Case Law Details
Punjab & Haryana High Court held In the case of CIT vs. M/s DSM Anti Infectives India Ltd. that the filter used by the TPO while selecting comparable is to select companies who are using Penicillin-G as raw material irrespective of the extent of usage of the same. The Tribunal’s conclusion that the companies would be appropriate comparables irrespective of the percentage of use of PEN-G by them since companies selected should be functionally comparable and not identical is a possible view.
Facts of the Case
During the assessment year 2005-06, the assessee entered into various international transactions with its associated enterprises. The assessee adopted transactional net margin method contending that it is the most appropriate method for determining the ALP. As comparables, the respondent selected six companies, namely, Amol Drug Pharma Limited, Avinash Drugs Limited, Ind-Swift Laboratories Limited, JK Pharmachem Limited, Kopran Limited and Torrent Gujarat Biotech Limited. These companies rejected by TPO on various grounds in his transfer pricing study. After going through a detailed selection process, the TPO selected as comparables three companies namely, Aurobindo Pharma Ltd., Nectar Life Sciences Ltd. and Standard Pharmaceuticals Ltd. The filters used by TPO includes selection of only those companies as comparables who are using Penicillin-G as raw material and rejection of companies who having negative net worth.
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