Income Tax

CBDT is duty bound to refer matter to transfer pricing officer of international transaction exceeding Rs. 5 crores

By TG Team Income Tax Judiciary February 1, 2008

TaxGuru Citation: 2008 taxguru.in 4
Case Name: Ranbaxy Laboratories Ltd. Vs Additional Commissioner of Income-tax (ITAT Delhi 'H' Bench)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: 2004-05
Courts: ITAT Delhi

IN THE ITAT DELHI BENCH `H’

Ranbaxy Laboratories Ltd. v. Additional Commissioner of Income-tax, Range 15, New Delhi

Vimal Gandhi, President

And P. M. Jagtap, Accountant Member

IT Appeal No. 2146 (Delhi) of 2007
[Assessment year 2004-05]

January 22, 2008

ORDER

Vimal Gandhi, President

1. This appeal by the taxpayer for the AY 2004-05 is directed against the order of Commissioner of Income-tax (CIT) partially setting aside assessment under Section 263 of IT. Act made vide order dated 30 March, 2005 with directions to the Assessing Officer for the fresh determination of Arm’s Length Price of international transaction with AEs in the light of his directions.

2. The facts of the case are that the taxpayer is a multinational company carrying on the business of manufacture and sale of pharmaceutical products as one of the leading concerns in India. It submitted its return disclosing income of Rs. 3,30,64,05,014 for Asstt. Year 2004-05 (F.A. 2003-04). The taxpayer admittedly carried international transactions worth Rs. 1435,03,46,825 to which provision of transfer pricing was attracted in the relevant year. This figure was disclosed in the audit report filed in Form 3CEB along with the Return. A copy of said report is available at page 1-14 of the paper book of the taxpayer placed before the Appellate Tribunal. The Assessing Officer took up the assessment and examined various questions involved in the case of the taxpayer under Section 35B, 35(2AB) and 35(2AA) and under Chapter VIA etc. He found as recorded in the assessment order that 62% of taxpayer’s turnover represents export of drugs and pharmaceuticals products to overseas markets. The taxpayer has further exported goods and services to its joint venture companies, wholly owned subsidiaries and stepped down subsidiaries located in Thailand, Malaysia, Nigeria, Brazil, Peru, China, Ireland, Germany, South Africa, Egypt, Vietnam, Hong Kong, Netherlands, USA and UK which were “Associated Enterprises” (AE) under Section 92A of the I.T. Act. The taxpayer was asked to explain/give a note on application of provisions of Section 92 of the Act somewhere in the last week of March 2005. The note of taxpayer on Arm’s Length Price was accepted by the Assessing Officer in the assessment order dated 30.3.2005.