.) 90,07,143 2,60,28,248 6 Profit 3,42,02,465 21,76,42,012 7 Additional credit allowed on account of Retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim made is that if profits of the company are to be shared, the losses also should be shared by SPIL. The contention of the assessee company is closely examined. Sun BVI is being paid dominantly for the risk being carried by it and to some extent marketing functions being performed. The main risk carried by it relates to the goods return, rebates, litigation costs and damage costs in suits filed by the patent holders. Since Sun BVI has already been compensated for the risks being carried by its @ 50% of the profits on sale of this drug, no further compensation is found necessary with respect to its legal expenses. It is clarified that the additional expenditure on litigation incurred by the company will not be available for set off as it is precisely for this reason that the AE has been allowed 50% share in profits. 8.12 However, in earlier discussions, it has been held by the undersigned that while majority of the risk is being undertaken by SPG FZE, and most of the other functions/assets are being performed/contributed by SPIL resulting in a profit split of 50:50, some portion of risk is also being taken up by SPIL as evident from the distribution agreement. Sun Global i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resale without any value addition and accordingly aggregate residual profitarising from International Transactions was apportioned in 80:20 ratios in A.Y. 2008-09 by the CIT(A) on the basis of detailed FAR analysis. Accordingly, respectfully following the order of CIT(A)-IV, Ahmedabad, I hold that aggregate residual profit arising from sale of Pantoprazole amounting to ₹ 451,52,31,720/- has to be apportioned in the ratio of 80:20 between the appellant and the AEs and the profit pertaining to the appellant company, thus, comes to ₹ 361,21,85,376/-. The Assessing Officer has already made an addition of ₹ 83,23,98,920/- on account of upward adjustment computed by the TPO after allowing deduction for patent infringement pay out at ₹ 142,52,16,938/-. I find that for patent infringement litigation, out of court settlement Agreement was entered into on 11.06.2013 and hence the liability, if any, has been crystaiized only in the subsequent year. Moreover, as a result of demerger of therapeutic business including Pantoprazole of AE w.e. from 01.05.2013 and merger of the same with appellant, the infringement losses have been ultimately taken over by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rat exhibited at pages 475 to 518 of the paper book. On 28.10.2007, SPARC sold a basket of 38 Technologies to SPG including ANDA for Pantoprazole Tablet,the consideration of which was USD 3 million for U.S. Market and USD 1.4 million for Europe Market. This is supported by the agreement for sale exhibited at pages 519 to 536 of the paper book. 77.By virtue of this agreement for sale, the Technology was purchased by SPG in the month of October, 2007 and immediately thereafter in the month of November, 2007, SPG enters into an agreement with appellant for manufacturing. Copy of supply agreement between SPG and SPIL is exhibited at pages 648 to 659 of the paper book. Relevant clauses of the supply agreement read as under:- AND WHEREAS SPGI is the owner of the various abbreviated new drug applications and is interested to market the products in United States of America and in Europe and is therefore interested to buy various products from side approved by US FDA. 1. SUPPLY AND PURCHASE ARRANGEMENTS. SPIL hereby agrees to sell and supply the Products to SGI and SPGI hereby agrees to Purchase the Products from SPIL with the terms and conditions of this Agreement. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntation: Except for the rights expressly under the terms of the Agreement this Agreement does not transfer any intellectual property rights, specifically with respect to the Products from SPGI to SPIL. SPGI represents and warrants that, to the best of the knowledge and belief of SPI, SPIL's fulfillment of the terms of this agreement to the' manufacturing of the Products will not infringe any third party intellectual property rights. Nevertheless, in case SPIL would be or named as a formal party by reason of an infringement of third party rights for the Products, SPIL shall promptly inform SPGI thereof. SPGI shall conduct any defense of such suit at its own expense and SPGI shad indemnify and hold SPIL harmless from and against any loss, claim, damage, expense or liability if any resulting from any such suit in accordance with Section 5. However, in any such litigation suit SPIL agrees to assist SPGI, without assuming any monetary obligation. 4.3 Legal Compliance. SPIL hereby undertakes to comply with all requirements of law for obtaining various licenses, approvals, permissions and no objection certificates for meeting all legal obligations in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.6.4 SPIL agrees to invoice and dispatch at SPGI's cost and risk, the finished products to SPGI or its nominees as specified by SPGI according to the orders placed by SPGI and instructions given by SPGI and accepted by SPIL. 5.1 SPGI Indemnification. SPGI shall indemnify and hold SPIL harmless from and against any loss, claim, damage, expense or liability, resulting from any misrepresentation, egligence, or intentional misconduct by SPGI in performing this agreement including for any claim, demand or suit alleging that the Product infringes any third party's patent, copyright, trademark, trade secret or other intellectual property right or any product liability. Notwithstanding anything to the contrary in this Agreement, in no event shall SPGI be liable to SPIL for any incidental, indirect, exemplary, special or consequential damages whatsoever (including, but not limited to, lost profits, loss of goodwill, or interruption of business) that may be suffered or incurred by SPIL as a result of SPGI's violation of this representation. 5.2 SPIL Indemnification. SPIL shall indemnify- and hold SPGI harmless from and gainst any loss, claim, damage, expense or liabil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 569 570 of the paper book which conclusively proves that the ANDA rights were with SPG BVI. 80. Adverting to the allegations of Ld Shri Shrivastava that these arrangements by the assessee is a brutal form of tax evasion , the Hon'ble Supreme Court in the case of Vodafone International Holdings B.V. vs. Union of India and Another reported in 341 ITR 1 has laid down the ratio : It is the task of the court to ascertain the legal nature of the transaction and while doing so it has to look at the entire transaction as a whole and not adopt a dissecting approach. All tax planning is not illegal or illegitimate or impermissible . 81.The Hon'ble Supreme Court further held. :- (iv)The Income-tax Act, 1961, in the matter of corporate taxation, is founded on the principle of the independence of companies as economic entities with legal independence vis-a-vis their shareholders or participants. Consequently, the entities subject to income-tax are taxed on profits derived by them on stand-alone basis, irrespective of their actual degree of economic independence and regardless of whether profits are reserved or distributed to the shareholders or participants ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsidiary depends on the facts of each case. In the case of multinationals their subsidiaries have a great deal of autonomy in the country concerned except where subsidiaries are created or used as a sham. The directors of the subsidiary under their articles are the managers of the companies. They are not to be dictated by the parent company if it is not in the interests of those companies (subsidiaries). The fact that the parent company exercises shareholder's influence on its subsidiaries cannot obliterate the decision-making power or authority of its (subsidiary's) directors. The decisive criteria is whether the parent company's management has such steering interference with the subsidiary's core activities that the subsidiary can no longer be regarded to perform those activities on the authority of its own executive directors. (vii) A typical large business corporation consists of sub-incorporates. Such division is legal and recognized by company law, laws of taxation, takeover codes. The parent is the only group member that normally discloses financial results. Below the parent company are the subsidiaries which hold operational assets of the busine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actional profit split method is that it can offer a solution for highly integrated operations for which a one-sided method would not be appropriate. For example, see the discussion of the appropriateness and application of profit split methods to the global trading of financial instruments between associated enterprises in Part III, Section C of the Report on the Attribution of Profits to Permanent Establishments.2 A transactional profit split method may also be found to be the most appropriate method in cases where both parties to a transaction make unique and valuable contributions (e.g.contribute unique intangibles) to the transaction, because in such a case independent parties might wish to share the profits of the transaction in proportion to their respective contributions and a two-sided method might be more appropriate in these circumstances than a one-sided method. In addition, in the presence of unique and valuable contributions, reliable comparables information might be insufficient to apply another method. On the other hand, a transactional profit split method would ordinarily not be used in cases where one party to the transaction performs only simple functions and does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... method, in the following manner, namely:- d) profit split method, which may be applicable mainly in international transactions --[or specified domestic transactions]involving transfer or unique intangibles or in multiple international transactions [or specified domestictransactions] which are so interrelated that they cannot be evaluated separately for the purpose of determining the arm's length price of any one transaction, by which i) the combined net profit of the associated enterprises arising from the international transaction --[or the specified domestic transaction] in which they are engaged, is determined; (ii) the relative contribution made by each of the associated enterprises to the earning of such combined net profit, is then evaluated on the basis of the functions performed, assets employed or to be employed and risks assumed by each enterprise and on the basis of reliable external market data which indicate how such contribution would be evaluated by unrelated enterprises performing comparable functions in similar circumstances; (iii) the combined net profit is then split amongst the enterprises in proportion to their relative contribution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to in sub-clause(iii); (v) the net profit margin thus established is then taken into account to arrive at an arm's length price in relation to the international transaction [or the specified domestic transaction]; 88. PSM is applicable when the international transaction involved transfer of unique intangibles (in the case in hand there is no such transfer from SPG BVI to SPIL), or in multiple international transaction which are so inter related that they cannot be evaluated separately for the purpose of determining the arm's length price of any one transaction. This is also absent (in the case in hand as the appellant company has done only manufacturing of Pantoprazole Tablets for SPG BVI). 89. Coming to the application of TNMM, we find that the profit margin benchmark by the assessee at 21.57% on sales transactions is much higher than the margin shown by the assessee with Eli Lily. 90. The revenue authorities have compared the agreements of SPIL with Eli Lily and SPIL with SPG BVI and have come to the conclusion that a conspectus reading of the relevant clauses show that the assessee is not a contract manufacturer in the case of SPG BVI. This fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked by divorcing the business realities. The contention of revenue that it is not concerned with the settlement which is pass event is untenable. Even if the PSM is applied the relatable losses which were so apparent by the time assessment was framed cannot be given a go by on unsustainable revenue stand. In such eventuality even the ALP offered by assesse as a contract manufacturer also will be wiped out. The PSM application may actually result in reduction of returned ALP working. Thus, considering the issues from all possible angles, the assessee has, undisputedly and as accepted by revenue, ultimately suffered losses which are not claimed in its books or tax purposes. Even the alternative application of PSM fails and would do no good to the Revenue . 