Fulford (India) Ltd v. DCIT (ITAT Mumbai) – The Tribunal made specific reference to the noting of the DRP in its order viz., that the assessee may be justified in claiming that own researched medicine should fetch higher profit margin, may be justifiable arguments, but the same had to be supported by adequate fact and each and every medicine had to be shown with respect to back-up research and development to justify the profit margin. The Tribunal found merit in the argument of the assessee that the TPO should apply his mind afresh every year and should not rely on the orders of the TPO for preceding years. Further, the Tribunal observed that according to the DR, the assessee’s submission that it acted as a secondary manufacturer, which was akin to a “value added distributor”, was not made before the lower authorities. Accordingly, the Tribunal opined that in the interest of justice they deem it proper to restore the issue to the AO for fresh adjudication.
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH “G”
I.T.A.No 8312/Mum/2010
(Assessment year: 2006-07)
Fulford (India) Ltd. Vs. DCIT
ORDER
Per R.K. Panda (AM):-
This appeal filed by the assessee is directed against the order dated 28.9.20 10 of the Dispute Resolution Panel-1, Mumbai relating to A.Y. 2006-07.
2. The assessee in the grounds of appeal has challenged the order of DRP in confirming the action of the Assessing Officer in re-computing the ALP of the International transaction in relation to import of Active Pharmaceutical Ingredients (API) and in relation to import of formulations and thereby making adjustment of 3,09,21,351/- and 4,13,72,000/- respectively.
2. Facts of the case in brief are that the assessee is engaged in the business of manufacturing and sale of pharmaceutical products and formulations. During the year under consideration, the assessee has shown net turnover (after reducing excise duty) of 154.39 crores, other income of 1.85 crores and declared net profit of 15,99,10,420/-. During the course of assessment proceedings, the assessee-company furnished various details in support of income declared and claims made in the return of income. The Assessing Officer noted that the assessee had entered into international transaction with Associated parties which can be summarized as under:
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