Roche Diagnostics India Private Limited v. Additional Commissioner of Income-tax, Range-8(3), Mumbai
[Citation -2019-LL-0823-13]

Citation 2019-LL-0823-13
Appellant Name Roche Diagnostics India Private Limited
Respondent Name Additional Commissioner of Income-tax, Range-8(3), Mumbai
Court ITAT-Mumbai
Relevant Act Income-tax
Date of Order 23/08/2019
Assessment Year 2008-09
Judgment View Judgment
Keyword Tags most appropriate method • determination of alp • original proceedings • trading activity • operating profit • mistake apparent • profit margin • tpo
Bot Summary: 3, had pleaded for consideration of fresh benchmarking analysis done by the assessee during proceedings before Ld. TPO. In ground no. At the same time, Ld. AR had pleaded for inclusion of M/s Frontline Electro Medical Limited as identified by the assessee in the fresh benchmarking before Ld. TPO. The Ld. DRP had rejected this entity finding the same not functionally comparable and in view of the fact that its turnover was less than 20 crores as against assessee s turnover of around Rs.200 Crores. Coming to the present miscellaneous application, Ld. AR has pleaded that the issue under appeal was limited to selection of two comparable entities and the fact whether Ld. TPO/DRP was justified in applying / upholding the turnover filter of Rs.1000 Crores in the comparability analysis. Upon careful consideration, we find that the issues under appeal primarily revolved around application of turnover filter, if any and functional comparability of the comparable entities and the grounds of appeal raised by the assessee were also concerned with the same. The bench, after considering, the orders of lower authorities observed that nothing was on record to demonstrate whether the turnover filter was a relevant factor / determinative factor for arriving at margins in assessee s particular line of business as against the arguments of Ld. AR that turnover filter was not a relevant criterion. Considering the fact that specific grounds were raised by the assessee and the assessee had also submitted fresh benchmarking during proceedings before Ld. TPO, which was not considered by Ld. TPO on the ground that earlier TP study was not rejected, the matter was remitted back. To dispel the concern raised by Ld. AR, it is made clear that the methodology adopted by the assessee including selection of most appropriate method as accepted by the revenue in the original proceedings, shall not be disturbed and the issues shall be limited to application of turnover filter, if any and selection of comparable entities.


IN INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM M.A. No. 117/Mum/2019 [Arising Out of ITA No. 7566/Mum/2012] (Assessment Year: 2008-09) Roche Diagnostics India Additional Commissioner of Private Limited Income Tax Range-8(3) Plot No.114, Road No.15 Room No.220,2 n d Floor MIDC, Andheri(E) Vs. Aaykar Bhavan, M.K. Road Mumbai-400 093 Mumbai 400 020 PAN/GIR No. AAACA0266H (Appellant) (Respondent) Assessee by Shri Nitesh Joshi, Ld. AR Revenue by Ms. Jyoti Lakshmi Nayak 07/06/2019 Date of Hearing 23/08/2019 Date of Pronouncement ORDER Manoj Kumar Aggarwal (Accountant Member) 1. By way of this application, assessee seeks recall of Tribunal order dated 04/05/2018 which has disposed-off assessee s appeal for AY 2008-09. issue under appeal was related with determination of ALP of distribution segment which consisted of purchase of trading goods by assessee from its AE and receipts from AE s against sale 2 made to Indian customers pursuant to global master agreement. Both these transactions were aggregated for purpose of determination of ALP. assessee s, in its TP study, had selected 9 comparable to benchmark transactions out which 4 comparable got excluded due to application of upper turnover filter of Rs.1000 Crores. assessee objected to inclusion of one comparable entity namely M/s Ashco Newlab Industries Ltd. on account of restructuring and also submitted fresh benchmarking. However, both these pleas got rejected by Ld. TPO and certain TP adjustments were proposed. action of lower authorities, upon confirmation by Ld. DRP, was under challenge before us. assessee, by way of ground no. 3, had pleaded for consideration of fresh benchmarking analysis done by assessee during proceedings before Ld. TPO. In ground no. 4, assessee contested inclusion of M/s Ashco Newlab Industries Ltd., inter-alia, on account of fact that trading income was only 49.96% and segmental results for trading activity were not available. At same time, Ld. AR had pleaded for inclusion of M/s Frontline Electro Medical Limited as identified by assessee in fresh benchmarking before Ld. TPO. Ld. DRP had rejected this entity finding same not functionally comparable and in view of fact that its turnover was less than 20 crores as against assessee s turnover of around Rs.200 Crores. In ground No. 5, assessee had contested rejection of certain comparable entities on account of turnover filter. 2. Tribunal, after considering grounds of appeal as well as rival submissions, vide para 4.1 to 4.4, remitted matter back to file of Ld. AO / TPO for fresh determination of ALP of transactions 3 under dispute keeping in certain factors as enumerated in those paragraphs. At para 4.2, it was observed that nothing was on record to demonstrate whether turnover filter was relevant factor / determinative factor for arriving at margins in assessee s particular line of business. issues were primarily revolving around application of turnover filter and functional comparability of comparable. In light of all these factors, bench, in its wisdom, had remitted matter back to file of lower authorities. 3. Coming to present miscellaneous application, Ld. AR has pleaded that issue under appeal was limited to selection of two comparable entities and fact whether Ld. TPO/DRP was justified in applying / upholding turnover filter of Rs.1000 Crores in comparability analysis. It has been submitted that assessee is aggrieved by direction with respect to fresh determination of Arm s Length Price of international transactions since it would place unreasonable burden on it to carry out fresh analysis after period of almost decade. Ld. AR further pointed out that it was argued that there was no linear relationship between turnover and operating profit margin of comparable entities and therefore, observation that no submissions were made to demonstrate whether turnover filter was relevant was factually incorrect. Reliance has been placed on decision of Hon ble Apex Court rendered in Honda Siel Power Products Limited V/s CIT [295 ITR 466] to submit that if Tribunal s mistake results in prejudice to party then Tribunal would be justified in rectifying mistake. In above circumstances, Ld. AR pleaded for recall of order. Ld. DR, on other hand, submitted that there 4 was no power to review order and same could be interfered only to rectify mistake apparent from record. 4. Upon careful consideration, we find that issues under appeal primarily revolved around application of turnover filter, if any and functional comparability of comparable entities and grounds of appeal raised by assessee were also concerned with same. bench, after considering, orders of lower authorities observed that nothing was on record to demonstrate whether turnover filter was relevant factor / determinative factor for arriving at margins in assessee s particular line of business as against arguments of Ld. AR that turnover filter was not relevant criterion. Therefore, considering fact that specific grounds were raised by assessee and assessee had also submitted fresh benchmarking during proceedings before Ld. TPO, which was not considered by Ld. TPO on ground that earlier TP study was not rejected, matter was remitted back. 5. To dispel concern raised by Ld. AR, it is made clear that methodology adopted by assessee including selection of most appropriate method as accepted by revenue in original proceedings, shall not be disturbed and issues shall be limited to application of turnover filter, if any and selection of comparable entities. 6. application stand allowed to extent indicated hereinabove. Order pronounced in open court on 23rd August, 2019. Sd/- Sd/- (Mahavir Singh) (Manoj Kumar Aggarwal) Judicial Member Accountant Member Mumbai; Dated : 23.08.2019 Sr.PS:-Jaisy Varghese 5 Copy of Order forwarded to 1. Appellant 2. Respondent 3. CIT(A) 4. CIT concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER, (Dy.
Asstt.Registrar) , ITAT, Mumbai Roche Diagnostics India Private Limited v. Additional Commissioner of Income-tax, Range-8(3), Mumbai
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