92. To summarize in nutshell , by the order of the Hon'ble High Court Innovative Research and Development /division of the appellant company was demerged and given to Sun Pharma Advance Research company (SPARC) subsequently SPARC transferred ANDA rights to SPG BVI. SPG BVI has been entered into an agreement with the appellant company SPIL for the manufacturing of Pantoprazole. Pursuant to this agreement assessee manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efect was pointed out by the TPO in the details furnished by the assessee in determining the ALP using TNMM allowed the appeal of the assessee. The learned DR has also not brought anything on record contrary to the argument advanced by the learned AR of the assessee. 21.1 Moreover, we are bound to follow the order of this Tribunal in the own case of the assessee in the earlier year as the facts are identical in the impugned issue before us. It is also important to note that the ld. DR has not brought anything on record contrary to the argument advanced by the ld. counsel for the assessee. 21.2 We also place our reliance on the judgment of Hon ble Madras High Court in the case of CIT v. L.G. Ramamurthi 1977 CTR (Mad.) 416 : [1977] 110 ITR 453 (Mad.). The relevant extract has been reproduced in the preceding paragraph. In the light of the ratio decidendi in the above said judgment we are of the considered opinion that the view adopted by the co-ordinate bench as discussed above shall be applied in the case on hand with full strength. The ld. DR and the ld. AR has not brought any decisions varying from similar or identical facts or circumstances. Therefore, the ratio decidendi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied Residual Profit Split Method and accordingly determined adjusted profit from Para-IV filing drugs at ₹ 73,03,24,357/-and from generic drugs at ₹ 21,34,71,777/- (Total ₹ 94,37,96,134/-) by apportioning the profit in the ratio of 50:50 in case of Para-IV filing and 80:20 in case of generic drugs, between the appellant and its AEs. It is also noticed that the appellant has adopted same methodology as in the case of Pantoprazole in respect of sale of other formulations to its AEs by considering itself a contract manufacturer. As already discussed, the FAR analysis carried out under the similar facts and circumstances of the case in A.Y. 2008-09 by the CIT(A)-IV, Ahmedabad, revealed that the appellant has deployed substantial assets in the form of US PDA approved manufacturing setup, played a substantial rolein preparation of ANDA and drawing marketing plans in USA. The only function performed outside was to provide market support. These findings are squarely applicable to the international transactions in respect of other drugs too. It is also noticed that no activities were carried out by the AEs for value addition in the drugs and accordingly, I hold that the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of other products under Chapter IV filing drugs by apportioning the residual profit in the ratio of 80:20 between the appellant and AEs. Accordingly, the addition made by the AO/TPO on this account at ₹ 94,37,96,134/- is confirmed along with enhancement of income by ₹ 43,81,94,615/-. Thus, appellant fails on this account. I am also satisfied that the appellant has furnished inaccurate particulars of income in respect of further Upward adjustment of ₹ 43,81,94,615/- and accordingly the penalty proceedings u/s.271(1)(c) r.w. Explanation-7 are hereby initiated. 24. Being aggrieved by the order of Ld.CIT (A), the Assessee is in appeal before us. 25. The Ld. AR before us submitted that in the identical facts and circumstances in the own case of the assessee in ITA No. 1666/AHD/2016 the impugned addition was deleted by the Hon ble ITAT vide order dated 08-09-2017. 26. On the other hand the Ld. DR filed the written submissions which are available on record. But the same has not been reproduced for the sake of brevity and convenience. The ld. DR vehemently supported the order of authorities below. 27. We have heard the rival contentions and perused the mate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in the own case of the assessee in the earlier year as the facts are identical in the impugned issue before us. It is also important to note that the ld. DR has not brought anything on record contrary to the argument advanced by the ld. Counsel for the assessee. 28.2 We also place our reliance on the judgment of Hon ble Madras High Court in the case of CIT v. L.G. Ramamurthi 1977 CTR (Mad.) 416 : [1977] 110 ITR 453 (Mad.). The relevant extract has been reproduced in the preceding paragraph. In the light of the ratio decidendi in the above-said judgment, we are of the considered opinion that the view adopted by the co-ordinate bench as discussed above shall be applied in the case on hand with full strength. The ld. DR and the ld. AR has not brought any decisions varying from similar or identical facts or circumstances. Therefore, the ratio decidendi rendered by the earlier order of the Tribunal has necessarily to be followed by us in line and tune to maintain the judicial discipline and decorum. In view of the above and respectfully following the ITAT order as discussed above, we set aside the order of the Ld.CIT (A). Accordingly, we direct the AO/TPO to delete the addition m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the argument of the assessee is not relevant to the effect that it is not necessary to get the expenses certified by the DSIR to claim the weighted deduction as the plea of the assessee was rejected on the preliminary ground i.e. the weighted deduction was not claimed in the income tax return. 31.6 In view of the above the ld. CIT-A rejected the claim of the assessee and confirmed the order of the AO. 32. Being aggrieved by the order of the Ld.CIT (A), both the assessee and Revenue are in appeal before us. The assessee is in appeal before us against the confirmation of the disallowance of weighted deduction whereas the Revenue is in appeal before us on the ground that the DSIR did not certify the impugned expenses. 32.1 The ground of appeal no. 10 raised by the Revenue stands as under: 10. On the facts and in the circumstances of the case, learned CIT(A) erred in law and facts in directing to allow weighted deduction on the R D expenses which was not certified by DSIR without appreciating that as per provisions of section 35(2AB), the assessee is eligible to for weighted deduction only in respect of the amount which is certified by the prescribe authority i.e. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible for weighted deduction. Considering the facts in totality in the light of the provision, we set aside the findings of the ld. CIT(A) and direct the A.O. to allow weighted deduction. Ground Nos. 9 10 are accordingly allowed. 36. As the facts in the case on hand are identical to the facts of the case as discussed above, therefore respectfully following the same we set aside the order of ld. CIT-A. Accordingly, we direct the AO to Allow the weighted deduction u/s 35(2AB) of the Act as claimed by the assessee. Hence the ground of appeal of the assessee is allowed. Now coming to the Revenue ground of appeal as discussed above. 37. The grievance of the Revenue in this ground of appeal is that the Ld.CIT (A) erred in directing the AO to allow the weighted deduction under section 35(2)AB of the Act in respect of the expenses which were not certified by DSIR. 37.1 Regarding this we note that the identical issue was also there in the own case of the assessee in ITA No. 1390/AHD/2016 pertaining to the AY 2009-10 which was decided vide order dated 22-12-2016 as held under: 6. We have heard both the parties. Case file perused. There does not appear to be any disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion in CIT vs. CLARIS LIFESCIENCES Ltd. (2010) 326 ITR 251 (Gujarat) upholds this tribunal's decision in the very assessee's case observing that expenses incurred before Form 3CM approval cannot be denied for the purpose of Section 35(2AB) weighted deduction. We follow the very reasoning to opine that facts of the instant case rather go a step further wherein the appellant has only claimed those expenses which relate to the time period as approved in the Form 3CM. We accordingly hold that the assessee is very much entitled for claiming the above capital and revenue expenses incurred on in house research and development amounting to ₹ 237,77,05,310/-. The Assessing Officer had rightly held it entitled for the above weighted deduction after verifying all necessary particulars during the course of scrutiny. 37.2 We further note that the above order of the ITAT was also affirmed by the Hon ble Gujarat High Court in the assessee s case in tax appeal no. 541 of 2017 dated 14-8-2017 wherein it was held as under: 5. Having heard Ld. Counsel for the parties and having perused the orders on record, we are broadly in agreement with the view of the Tribunal. Undispu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical facts or circumstances. Therefore, the ratio decidendi rendered by the earlier order of the Tribunal has necessarily to be followed by us in line and tune with the judicial discipline and decorum. In view of the above and respectfully following the ITAT order as discussed above, we allow the ground of appeal of the assessee and dismiss the ground of appeal of the Revenue. 39. The issue raised by the assessee in ground No. 7 is that the Ld.CIT (A) erred in confirming the order of the AO by allocating the research and development expenses incurred by it to the other partnership firms and accordingly made the disallowance of such expenses proportionately. 40. The assessee is a partner in two partnership firms namely Sun Pharma Industries and Sun Pharma Sikkim (for short SPI and SPS). Both the partnership firms were engaged in manufacturing the drugs. However, the assessee was carrying out research and development expenses for the drugs manufactured by both the firms. Accordingly, the assessee claimed the deduction for all the research and development expenses incurred by it in its books of accounts. 41. The AO during the assessment proceeding observed that both the partn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure incurred by it for the partnership firm is as good as its own expenditure because ultimately the appellant is going to be the major beneficiary of any profit earned by the partnership firm as a result of this R D expenditure. 7.3.1 These claims of the appellant are to be examined in view of the different provisions of the IT Act 1961. The share of profit received by the appellant from the firm is exempt from the Income Tax. The remuneration is received from the firm is taxable under the head income from business and profession, as per the provision of clause (v) of section 23 of the IT Act 1961. But the proviso to this section says that where such remuneration or part thereof has not been allowed to be deducted under clause (b) of section 40, the income under this clause shall be adjusted to the extent of the amount not so allowed to be deducted. Now as per the provisions of section 40(b)(i), any payment of salary, bonus, commission or remuneration to any partner who is not a working partner is not allowed as a deduction in computation of the total income of the firm. The explanation 4 to clause (b) says that working partner means an individual who is actively en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rrent appellate proceedings also and the same are being utilized for the purpose of deciding this issue. 7.5.1 The first contention of the appellant is that the partnership firm and the appellant company cater to the different sections of business with underline facts. These differences have been submitted by the appellant which have already been reproduced above. The first difference pointed out is that the partnership firm is only into production of formulation drugs for the domestic market, whereas appellant incurred R D expenditure on bulk drug segment and formulation segment both and that too for domestic market as well as international market and regulated market. It has been submitted that the partnership firm has sold its product in domestic market only. In this regard, the appellant has also submitted the copy of Financial statement for FY 2007-08 of Sun Pharmaceutical Industries. As per this, the turnover of this firm is 1086.2 crore, which is the same figure as adopted by the Ad in his order. Besides in Clause 8' of the Notes on Financial Statement, it has been mentioned that the firm operates in one reportable geographical segment i.e. within India . On th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n this year a/so, I respectful/y following the order of my predecessor in appellant's own case as mentioned above, hold that the R D expenses incurred by the appellant admittedly are also pertaining to SPI/SPS and hence the same are required to be allocated in the ratio of turnover of appellant and SPI/SPS. I also agree with the views of my predecessor that the expenses incurred for Development of Formulation Drugs for domestic market are to be considered only because SPI/SPS has no business outside the country. As per the details furnished the R D expenses for Development of Formulation drugs for domestic market are ₹ 3201.08 + 2816.97 + -194.80+ 130.68 = Rs,6343.53 lacs. Accordingly, the Assessing Officer is directed to work out the disallowance of R D expenses out of ₹ 6343.53 lacs in the ratio of domestic turnover of SPI/SPS and SPIL i.e. appellant, after necessary verification of the figures. Thus, appellant succeeds partly in respect of Ground No. 9. 