DCIT Vs Glenmark Pharmaceuticals Limited (ITAT Mumbai)
ITAT Mumbai held that with respect to benchmarking of export transaction, foreign Associated Enterprise [AE] can be chosen as tested party since AE possess the least complex functional analysis. Accordingly, transfer pricing adjustment not justifiable.
Facts- The assessee is the ultimate holding company of the Glenmark Group. It is research led global, fully integrated pharma company, head quartered in Mumbai, incorporated in 1977, and engaged in the business of manufacturing and marketing of formulations in India. Globally, it enjoys diversified presence in regulated and developing international market. Post restructuring in 2008, it now focuses on manufacturing and marketing FDF. The specialty business comprises branded generics and R&D is a part of the assessee. Assessee filed its return of income on 28.11.2015, reporting total income at Rs.570,05,14,430/- under the normal provisions of the Act and book profit of Rs.1261,54,80,329/- u/s. 115JB. Assessee had undertaken international transactions with its Associate Enterprises (AEs).
Case of the assessee was thus, referred to Transfer Pricing Officer (TPO) for computation of Arm’s Length Price (ALP) in respect of international transactions. TPO vide his order u/s.92CA(3) proposed upward adjustment of Rs.45,95,35,746/-. Thereafter, AO completed the assessment with total income assessed at Rs.715,03,76,410/- under the normal provisions of the Act and book profit of Rs.1266,35,45,089/- u/s. 115JB. CIT(A) gave relief to the assessee by allowing its appeal, against which Revenue is in appeal before the Tribunal.
