The Week That Was - Episode 35 (April 22, 2016)

CASE LAWS

2016-TII-221-ITAT-DEL-TP

RANBAXY LABORATORIES LTD Vs ACIT : DELHI ITAT (Dated: April 25, 2016)

Income tax - Sections 10, 14A, 35(2AB), 37(1), 40(a)(ia), 80IA(8), 80IB, 80IC, 92CC, 115JB, 143(3) & 144C - Rules 8D & 10MA.

Keywords - ALP - AE - APA - advance pricing agreement - book profit - contribution to healthcare society - deferred employee compensation - dividend income - ESOP scheme - ECB - forex fluctuations - hedging charges - inter unit transfer - roll back provisions - R&D expenditure - tested party & weighted deduction.

Whether advance pricing agreement entered into by an assessee with CBDT during previous year can be followed for determining ALP of the international transactions for the subsequent current year, in case the nature of international transactions, FAR of assessee and the AEs are respectively similar - YES: ITAT

Whether the selection of tested party should be taken as foreign AE for the current year as well, where the tested parties i.e., foreign AEs selected by above mentioned the APA are least complex and the adequate financial data are available for comparison on region/country basis - YES: ITAT

Whether deferred employees compensation debited by an assessee to the profit and loss account, is revenue expenditure allowable u/s 37(1) - YES: ITAT

Whether contribution made by an assessee to healthcare society is an allowable deduction - YES: ITAT

Whether disallowance u/s 40a(ia) is warranted, in the absence of specific section under which the tax is required to be deducted on such contribution without their being any service rendered by the recipient of the contribution - NO: ITAT

Whether any addition u/s 115JB is warranted for amount of disallowance u/s 14A - NO: ITAT

Whether provision of section 80 IA (8) could be invoked, in absence of any inter unit transfer - NO: ITAT

Assessee's appeal partly allowed

2016-TII-220-ITAT-MUM-TP

SYNGENTA BIOSCIENCES PVT LTD Vs DCIT : MUMBAI ITAT (Dated: April 22, 2016)

Income Tax - Sections 40(a)(ia), 92C(2), 92F, 143(3) & 144C.

Keywords: ALP determination - Research & Technical Services - AE - relinquishment of right - short term capital gains - turnover - cost of acquisition - working capital adjustments.

Whether in order to take into account the difference in the net working capital requirements between the assessee and comparables selected by revenue, appropriate adjustments should be made on account of debtors and creditors -YES: ITAT

Whether if the assessee has filed the date of three years to show any variability distortions which are having effect on determination of TP, the comparables which are available in public domain even after the conduct of the studies by assessee, can be taken as comparables and considered for benchmarking - NO: ITAT

Whether for the purpose of computing ALP margin, the comparable chosen by assessee can be removed by the TPO for computation of margin and working capital adjustment to the comparables - YES: ITAT

Whether in case the adjustment of refund of deposit from the Govt. department is to be treated as sale consideration, in such case the assessee should also be allowed this as cost of acquisition for the purpose of computing capital gains - YES: ITAT

Assessee's appeal partly allowed