43. Being aggrieved by the order of the Ld.CIT (A), both the assessee and the Revenue are in appeal before us. The assessee is in the appeal for the allocation of R D expenses to SPI and SPS whereas the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brought anything on record which could suggest that the expenditures have not been incurred for the purposes of business. Be it assessee's business or the business of the partnership firm where the assessee is a majority stake holder. In our understanding of the law an expenditure is allowable if it is incurred for the purposes of the business of the assessee. Finding that the assessee is having 97.5% share in the profits of the firm SPI, we do not find any merit in the disallowance made by the A.O. and confirmed by the First Appellate Authority. We, accordingly, direct the A.O. to delete the addition of ₹ 5,30,29,5255/-. Ground no. 12 is accordingly allowed 48. Regarding the Revenue appeal, the relevant finding of the ITAT in ITA 1663/AHD/2016 in its order is extracted below: 137. Similar issue has been considered and decided by us in assessee's appeal (supra) vide ground nos. 9 to 11 of that appeal. For our detailed discussion therein, ground no. 11 is dismissed. 49. As facts in the case on hand are identical to the facts of the case as discussed above, therefore respectfully following the finding of the Tribunal (supra), we direct the AO accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re of profit from the partnership is exempted from tax under section 10(2A) of the Act. There is no exemption under section 10 of the Act in respect of the remuneration received from the partnership firm. Accordingly, the AO rejected the claim of the assessee and made the addition of the remuneration while determining the book profit under section 115JB of the Act. 52. The aggrieved assessee preferred an appeal to the Ld.CIT (A) who confirmed the order of the AO by observing as under: 14 . Ground No. 11 is against the action of the Assessing Officer in not considering remuneration received from partnership firm (SPI) as share of profit to which provisions of section 10(2A) apply for the purpose of working of book profit u/s. 115JB. This issue has been discussed by the Assessing Officer in paras-6.1.3 and 6.1.4 of the assessment order. The appellant has claimed to have received remuneration of ₹ 15,07,27,535/-from partnership firm, Sun Pharmaceutical Industries (SPI) which was deducted while working out the book profit u/s. 115JB by the appellant. On verification of the facts and material in records, the Assessing Officer held that only the share profit received fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant in A.Y. 2008-09 wherein the claim of deduction of remuneration received from the partnership firm SPI for the determination of Book Profits u/s. 115JB was denied by the revenue authorities. We find that when the matter was agitated before the Tribunal, the Tribunal also declined to interfere with the findings of the ld. CIT(A). The relevant findings of the Tribunal read as under:- 110. We have considered the facts, circumstances, relevant provisions and rival submissions,. A harmonious reading of the provisions of section 115JB of the Act reflects that in the case of a company subject to the provisions of Section 115JB of the Act has to prepare P L statement in accordance with the provisions of part (ii) of Schedule (vi) of the Companies Act. 111. The relevant clause of Explanation 1 reads as under:- Explanation [1]- For the purposes of this section, book profit means the [profit] as shown in the [statement of profit and loss] for the relevant previous year prepared under sub-section (2), as increased by - (f) the amount or amounts of expenditure relatable to any income to which [section 10(other than the provisions contained in clause (38) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the facts of the case as discussed above, therefore respectfully following the finding of the tribunal (supra), we direct the AO accordingly. Moreover, we are bound to follow the order of this Tribunal in the own case of the assessee in the earlier year as the facts are identical in the impugned issue before us. It is also important to note that the Ld. AR has not brought anything on record contrary to the finding of the Ld. CIT-A. 57.1 We also place our reliance on the judgment of Hon ble Madras High Court in the case of CIT v. L.G. Ramamurthi 1977 CTR (Mad.) 416 : [1977] 110 ITR 453 (Mad.). The relevant extract has been reproduced in the preceding paragraph. In the light of the ratio decidendi in the above-said judgment, we are of the considered opinion that the view adopted by the co-ordinate bench as discussed above shall be applied in the case on hand with full strength. The ld. DR and the ld. AR has not brought any decisions varying from similar or identical facts or circumstances. Therefore, the ratio decidendi rendered by the earlier order of the Tribunal has necessarily to be followed by us in line and tune with the judicial discipline and decorum. In view of the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 is dismissed. 61. Being aggrieved by the order of Ld.CIT (A) the assessee is in appeal before us. 62. The Ld. AR before us submitted that in the identical facts and circumstances in the own case of the assessee in ITA No.1666/AHD/2016 the impugned issue was set aside to the AO for fresh adjudication by the Hon ble ITAT vide order dated 08-09-2017. Accordingly the Ld.AR for the assessee requested to restore the impugned issue to the file of AO for fresh adjudication as per the provision of law. 63. On the other hand, the Ld. DR vehemently supported the order of authorities below. 64. We have heard the rival contentions and perused the materials available on record. At the outset, we find that in the identical facts and circumstances in the own case of the assessee s (supra), the ITAT set aside issue to the file of AO for fresh adjudication. The relevant extract of the order is reproduced as under: 87.We have considered the facts in issue carefully. The Tribunal in its order for A.Y. 2008-09 in ITA Nos. 3297 and 3420/Ahd/2014 had considered a similar issue vide ground no. 14 of that appeal and held as under:- 138. An identical issue was considered by the B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier order of the Tribunal has necessarily to be followed by us in line and tune with the judicial discipline and decorum. In view of the above and respectfully following the ITAT order as discussed above, the ground of appeal of the assessee is allowed for statistical purposes. 66. The issue raised by the assessee in the ground of 10 is that the Ld. CIT-A erred in treating the repairing expenditure of ₹ 16,82,791/- as capital in nature. 67. The AO during the assessment proceedings observed that the assessee had incurred ₹ 372.88 Million towards repairing expenses. The AO further found that certain expenses are not in the nature of revenue expenses but of capital in nature as detailed below: Sr. No. Location Name of the party Voucher No. Repairing expenses Amount Rs. 1 Halol EOU Mutech Engineers 313PUA0018 1,04,719/- 2 Halol EOU H 3 International 313PUA3154 4,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refer to the ratio laid down by the Hon'ble Supreme Court in the case of Daimia Jain Go. Ltd. Vs. CIT (1971) 81 ITR 754 wherein it has been held that in deciding whether a particular expenditure is a capital in nature, what the Courts have to see as to whether the expenditure in question was incurred to create any new assets or was incurred for maintaining the business of the company, if it is the former, it is capital expenditure. If it is the latter, it is revenue f expenditure . In this background, the items purchased by the appellant company have to be dealt with accordingly. (a) Purchases of ₹ 1,04,719/-- from Mutech Engineers:- It is noticed that, the appellant has purchased panel boards for MCC (Motor Control Centre)which is in the nature of replacement of a part of larger machine. It is not, also capable of being used as an independent machinery and hence has to be treated as revenue expenditure. The Assessing Officer is directed accordingly. (b) Purchases of ₹ 4,00.OOP from H.3. International;- It is noticed that, the appellant has purchased Copeland compressor used for refrigerating and hence it is a part of refrigerator. The compressor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see as claimed by the Ld.AR of the assessee. The relevant extract of the ITAT order (supra) is extracted below: 93.We have carefully considered the orders of the authorities below. We find that following expenses were incurred by the assessee - (a)Kiran Pumps for ₹ 1,59,000/-:- The assessee has purchased LUTZ Pump FLP single motor which is capable of functioning independently without assistance of any other plant machinery. Therefore, it can be said that a new capital assets has come into existence and hence the expenditure is treated as capital expenditure. (b) Martin Christ GMBH of ₹ 5,53,436/-:- the appellant has purchased Freeze Dryer Beta with accessories for the purposes of drying process of organic solvents. The assessee has also incurred labour charges on installation of this dryer. The factual matrix shows that new capital assets . A.Y. 2009-10 have come into existence and, therefore, the purchase cost and labour charges are treated as capital expenditure. (c) Communica Aids of ₹ 1,52,250/-:- The appellant has purchased Tata Make IOX 160 EPBAX System with 16 trunk lines and 4 E M Circuits. The configuration of this machine itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firms. 75.3. In case of partnership firm, the profit accrued to it was not exempted in the hands of the partnership firm. The partnership has credited only the share of profit which is not the income in the hands of the partners but credit to partner s capital account. Further assessee earned interest income and remuneration from partnership firm which is taxable. Thus the provision of section 14A does not apply to the investment in a partnership firm. 75.4. However, the AO disregarded the contention of the assessee and worked out the disallowance in the manner provided under section 14A read with rule 8D of Income Tax Rule as given below: Disallowance of interest expenses ₹ 5,82,987/- Disallowance of administrative expenses ₹ 4,17,40,201/- 76. The aggrieved assessee, preferred an appeal to the Ld.CIT (A) who partly confirmed the order of the AO by observing as under: 19. Ground No. 16 pertains to disallowance made u/s. 14A read with Rule 8D amounting to ₹ 4,23,23,188/-. This issue has been discussed by the Assessing Officer in para-13 of the assessment order. The Assessing Officer noticed that the assessee company has incurred interest expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal. The relevant findings read as under:- 153. A similar issue was considered by the Bench in A.Y. 2007-08 in ITA No. 2076 2067/Ahd/2013, and the relevant findings read as under:- 52. Coming to the disallowance made u/s. 14A by the First Appellate Authority, it is an undisputed fact that the assessee was having sufficient own funds for making the investment in the partnership firm. It is also true that the assessee was on a contractual obligation to look after the marketing and distribution activities of the firm SPI as per the partnership deed read along with the supplementary deed to earn remuneration from the partnership firm. However, it is equally true that a reasonable disallowance of expenditure should be made for earning the exempt income so far as the share of profit from the partnership firm SPI is concerned. We are conscious about the fact that Rule 8D is not applicable for the year under consideration but at the same time for the computation of disallowance for administrative expenditures, the formula given under Rule 8D is the most appropriate method for the computation of the disallowance. We accordingly direct the A.O. to compute the disallowance so fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the identical facts and circumstances in the own case of the assessee in ITA# 1666/AHD/2016 the impugned addition was deleted by the Hon ble ITAT vide order dated 08-09-2017. 87. On the other hand, the Ld. DR vehemently supported the order of authorities below. 88. We have heard the rival contentions and perused the materials available on record. At the outset, we find that in the identical facts and circumstances in the own case of the assessee (supra), the ITAT deleted the addition made by the TPO/AO. The relevant extract of the order is reproduced as under: 104. The Tribunal in A.Y. 2008-09 in ITA No. 3297 3420/Ahd/2014 had the occasion to consider the dispute vide ground no. 10 of that appeal and held as under:- 119. We have considered the orders of the authorities below and have given a thoughtful consideration to the order of the Hon'ble Jurisdictional High Court in the case of Alembic Ltd. The Hon'ble High Court was seized, interalia, with the following substantial question of law:- (iii) whether on the facts and in the circumstances of the case and in law, the ITAT was justified in holding that adjustment made on account of disallowance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 115JB of the Act, the disallowance of interest expenditure on exempt income was wrongly negative by both the authorities on the ground that it was not the liability for expenses, but a liability relating to assets. 6.5 We find no fault in the approach adopted by both the authorities. The addition under section 115JBof the Act of a sum of ₹ 1,14,43,040/- when was made as an expenditure estimated on earning of dividend income under Section 14A of the Act, without reiterating the rationale of confirming deletion of such amount as has been elaborately done at the time of deciding question no. 1, this deletion requires to be confirmed. 8. Taking into consideration the evidence on record and considering the division of this court in the case of Commissioner of Income-tax-1 vs. Gujarat State Fertilizers Chemicals Ltd. (supra), we are of the opinion that issue Nos. (iii) and (iv) required to be answered in favour of the assessee and against the revenue. In . A.Y. 2009-10 that view of the matter, we answer questions (iii) and (iv) referred to us in favour of the assessee and against the revenue. The appeal of revenue is dismissed. 121. Respec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntical facts and circumstances in the own case of the assessee in ITA# 1666/AHD/2016 the impugned issue was decided in its favor by the Hon ble ITAT vide order dated 08-09-2017 94. On the other hand, the Ld. DR vehemently supported the order of authorities below. 95. We have heard the rival contentions and perused the materials available on record. At the outset, we note that the impugned issue is not covered in favor of the assessee as claimed by the Ld.AR of the assessee. As such it was restored to the AO for fresh adjudication. The relevant extract of the ITAT order (supra) is extracted below: 64.On finding similarity of facts, we have no hesitation in following the decision of the Tribunal given in earlier year and the relevant findings read as under:- 153. A similar issue was considered by the Bench in A.Y. 2007-08 in ITA No. 2076 2067/Ahd/2013 and the relevant findings read as under:- 52. Coming to the disallowance made u/s. 14A by the First Appellate Authority, it is an undisputed fact that the assessee was having sufficient own funds for making the investment in the partnership firm. It is also true that the assessee was on a contractual obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l has necessarily to be followed by us in line and tune with the judicial discipline and decorum. Hence the ground of appeal of the assessee is allowed for statistical purpose. 97. The issue raised by the assessee in the ground no. 14 is related to penalty proceeding u/s 271(1)(c) of the Act. However, the grievance of the assessee is premature at this stage and therefore the same is accordingly dismissed. 98. In the result, the appeal of the assessee is partly allowed for statistical purposes. Now we take up the Revenue s appeal in ITA No.922/Ahd/2017 for AY 2010-11 99. The Revenue has raised the following grounds of appeal 1. On the facts and in the circumstances of the case, and in law, earned CIT(A) erred in educing the addition on account of interest on loans to AEs and on account of 0% OFCD by 1% ignoring the facts that 100 basis point increase was required on account of Country and foreign exchange risk keeping in view substantial foreign exchange risk involved on account of loan to the AE in dollar severe fluctuations in the foreign exchange. 2. On the facts and in the circumstances of the case, learned CIT(A) erred in law and facts in reducing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id amount was not for infra structural development by an undertaking as is provided u/s. 80IA(4) (i) read with explanation (a) to (d) or (iv) of the said section. 9. On the facts and in the circumstances of the case, the learned CIT(A) erred in the law and facts in deleting the addition on account of disallowance of expenditure incurred on behalf of its sister concern without appreciating the fact that the assessee has used the said arrangements to shift the profit and which is not allowable u/s.37 of the I.T. 10. On the facts and in the circumstances of the case, learned CIT(A) erred in law and facts in directing to allow weighted deduction on the R D expenses which was not certified by DSIR without appreciating that as per provisions of section 35(2AB), the assessee is eligible to for weighted deduction only in respect of the amount which is certified by the prescribe authority i.e. Secretary, Department of Scientific and Industrial research, government of India. 100. The first issue raised by the Revenue in Ground No. 1 is that the Ld.CIT (A) erred in reducing the addition on account of interest on loans to AEs on account of 0% OFCD. 101. The assessee in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant had also furnished identical submission during the course of appellate proceedings, I had held that the OFCDs remained debt until they are converted into equity on a future date at an option of the investor. Accordingly, Arm's Length predetermined by TPO was upheld in A.Y. 2009-10, subject to 1% reduction in interest rate benchmarked for I exchange fluctuation risks. However, now this issue stands decided in 1 the favour of appellant, vide order dated 10.05.2016 of Hon'ble ITAT, Ahmedabad contained in ITA No. 1589 1592/AHD/2011 (A.Y. 2006-07). In that case the TPO made following adjustments:- (i) Interest on loan to AEs at LOBOR plus rate allowed to AEs ₹ 7,83,82,483/- (ii) Interest on 9% OFCD ₹ 21,08,42,301/- The relevant portion of order of Hon'ble ITAT is reproduced as under:- 7. Assessee carried the matter before the Ld. CIT(A) and reiterated its claim. After considering the facts and the submissions, the Id. CIT(A) reduced the interest to LIBOR+0.25% from LIBOR+2%. The assessee is disputing the LIBOR+0.25% and the revenue is in dispute for the deletion of 1.75%. 8. We have heard the rival contentions and have c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as per the terms of agreement, no interest accrued to the Assessee and therefore no income was considered. The TPO did not find the contention of the Assessee acceptable. He considered the Optionally Fully Convertible loan as debt and considering the average six month Euro Libor rate for the year @ 4.48% to which he added the interest rate of 2.90 basis point as per the agreement and thereafter considered the rate of interest to be @ 7.38% and accordingly computed the interest on ₹ 108.32 Crore for 171 days at 7.38%. The aforesaid adjustment made by the TPO was considered by the Assessing Officer and the addition of ₹ 3,99,74,426/- was made to the income. Aggrieved by the order of Assessing Officer, Assessee carried the matter before CIT(A). CIT(A) after considering the submissions made by the Assessee decided the issue in favour of Assessee. 10. And the Tribunal held as under:- 7. We have heard the rival submissions and perused the material on record. CIT(A) while deleting the addition has noted that as per the agreement, the interest was payable only if the conversion option was not exercised on the expiry of 5 year period. If at any time during the 5 yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Corporation Ltd. in Civil Appeal No. 9813 of 2011. It is contended that the Hon'ble Supreme Court has explained the nature of OFCDs and have held that OFCDs are hybrid securities which remained in the nature of debentures till they are converted into equity, after which they take form of equity. Counsel further pointed out that in the earlier assessment years, the Bench has drawn support from the decision in the case of Cadila Healthcare in ITA No. 2430/Ahd/2012 without appreciating the fact that in that case, the assessee has produced comparable data to show that independent parties had entered into agreements with similar terms (benefits) and not charged any interest thereon whereas in the case in hand, the assessee has not produced comparable data to justify that OFCDs were issued at arm's length price. It is strongly contended that since these facts have not been brought on record, therefore, the Bench should not follow its earlier decision. 20. Shri Soparkar ld. senior counsel replying to the submissions of revenuestated that the decision of the Hon'ble Supreme Court in the case of Sahara India Real Estate (Civil Application) No. 9813 of 2011 relied upon by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bench has not considered certain facts while relying upon the decision of the Co-ordinate Bench in the case of Cadila Healthcare. 23. The Hon'ble High Court in the case of A.P.V. Kokkiliagada Meerayya, Masud Khan has laid down the following : 28. There can be no dispute with respect to the settled legal proposition that a judgment of this Court is binding, particularly, when the same is that of a coordinate Bench, or of a larger Bench. It is also correct to state that, even if a particular issue has not been agitated earlier, or a particular argument was advanced, but was not considered, the said judgment does not lose its binding effect, provided that the point with reference to which an argument is subsequently advanced, has actually been decided. The decision therefore would not lose its authority, merely because it was badly argued, inadequately considered or fallaciously reasoned . The case must be considered taking note of the ratio decidendi of the same i.e. the general reasons, or the genera! grounds upon which the decision of the court is based, or on the test or abstract, of the specific peculiarities of the particular case, which finally gives rise to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Cadila Healthcare Ltd. in ITA No. 2430/Ahd/12 with C.O. No. 242/Ahd/12 in 146 ITR 502 wherein the first ground related to the adjustment made on account of notional interest on Optionally Convertible Debenture to Foreign Subsidiary. The Tribunal considered the following facts:- 4. During the course of assessment proceedings, Assessing Officer noticed that Assessee had subscribed to Optionally Convertible Loan of U.S. $ 27 Million issued by Zydus International Pvt. Ltd., Ireland. Accordingly reference under Section 92CA of the Act for computing of arms length price in relation to the transaction was made to Transfer Pricing Officer (TPO). TPO noted that the Assessee had entered into an agreement with Zydus International Pvt. Ltd. on 09.10.2007 for a convertible loan of U.S $ 27 Million which was subsequently utilized by the Ireland Company for acquiring shares in Zydus Healthcare, Brazil. As per the terms of agreement, no interest was payable if the amount was converted into equity. However, if the same is redeemed, interest was payable at Libor Plus 290 bps and the interest was to be computed at annual rates and payable at maturity that is 5 years from the date of first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. In view of these facts, we find no reason to interfere with the order of CIT(A). 11. Respectfully following the findings of the Hon'ble High court (supra) and the Co-ordinate Bench (supra), we direct the A.O to delete the impugned additions. Ground no. 2 is accordingly allowed. 26. Thus, the distinguishing facts as canvassed by the Shri Shrivastava do not culminate in to any proposition so as to convince us to take any divergence from earlier findings and the judicial discipline also guides us to follow the decision of the Co-ordinate Bench in the light of the ratio laid down by the Hon'ble Supreme Court and the Hon'ble Jurisdictional High Court of Gujarat (supra) and considering the fact that the OFCD were on beneficial terms as per facts mentioned above. Consequently, we have no hesitation to follow earlier judgment in assessee's own case as a result we delete the impugned additions. Ground No. 3 of assessee is allowed. 107. As facts in the case on hand are identical to the facts of the case as discussed above, therefore we are inclined not to disturb the finding of the Ld.CIT (A). Moreover, we are bound to follow the order of this Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion even with regard to a question of law, the position will be a fortiori with regard to a question of fact. If the Tribunal wants to take an opinion different from the one taken by an earlier Bench, it should place the matter before the President of the Tribunal, so that he could have the case referred to a Full Bench of the Tribunal consisting of three or more members for which there is provision in the IT Act itself. 107.2 In the light of the ratio decidendi above we are of the considered opinion that the view adopted by the co-ordinate bench as discussed above shall be applied in the case on hand with full strength. The ld. DR before us has not brought any decisions varying from similar or identical facts or circumstances. Therefore, the ratio decidendi rendered by the earlier order of the Tribunal has necessarily to be followed by us in line and tune with the judicial discipline and decorum. Hence the ground of appeal of the Revenue is dismissed. 108. The issue raised in the ground no. 2 is that the Ld.CIT(A) erred in reducing the adjustment on account of ALP for Corporate Guarantee Fees from 2.96% to 2%. 108.1 An identical issue has been considered and decided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence in the sales price within the normal range of variation cannot be treated as diversion of profit. However, during the course of appellate proceedings of A.Y.2009-10, the Ld. Authorized Representative have filed copy of order of Hon'ble ITAT, Ahmedabad in the appellant's own case dated 22.02.2016 contained in ITA Nos. 1558 1676/Ahd/2006 (A.Y. 2002-03), ITA Nos. 1513 1701/Ahd/2007 (A.Y. 2003-04) and ITA Nos. 1193 1287/Ahd/2008 (A.Y. 2004-05), wherein the similar issue in A.Y. 2004-05, has been decided in the favour of appellant The Hon'ble ITAT has held that the authorities below have not pointed out any specific provisions under which such addition can be made. Moreover, the provisions of section 40A(2) are applicable only in respect of the payments made to the related parties. It has been further held that the Assessing Officer has not brought on record any claim u/s. 80IB made by the assessee and hence there was no justification for making the addition. 113. Being aggrieved by the order of Ld.CIT (A), the Revenue is in appeal before us. 114. Both the parties before us vehemently supported the order of authorities below as favorable to them. 115 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Overseas product registration charges ₹ 3,67,38,983/- 118. On perusal of the above, the AO observed that these expenses were incurred for registration of drug, patent in foreign countries. Therefore, these expenses are not covered under explanation to section 35(2AB) of the Act. Accordingly, the AO held that no weighted deduction in respect of such expenses could be claimed under section 35(2AB) of the Act. Thus the AO disallowed the excess weighted deduction claimed by the assessee amounting to ₹ 2,17,24,495/- and added to the total income of the assessee. 119. The aggrieved assessee, preferred an appeal to the Ld.CIT (A) who deleted the addition made by the AO by observing as under: 10. Ground No. 7 is against the action of the Assessing Officer in holding that the trade mark registration charges of ₹ 67,10,905/- and overseas product registration charges of ₹ 3,67,38,983/- are not eligible for weighted deduction-and accordingly, the Assessing Officer disallowed a sum of ₹ 2,17,24,945/- being weighted deduction u/s 35(2AB). This issue has been discussed by the Assessing Officer in para-5 of the assessment order. I find that basis of disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/Ahd/2011 qua ground no. 3 wherein the Bench has followed its earlier decision in ITA No. 2430/Ahd/2009. The findings thereon read as under:- Ground no. 4 relates to the disallowance of trade mark registration and overseas product registration charges u/s. 35(2AB). 11. On perusing the details of R D expenditure, the A.O found that the assessee has claimed weighted deduction @ 150% on - (a) Trade Mark Registration Charges : 2,42,56,296/- (b) Overseas Product Registration Charges : 2,00,00,508/- 12. The assessee was asked to justify its claim. Assessee filed a detailed reply justifying its claim of weighted deduction. It was explained that the expenditure incurred for product registration although named as Product Registration Expenditure is not merely an expenditure for registration of the product, but in large measure constitutes expenditure for validation and confirmation of the Research carried out. The A.O did not accept the claim of the assessee holding that these expenses were incurred for registration of drug patents in foreign countries. The A.O accordingly withdrew the weighted deduction and allowed only 100% of the same as revenue expenditu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to note that the ld. DR has not brought anything on record against the finding of the ld. CIT-A, and the argument advanced by the ld. Counsel for the assessee. 123.1 We also place our reliance on the judgment of Hon ble Madras High Court in the case of CIT v. L.G. Ramamurthi 1977 CTR (Mad.) 416 : [1977] 110 ITR 453 (Mad.). The relevant extract of the order has already been reproduced above. In the light of the ratio decidendi in the said order, we are of the considered opinion that the view adopted by the co-ordinate bench as discussed above shall be applied in the case on hand with full strength. The ld. DR has not brought any decisions varying from similar or identical facts or circumstances. Therefore, the ratio decidendi rendered by the earlier order of the Tribunal has necessarily to be followed by us in line and tune with the judicial discipline and decorum. Hence the ground of appeal of the Revenue is dismissed. 124. The issue raised by the Revenue in ground number 5 is that the Ld.CIT (A) erred in allowing the weighted deduction claimed under section 35(2AB) of the Act in respect of lunch/refreshment of expenses and brokerage of the property. 124.1 The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. I find that the facts pertaining to this issue as well as submission of the appellant are similar to A,Y. 2008-09 where the similar disallowance was also made. The CIT(A)- IV, Ahmedabad vide her order dated 14.10.2014, allowed the weighted deduction after elaborately discussing the facts and reasons in para-10.3 and 12.4 of the order. Since, these expenses relating to lunch and refreshment were pertaining to the employees engaged in R D activities and brokerage was paid for the property used in R D Centre, it was held that these expenses qualify for weighted deduction at 150%, Since the facts are identical in this year also, I respectfully following the order of CIT(A)-IV, Ahmedabad, direct the Assessing Officer to allow weighted deduction at 150% on lunch and refreshment and brokerage for property. Thus, Ground No. 8 is allowed. 129. Being aggrieved by the order of Ld.CIT (A), the Revenue is in appeal before us. 130. Both the parties before us vehemently supported the order of authorities below as favorable to them. 131. We have heard the rival contentions and perused the materials available on record. At the outset, we find that in the identical facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent appeal, we have extracted the relevant part of the decision of the Co- ordinate Bench. For the reasons given therein, ground no. 2 is also dismissed. 74. Ground no. 3 relates to the deletion of the disallowance of ₹ 7,91,222/- claimed u/s. 35(2AB) of the Act incurred for lunch, refreshment and brokerage paid for property used by R D unit employees. 119. Respectfully following the findings of the Co-ordinate Bench (supra), ground no. 5 is dismissed . 131.2 As facts in the case on hand are identical to the facts of the case as discussed above, therefore we are inclined not to disturb the finding of the Ld.CIT (A). Moreover, we are bound to follow the order of this Tribunal in the own case of the assessee in the earlier year as the facts are identical in the impugned issue before us. It is also important to note that the ld. DR has not brought anything on record against the finding of the Ld. CIT-A, and the argument advanced by the Ld. Counsel for the assessee. 131.3 We also place our reliance on the judgment of Hon ble Madras High Court in the case of CIT v. L.G. Ramamurthi 1977 CTR (Mad.) 416 : [1977] 110 ITR 453 (Mad.). The relevant extract of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made by the AO by observing as under: 13. Ground No.10 is against the action of the Assessing Officer in adding the provisions of Wealth-tax of ₹ 10,33,413/- to the book profit for computation u/s.115JB. This issue has been discussed by the Assessing Officer in para-6.1.1 and 6.1.2 of his order and it has been held that the Wealth-tax is of same nature as Income-tax. This issue was also involved in the case of appellant ion A.Y. 2008-09 and the CIT(A)-IV, Ahmedabad vide para-16.2 to 16.2.2 of the appellate order has allowed the appeal of the appellant on this account holding that the Wealth-tax paid, payable or a provision thereof, cannot be treated on par with Income-tax and accordingly the provisions for Wealth-tax was not required to be added to the book profit u/s.115JB. Respectfully following the order of CIT(A)-IV, Ahmedabad, I also direct the Assessing Officer to exclude the provisions of Wealth-tax from the book profit computation u/s.115JB. Thus, appellant succeeds in respect of Group No.10. 136. Being aggrieved by the order of Ld.CIT (A) the Revenue is in appeal before us. 137. Both the parties before us vehemently supported the order of authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght of the ratio decidendi in the said order, we are of the considered opinion that the view adopted by the co-ordinate bench as discussed above shall be applied in the case on hand with full strength. The ld. DR has not brought any decisions varying from similar or identical facts or circumstances. Therefore, the ratio decidendi rendered by the earlier order of the Tribunal has necessarily to be followed by us in line and tune with the judicial discipline and decorum. Hence the ground of appeal of the Revenue is dismissed. 139. The issue raised by the Revenue in ground number 8 is that the Ld.CIT (A) erred in deleting the addition made by AO under section 80IA(4) of the Act for ₹ 1,83,99,656/-. 139.1 The assessee in the year under consideration has not claimed a deduction of ₹ 75,37,561/-u/s 80IA(4) of the Act in its return and the revised return of income as there was no positive income in the computation of income. But the assessee claimed that it has the right to claim the deduction u/s 80IA(4) of the Act as and when necessary as per the provision of law. 139.2 All the units engaged in the business of the electricity, maintain separate books of account of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the decision of his predecessor for A.Y. 2008-09. We find that the Tribunal in ITA Nos. 3297 3420/Ahd/2014 has confirmed the findings of the First Appellate Authority vide ground no. 8 of that appeal. The relevant findings read as under:- 178. We have given a thoughtful consideration to the orders of the authorities below and the reasons given by the A.O. as mentioned elsewhere. The details of year-wise profits generated in captive power plant are as under:- Statement of Panoli CPP Panoli working of deduction u/s 801A CPP Panoli 08-09 CPP Panoli 07-08 CPP Panoli 06-07 Panoli CPP 05-06 Panoli CPP 04-05 A Profit before tax as per Profit Loss A/c 32,79,235 (9,53,471) 82,89,195 75,41,568 43,51,772 B) Add: Items disallowed / considered separately Depreciation 18,57,315 18,57,315 18,57,315 18,57,315 13,95,524 Disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o note that the ld. DR has not brought anything on record against the finding of the ld. CIT-A, and the argument advanced by the ld. Counsel for the assessee. 143.2 We also place our reliance on the judgment of Hon ble Madras High Court in the case of CIT v. L.G. Ramamurthi 1977 CTR (Mad.) 416 : [1977] 110 ITR 453 (Mad.). The relevant extract of the order has already been reproduced above. In the light of the ratio decidendi in the said order, we are of the considered opinion that the view adopted by the co-ordinate bench as discussed above shall be applied in the case on hand with full strength. The ld. DR has not brought any decisions varying from similar or identical facts or circumstances. Therefore, the ratio decidendi rendered by the earlier order of the Tribunal has necessarily to be followed by us in line and tune with the judicial discipline and decorum. Hence the ground of appeal of the Revenue is dismissed. 144. The issue raised by the Revenue in ground number 9 is that the Ld.CIT (A) erred in deleting the addition made by AO under section 37 of the Act for ₹ 74,11,66,808/-on account of expenses incurred on behalf of its sister concerns. 144.1 The AO on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to assume that the assessee has not incurred any expenses on making such a huge sale on behalf of SPI. In the absence of detail of expenses incurred by it on behalf of SPI and perusal of other expense, personnel cost debited by assessee the following expenses directly related to assessee s function performed on behalf of SPI Selling distribution expenses ₹ 122,29,47,629/- Salary and advance to field staff ₹ 76,91,47,335/- Total ₹ 199,20,94,983/- 145.1 These expenses divided into three concerns in their turnover ratio. The ratio of both partnership firms are 37.21 % (SPI 16.49% + SPS 20.72%) accordingly Rs, 74,11,66,808/- expenses are disallowed u/s 37 of the Act, as incurred on behalf of them by the assessee. 146. The aggrieved assessee preferred an appeal to the Ld.CIT (A) who deleted the addition made by the AO by observing as under: 21.3. This issue was also involved in A.Y. 2008-09 and the CIT(A)-IV, Ahmedabad vide order dated 14.10.2014 after considering the submission of the appellant which is similar to submission fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l applicable. 27. Respectfully following the findings of the Tribunal (supra), we direct the A.O to delete the addition of ₹ 21,25,278/-. Ground no. 9 is allowed. 124. Respectfully following the same, we direct the A.O. to delete the addition of ₹ 2,75,07,070/-. Ground no. 11 is allowed. 125. Ground no. 12 relates to the disallowance of ₹ 62,15,78,070/- made u/s. 37 of expenses incurred on behalf of Sun Pharmaceutical Industries. 126 An identical issue was considered by the Bench in assessee's own case in ITA NO. 1589/Ahd/2011 and ITA No. 2430/Ahd/2009. The relevant part of ITA No. 2430/Ahd/2009 has been extracted in ground no. 11 of this appeal. For similar reasons, we direct the A.O. to delete the disallowance of ₹ 62,15,78,070/-. 133. Respectfully following the decisions of the Co-ordinate Bench (supra), we decline to interfere. Ground no. 9 is dismissed. 149.1 As facts in the case on hand are identical to the facts of the case as discussed above, therefore we are inclined not to disturb the finding of the Ld.CIT (A). Moreover, we are bound to follow the order of this Tribunal in the own case of the assessee in the earlier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rking done by the Appellant as a contract manufacturer having regard to the functions performed, the assets deployed and risks undertaken by the Appellant in the transaction. The Ld. CIT(A) has grossly erred in upholding the order of AO/TPO who erred in classifying the sales made by the Appellant having regard to the relevant Para of the US PDA under which the approval was sought without appreciating the fact that the US PDA Para under which the product is filed is irrelevant for the Appellant who is a contract manufacturer. The Ld. CIT(A) has grossly erred in sustaining the additions made by the TPO by recharacterizing the transaction undertaken by the appellant based on peculiar interpretation of the past unpredictable future events. The Ld. CIT(A) has grossly erred in upholding the order of AO/TPO who erred in arbitrary adoption of residual profit split method (PSM) as the same cannot be applied to the transaction under review as neither there is any transfer of unique intangibles nor multiple interrelated transactions requiring separate evaluation. Without prejudice to the above, the Ld. C!T(A) failed to appreciate that if at all PSM is adopted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant for other Para IV products. 2.5 The Ld. CIT(A) has grossly erred in upholding the order of AO/TPO who erred in arbitrary adoption of residual PSM as the same cannot be applied to the transaction under review as neither there is any transfer of unique intangibles nor multiple interrelated transactions requiring separate evaluation, 2.6 Without prejudice to the above, the Ld. CIT(A) failed to appreciate that if at all PSM is adopted as the most appropriate method, the determination of ALP had to be in accordance with Rule 10B(1)(d)(ii) on the basis of reliable external market data which was totally nonexistent, hence application of PSM method would fail. 2.7 Without prejudice to the above, even if PSM is to be followed, the Ld. CIT(A) has grossly erred in not appreciating that the IPR belonged to the AE, AE was exposed to significant risks (having regard to the fact that the Para IV product had inherent risk) and accordingly the profit allocation to the AE ought to be high. 2.8 Without prejudice to the above, even if PSM is to be followed, the Ld. C1T(A) has grossly erred in enhancing the attribution of profits for Para IV product (other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hout prejudice to the above, if PSM is to bo followed, the ratio of 50:50 ought to be adopted for benchmarking sale of the products. 4. Non-deduction of Remuneration received from Partnership firm for determination of Book Profits u/s 115JB - ₹ 201,23,42,044/-: 4.1 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not considering the remuneration receivable from the partnership firm as an income to which the provisions of section 10 apply for the limited purpose of computing book profits u/s 115JB without appreciating that remuneration received from partnership firm is nothing but an appropriation of profit. 4.2 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) failed to appreciate that the entire mechanism of computing book profits is based on normal commercial profits having regard to the relevant accounting framework prescribed in Companies Act and thus remuneration is eligible to be deducted for computing book profits as per clause (ii) to Explanation to section 115JB (2) read with Chapter III of the Act. 4.3 On the facts and in the circumstances of the case and in law, the Ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure incurred on behalf of Sun Pharmaceutical Industries ('SPl') and Pharma Sikkim ('SPS') u/s 14A: ₹ 170,95,96,941/- 7.1 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in disallowing selling and distribution expenditure incurred by the Appellant u/s 14A on the ground that the said expenditure is directly incurred by the Appellant for earning exempt income without appreciating that: .1 Selling and distribution expenditure incurred by the Appellant is wholly and exclusively for the purposes and in furtherance of its business activities and in absence of any cogent evidence to the contrary, it could not be presumed to have been directly incurred for earning exempt income; .2 Remuneration received from the partnership firm is not an exempt income covered under chapter III rather a receipt which is not liable to tax in the hands of partner by virtue of interplay between provisions of section 28(v) and 40(b) since it has been indirectly charged in the hands of the partnership firm and therefore, application of section 14A is ruled out; .3 Provisions of section 14A cannot be applied to investments which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dering the amount disallowed u/s 14A under normal provisions, as amount to be added for computing book profit u/s 115JB without appreciating that the provisions of section 115JB and section 14A are mutually exclusive, deeming provisions enacted under the Income-tax Act which are to be made operative only to the extent of the deeming fiction created therein. The Ld. CIT(A) grossly erred in importing the deeming provisions of sub-section (2) and (3) of section 14A into Explanation to section 115JB. 9.2 Without prejudice to the above, the Ld. CIT(A) erred in adding an amount of ₹ 7,16,20,195/- u/s 115JB read with section HAread with rule 8D without appreciating that: .1 In absence of direct and specific expenditure incurred for earning exempt income, no addition of the amount disallowed u/s 14A read with Rule 8D in computing book profits is warranted. .2 The Assessing Officer has mechanically invoked Rule 8D without first recording its satisfaction regarding the correctness of the claim made by the Appellant; .3 The income earned by the Appellant fro:n the partnership firm is not an exempt income covered under chapter 111 of the Act and hence section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IR in this regard and the fact that Department of Scientific and Industrial Research (DSIR) has already approved the entire revenue expenditure. 10.4 Without prejudice to the above, Assessing Officer has undisputedly accepted that R D expenses are futuristic in nature, and under such circumstances, R D expenditure incurred during the year under consideration cannot be associated to the turnover of the said assessment year for the purpose of disallowance. 10.5 Without prejudice to the above, the Assessing Officer grossly erred in allocating total R D cost incurred by the Appellant in the ratio of domestic formulations turnover without appreciating that only cost of raw materials consumed shall be allocated between the Appellant and the partnership firm, as held by the Honorable ITAT for AY 2005-06, 2004-05 and 2002-03. 10.6 Without prejudice to the above, the Ld. CIT(A) grossly erred in not accepting the segment wise expenditure incurred by the domestic formulation department amounting to ₹ 3053.29 Lakhs and ought to have disallowed the R D expenses only relating to the domestic formulation activity. 10.7 Without prejudice to the above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t prejudice to the above, CIT(A) ought to have appreciated that as per the partnership deed, the Appellant, being the working partner was obliged to provide technical and other information to partnership firm in lieu of which it was entitled to receive remuneration and hence the utilization of the capital R D equipment for the activities of the partnership firm, if any, was only in the furtherance of its obligation under the partnership deed. 11.6 Without prejudice to the above and without accepting any disallowance of the expenses, the Ld. CIT(A) should have restricted the disallowance towards expenses as provided u/s 14A read with Rule 8D. 12. Addition on account of re-characterizing remuneration from SPI and SPS (partnership firms) as consideration for use of Trademarks, Brands etc. - ₹ 201,23,42,044/-: 12.1 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) grossly erred in upholding the recharacterization of the remuneration received from the partnership firms, which is not taxable by virtue of the proviso to section 28(v) read with section 40{b) of the Act. In doing so, the Ld. CIT(A) erred in arbitrarily re-characte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income. 12.6 Without Prejudice to the above, the Ld. CIT(A) ought to have appreciated that only ₹ 86,63,96,134/- being remuneration from SPS accruing in the current year should have been considered and remuneration of ₹ 96,27,96,704/- pertaining to past years cannot be included for the purpose of computing disallowance under this ground. 12.7 Without prejudice to the above and without admitting that the remuneration amounts to royalty, the Ld. CIT(A) ought to have appreciated that in any case, the entire remuneration cannot be held to be received for permitting use of trademarks, brand name but is for a wide range of functions / services performed by the Appellant in its capacity as working partner. 13. Re: Disallowance of R D Expense not approved by DSIR of ₹ 36,93,69,000/-: 13.1 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) grossly erred in setting aside the issue to the AO on the ground that details of the expenses have not been furnished whereas in fact the relevant details have been duly submitted to the AO as well as the Ld. CIT{A) as part of the paperback. 14. Taxability of interest on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowing deduction of the remuneration received from the partnership firms while determining the books profit under section 115JB of the Act. 155.1 We have already decided the impugned issue against the assessee in ITA 929/AHD/2017 in the ground of appeal bearing no. 8 vide Para No. 56 57 of this order. Thus respectfully following the same, the ground of appeal of the assessee is dismissed. 156. The issue raised by the assessee in the ground no. 5 is that the Ld.CIT (A) erred in not allowing the deduction of ₹ 7,56,90,473/- on account of expenditure incurred for doctors towards business promotion. 156.1 The assessee has shown ₹ 2424.3 million on account of selling distribution expenses which includes ₹ 8,41,89,667/- on account of the distribution of gifts and providing hospitality services to the doctors/ medical practitioners. 156.2 However, the AO was of the view that the said expenditure is prohibited under the guidelines issued by the medical council of India (MCI). Therefore the same is not allowable under section 37(1) of the Act. 156.3 However, the assessee submitted the breakup of ₹ 8,41,89,667/- as under: Sr.N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r No. 5/2012 dated 1-8-2012 which highlight that any expense incurred in the nature of freebees to a medical practitioner is to be disallowed. Accordingly, the AO disallowed the sum of ₹ 8,41,89,667/- and added to the total income of the assessee. 158. Aggrieved assessee carried the matter to Ld. CIT (A) who partly confirmed the order of the AO by observing as under: 23.2 I have careful considered the facts on record and submission of the ''Ld. Authorized Representative. Admittedly, the appellant has incurred expenditure of ₹ 8,41,89,667/- as detailed above on gift and reimbursement of lodging and boarding and conference expenses incurred / by the Doctors/medical practitioners. As is evident from the written \ submission, the business promotion expenses of ₹ 7,27,99,029/-are pertaining to the equipment provided to various medical j practitioners as gifts. Claim of indirect business gain as a result of gifts/ provided to the medical practitioners is irrelevant for alfowabifity of these expenses. The appellant has also argued that the amendment to Indian Medical Council (Professional Conduct, Etiquette Ethics) Regulation 2002 on 10.12.2009 and CBD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... road. It has further been claimed that conference and seminars were organized to gain the knowledge by the medical practitioner which is, then shared with the appellant for improving the product quality and Research and Development. From the submission of appellant itself, it is crystal clear that the reimbursement of accommodation expenses have directly benefited the medical practitioner and Doctor and hence the same is in the nature of gift hit by Circular No. 5/2012 and amended guidelines of Medical Council of India. Accordingly, I hold that accommodation expenses at ₹ 28,91,444/- are also deserves to be disallowed being freebies. The conference fees and sponsorship expenses since were incurred for sharing the knowledge in the medical field which may help in improving the product and Research and Development activity of (appellant, in my considered view, it is not hit by the Circular No. 5/2012 and amended MCI Guidelines. Further they appears to be in the nature of remuneration for services rendered by the Medical Professionals in the conference and seminars. Accordingly, the disallowance to the extent .of ₹ 84,99,194/- being conference fees and sponsorship is dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We afforded ample rebuttal opportunity to the Revenue. Learned Departmental Representative fails to indicate any distinguishing features therein. We find that the above latter co-ordinate bench has elaborately discussed all case laws, IMC regulations as well as Board's circular in deciding the issue. We therefore adopt the very reasoning herein as well to delete the impugned disallowance. The assessee succeeds in its instant substantive ground 161.2 The facts of the case on hand are identical to the facts of the case as discussed above. Therefore respectfully following the same, we allow the ground of appeal of the assessee and dismiss the ground of appeal of the Revenue. 162. The issue raised by the assessee in the ground of 6 is that the Ld. CIT-A erred in treating the repairing expenditure of ₹ 28,93,787/- as capital in nature. 162.1 We have already decided the impugned issue in favor of the Revenue in ITA 929/AHD/2017 in the ground of appeal bearing no. 10 vide Para No. 72 73 of this order. Thus respectfully following the same, the ground of appeal of the assessee is dismissed. 163. The issue raised by the assessee in the ground of 7 is that the Ld.CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brands. 167.1 The assessee in the year under consideration has received remuneration from the partnership firm namely SPI amounting to ₹ 18,31,49,206/- and from SPS amounting to ₹ 1,82,91,92,838/-which has been reduced in computing the taxable profit under the normal provision of the Act. The assessee claimed that the remuneration paid to it by the firm was not allowed as a deduction in the hands of the partnership as mentioned earlier. 167.2 Accordingly, the assessee claimed that such remuneration is not taxable in its hands as per proviso to section 28(v) r.w.s. 40(b) of the Act. 168. However, the AO disregard the contention of the assessee by observing that the Ld. CIT (A) in its case for AY 2008-09 in similar facts and circumstances treated the remuneration as taxable income by holding that remuneration was nothing, but it was fee for the use of all present and future trademark/brands and technology of the partnership firms. Therefore the AO took a similar view in the year under consideration and treated the remuneration as taxable income amounting to ₹ 2,01,23,42,044/- and added to the total income of the assessee. 169. Aggrieved assessee carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l in this year also, I respectfully following the order of CIT(A)-IV, Ahmedabad in A.Y. 2008-9 and my own order in A.Y.2009-10, hold that Assessing Officer is justified in treating the remuneration of ₹ 201,23,42,044/- as consideration received for use of trademark/brands and accordingly assessing the same under normal provisions of the Act. Thus Ground No. 18 is dismissed. 170. Being aggrieved by the order of the Ld.CIT (A) assessee is in appeal before us: 171. The Ld. AR before us submitted that in the identical facts and circumstances this ITAT in the own case of the assessee bearing ITA No. 1666/AHD/2016 for the AY 2009-10 vide order dated 08-09-2017 has deleted the addition made by the AO. Therefore there is no question for making the addition to the total income. 172. On the other hand the Ld. DR vehemently supported the order of the Lowe Authorities. 173. We have heard the rival contentions and perused the materials available on records. At the outset, we find that in the identical facts and circumstances in the own case of the assessee s (supra), the ITAT deleted the addition made by the AO. The relevant extract of the order is reproduced as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case on hand are identical to the facts of the case as discussed above, therefore respectfully following the same we set aside the order of ld. CIT-A. Accordingly, we direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is allowed. 173.2 Moreover, we are bound to follow the order of this Tribunal in the own case of the assessee in the earlier year as the facts are identical in the impugned issue before us. Therefore respectfully following the same we delete the addition made the AO. 173.3 We also place our reliance on the judgment of Hon ble Madras High Court in the case of CIT v. L.G. Ramamurthi 1977 CTR (Mad.) 416 : [1977] 110 ITR 453 (Mad.). The relevant extract has been reproduced in the preceding paragraph. In the light of the ratio decidendi in the above-said judgment, we are of the considered opinion that the view adopted by the co-ordinate bench as discussed above shall be applied in the case on hand with full strength. The ld. DR and the ld. AR has not brought any decisions varying from similar or identical facts or circumstances. Therefore, the ratio decidendi rendered by the earlier order of the Tribunal has necessarily ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le @200% out of a (a) above 4,802.56 (2,401.28*2) 174.5 The assessee further filed the reconciliation statement of the difference between the expenditure (both Revenue Capital) claimed by it and the expenditure approved by the DSIR: 174.6 Reconciliation statement for revenue expenditure as under: I. Revenue R D expenditure Particulars Amount (Rs. In lacs) Amount (Rs.in lacs) Gross Amount of Revenue R D on which weighted deduction is claimed 16,566.24 Less: Amount Inadmissible 1.Less on Sale of Fixed Assets 2.Sale Proceed on sale of Assets (7.83) (8.40) (16.23) Net Amount of Revenue R D on which weighted deduction is claimed by the Assessee in the return of income 16,550.01 Less Expenses not included above 1.Foreign Patent 2.Repairs on building 3.Muncipal Taxes 4.Painting-Building 5.Rates Taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the expenses incurred on building repair and maintenance etc, amounting to ₹ 100.15 lacs detailed as under: Sr.No. Particulars Amount 1. Repairs on Bilding 88.20 2. Painting Building 7.93 3. Munciupal Taces 33.39 4. Rates and Taxes 13.81 5. Rent 0.27 Total 143.6 The assessee in response to the notice issued by the AO explained that the word expenditure in the nature of cost of any land or building used in section 35(2AB) of the Act relates to the purchase of any land or building. But the expenses claimed by it are in the nature of wear tear expenses which are not capital in nature for the land or building. Therefore the repair and maintenance charges cannot be considered as the cost of the building. These expenses were incurred for wear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee has incurred the advertisement expense amounting to ₹ 1.71 lacs on which it claimed deduction u/s 35(2AB) of the Act. Such advertisement expenses paid by the Tandalja R D unit to find out volunteers for the purpose of carrying out clinical trial which is integral part of the R D activities. 6) The assessee has incurred expenses towards foreign professional fees amounting to ₹ 719.61 lacs. The professional fees incurred by the assessee for getting the advice relating to patents, violation or infringement on the existing patent of various pharmaceutical product. 7) The assessee has incurred contract labour charges during the year under consideration amounting to ₹ 219.81 lacs and claimed weighted deduction u/s 35(2AB) of the Act for ₹ 439.62 lacs. These payments made to contractors who provide the employee on temporary basis. This payment is equal to salary payment made to employee. There the same is eligible for deduction. 8) The assessee has incurred capital expenses towards purchase vehicle amounting to ₹ 96.63 lacs during the year under consideration. Such vehicles are used for the transportation of the employee of the R D unit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re us. The assessee is in appeal before us against the direction of the ld. CIT-A for the verification of the expenses and the Revenue is in appeal before us against the direction of the ld. CIT-A to allow the relief to the assessee after the verification of the expenses. 179. The Revenue before us has raised the following grounds of appeal: 14. Whether on the facts and circumstances of the cae and in law the Ld. C.I.T. (A) was justified in directing the A.O. to verify each and every item of the expenses not certified by D.S.I.R. included in ₹ 2046.99 lacs and then allow consequential relief without appreciating that the A.O. had correctly disallowed assessee's claim of weighted deduction u/s. 35(2AB) of the Act to the extent of ₹ 2046.99 lacs since the A.O. has no power to allow weighted deduction u/s. 35(2AB) of the Act in excess of what has been approved by D.S.I.R. in accordance with the provision of section 35(2AB) of the Act 15. Whether on the facts and Circumstances of the case and in law, the Ld. C.I.T. (A) was justified in directing the A.O. to verify each and every item of the expenses not certified by D.S.I.R. included in ₹ 2046.99 lacs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... materials available on record. At the outset, we note that the ld. CIT-A allowed the ground of the assessee for statistical purpose after having reliance of the order of his predecessor for the AY 2008-09. We further note that the assessee against the order of the Ld. CIT-A preferred an appeal before the Tribunal in ITA No. 3297/AHD/2014 which was decided in favor of the assessee vide order dated 16-6-2017. The relevant extract is reproduced below. 93. As demonstrated elsewhere, the IPR/ANDA rights were very much with SPG BVI who entered into an agreement with the appellant company for the manufacturing of the said drug. The application of Transactiona!- Net Margin Method is the most appropriate method in such sale transaction and has been benchmarked by the assessee by showing it to be higher than the margin earned from the sales made to Eli Lily. 94 .Considering the facts in totality in the light of the decision of the Hon'ble Supreme Court in the case of Vodafone International Holdings B.V. (supra) and on conspectus understanding of the facts as ^discussed elsewhere, we do not find any merit in the findings of the First Appellate Authority in accepting the applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The Id. D.R, could not bring any distinguishing decision in favour of the reven ue. 14. We have given a thoughtful consideration to the order of the Tribunal in earlier years; we find that the Tribunal while deciding the issue in favour of the assessee has followed the decision of the Coordinate Bench, Mumbai in the case of USV Ltd. 54 SOT 615. Findings of the Tribunal read as under:- 24. We have carefully perused the orders of the authorities below. We find that the Id. CIT(A) has simply followed the findings of his predecessor for A.Y. 2000-01. We also find that the assessment order for A. Y. 2000-01 has been quashed by the Tribunal vide a ITA Nos. 1199 1279/Ahd/2006, which means that the basis for upholding the disallowance has been removed. We further find that on identical set of facts, the Mumbai Bench in the case of USV Ltd. (supra) has allowed the .claim of the assessee in respect of expenditure incurred in respect of patent application. Respectfully, following the findings of the coordinate Bench (supra); we direct the A.O to delete the disallowance of ₹ 44,71,906/- Ground no. 10 is accordingly allowed. , 15. Respectfully following the detailed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decided in favour of the assessee and against the revenue by the Co-ordinate Bench in ITA No. 1592/Ahd/2011 qua ground no. 2 of that appeal. The relevant part reads as under:- Ground no. 2 relates to the weighted deduction u/s. 35(2AB) on account of gifts to R D employees on occasion of marriage. 44. We find that an identical issues has been decided in favour of the assessee and against the revenue in the case of Claries Lifesciences Ltd. 112 ITD 307 (Ahd.) which decision has been followed by the ld. CIT(A). The said decision of the Tribunal has been confirmed by the Hon'ble . A.Y. 2009-10 Jurisdictional High Court in Tax Appeal No. 383 of 2008. Now, that the decision of the First Appellate Authority is well supported by the decision of the Hon'ble Jurisdictional High Court. No interference is called for. Ground no. 2 is dismissed. 71. Respectfully following the same, ground no. 1 is dismissed. 72. Ground no. 2 relates to the deletion of the disallowance of ₹ 42,46,000/- claimed u/s. 35(2AB) of the Act on repairs and municipal taxes paid for building utilized for R D activity. 73. An identical issue was considered by the Co-ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s required to avoid leakage and only in-house staff will have assessed to building. Accordingly, this expenditure are for preserving the research which is completed and its clinical trial is pending. As regards to the environmental issue, the assessee-company has set up an affluent plant and as is widely accepted the vegetation, i.e. trees have contained the pollution. This expenditure of gardening and plantation have been done for the perseverance of environment and this is directly related to R D facilities. As regards to salary paid to Dr. C.Dutt amounting to ₹ 58.54 lakhs, he is in-charge of R D Centre at Bhatt. He is the person through whom all co-ordination of technical scientists and other technical persons are carried out. The entire reporting of the research activity to the management has been taken to the Board of Directors through him only and for this the salary is paid. Accordingly, the assessee has rightly paid the entire expenditure of ₹ 133.92 lakhs and building repairs ₹ 37.55 lakhas on which weighted deduction u/s.35(2AB) of the Act is allowable. In view of the above discussion, we allow ITA No.333 346/A/06 4343, 4356/A/07 A.Ys 02-0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income tax refund. 184.1 On the basis of AIR data/ ITS detail, the AO found that the assessee has received interest on income tax refund u/s 244A of the Act of ₹ 5,99,53,963/- for AY 2009-10 2011-12 vide letter dated 21-09- 2015. However, the assessee has not disclosed it in the return of income. Accordingly, assessee was sought to explain for the same. 184.2 In reply to the question of AO, the assessee filed a letter dated 22- 02-2016 by stating that it has not accounted for such income during the year under consideration. 185.3 In view of the above, the AO accordingly added the amount of ₹ 5,99,53,963/- to the total income of the assessee. 186. Aggrieved assessee carried the matter to Ld. CIT (A) who confirmed the order of the AO by observing that the assessee failed to furnish any acceptable reason against the action of the AO. 187. Being aggrieved by the order of the Ld.CIT (A) assessee is in appeal before us: 188. The Ld. AR before us conceded that the issue stands against the assessee. On the contrary the Ld. DR before relied on the order of authorities below. 189. We have heard the rival contentions of the parties and perused the materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... barred. The Tribunal thus, rightly permitted this additional ground to be raised and correctly dealt with the same ground on merits as well. Order of the High Court affirming this view of the Tribunal is therefore without any blemish. Further, in view of aforementioned findings, it is not necessary to enter into this controversy. Thus, there is no merit in these appeals The implication of the fact that the assessment order passed by the Assessing Officer covers eight assessment years is to be noted. The assessment done in six assessment years is under section 153C. Assessment order is set aside only in respect of four such assessment years that too on the technical ground, noted above. The objection pertaining to the four assessment years in question does not relate to the other two assessment years, namely, 2004-05 and 2005-06. Likewise, this decision has no bearing in respect of assessment done qua assessment year 1999-2000 as well as assessment year 2006-07. The necessary consequence would be that insofar as the conclusions of the Assessing Officer in his assessment order regarding the activities of the trust not being genuine and not carried out in accordance with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion charges and overseas product registration charges without appreciating that the A.O. had correctly disallowed the assesee's claim of weighted deduction u/s. 35(2AB) of the Act since the the expenses on trade mark registaration charges and overseas product registration charges were incurred by the assessee outside India and hence the same could not be considered for the purpose of allowance of weighted deduction u/s. 35(2AB) of the Act. 4. Whether on the facts and circumstances of the case and in law, the Ld. C.I.T. (A) was justified in directing the A.O. to allow weighted deduction on expenses relating to building repairs and Muncipal Taxes amounting to ₹ 1,21,59,206/-without appreciating that the A.O. had correctly disallowed expenditure on repair to building and municipal taxes u/s. 35(2AB) of the Act since the assesee did not establish as to how expenditure on repair to building and municipal tadaes lead to improvement in R D activitities carried on by the assessee. 5. Whether on the facts and circumstances of the case and in law, the Ld. C.I.T. (A) was justified in directing the A. O. to allow weighted deduction at 200% on lunch and refreshment and b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucing its profit with an intention to minimise its tax liability. 9. Whether on the facts and circumstances of the case and in law, the Ld. C.I.T. (A) ws justified in holding that The appellant is eligible for deduction u/s. 80IA(4) in respect of income of Captive Power Generation Unit and hence the Assessing Officer is directed to allow the same after correctly computing the income of eligible unit without appreciating that the A.O. by relying on the provision of 80A(4) 80AB, SOB 80IA(1) of the Act had correctly disallowed assessee's claim of deduction u/s. 80IA(4) of the Act. 10. Whether on the facts and circumstances of the case and in law, the Ld. C.I.T, (A) was justified in holding that The appellant is eligible for deduction u/s. 80IA(4) in respect of income of Captive Power Generation Unit and hence the Assessing Officer is directed to allow the same after correctly computing the income of eligible unit , without appreciating that the assessee did not substantiate its claim with facts and figures to prove that it had included profit of the Undertaking derived from utilization of captive power Genertion Unit in the gross total income. 11. Whether O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in law, the Ld. C.I.T. (A) was justified in directing the A.O. to verify each and every item of the expenses not certified by D.S.I.R. included in ₹ 2046.99 lacs and then allow consequential relief without appreciating that it was for the assesee to approach the Secretary, D.S.I.R. for reconsideration of approval of expenditure on scientific rsearch to the extent of ₹ 2046.99 lacs not considered in certificate issued by the Secretary, D.S.I.R.. for the purpose of weighted deduction u/s. 35(2AB) of the Act. 16. Whether on the facts and Circumstances of the case and in law, the Ld. C.I.T. (A) was justified in directing the A.O. to verify each and every item of the expenses not certified by D.S.I.R. included in ₹ 2046.99 lacs and then allow consequential relief without appreciating that in accordance with the Scheme of Section 35(2AB) of the Act, the approval of expenditure on Scientific research is the guiding factor for the A.O, to determine the allowance or otherwise of the weighted deduction u/s. 35(SAB) of the Act claimed by the assessee. 17. Whether on the facts and Circumstances of the case and in law, the Ld. C.I.T. (A) was justified in direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he view that the above cost is in relation to the building which is not eligible for weighted deduction under section 35(2AB) of the Act. 196.1 The assessee in response to the notice issued by the AO explained that the word expenditure in the nature of cost of any land or building used in section 35(2AB) of the Act relates to the purchase of any land or building. But the expenses claimed by it are in the nature of wear tear expenses which are not capital in nature for the land or building. Therefore the repair and maintenance charges cannot be considered as the cost of the building. These expenses were incurred for wear tear and maintenance of the building. These expenses are not bringing the building into existence or to put to use for work. Therefore expenses are not in the nature of capital. 196.2 Repair of building expenses incurred for the building in which the research and development activity carried out. 196.3 However, the AO rejected the contention of the assessee by observing that the repair and maintenance and municipal tax expenses incurred by the assessee pertaining to the building in which R D activities carried out. Therefore on these expenses only 100 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 73. An identical issue was considered by the Co-ordinate Bench in ITA No. 1592/Ahd/2011 qua ground nos. 2 3 of that appeal. In ground no. 1 of the present appeal, we have extracted the relevant part of the decision of the Co- ordinate Bench. For the reasons given therein, ground no. 2 is also dismissed. 200.1 The facts of the case on hand are identical to the facts of the case as discussed above. The ld. DR has also not brought anything on record contrary to the finding of ld. CIT-A, and the argument advanced by the ld. AR for the assessee. Therefore respectfully following the same, we do not want to disturb the finding of ld. CIT-A. Hence the ground of appeal of the Revenue is dismissed. 201. The issue raised by the Revenue in ground number 5 is that the Ld.CIT (A) erred in allowing the weighted deduction claimed under section 35(2AB) of the Act in respect of lunch/refreshment of expenses and brokerage of the property. 201.1 We have already decided the impugned issues against the Revenue in the ground of appeal bearing no. 5 vide Para No. 131 of this order in ITA 922/AHD/2017. Thus respectfully following the same, we are inclined not to disturb the finding of the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue in ground no. 13 is that the Ld.CIT (A) erred in deleting the addition made by the AO for ₹ 84,99,194/- on account of reimbursement of conference fees and sponsorship fees to the medical practitioners. 206.1 At the outset, we note that we have adjudicated the issue raised by the Revenue along with ground of appeal of the assessee bearing no. 5 vide Para no. 161 of this order in ITA 1237/AHD/2017. Thus respectfully, following the same, we do not find any reason to interfere in the order of the Ld. CIT-A. Hence the ground of appeal of the Revenue is dismissed. 207. The interconnected issue raised by the Revenue in ground no. 14 to 17 is that the Ld.CIT (A) erred in directing the AO to allow the claim of the assessee after verifying each and every item of the expenses not certified by the DSIR. 207.1 At the outset, we note that we have adjudicated the issue raised by the Revenue along with ground of appeal of the assessee bearing no. 13 vide Para no. 183 of this order in ITA 1237/AHD/2017. Thus respectfully, following the same, we do not find any reason to interfere in the order of the Ld. CIT-A. Hence the ground of appeal of the Revenue is dismissed. 207.2 In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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