Case Law Details
Brief of the Case
ITAT Bangalore held In the case of M/s. Agila Specialties Pvt. Ltd vs. DCIT that when the data is available showing profit margin of that enterprise itself from a third party, it is always safe and advisable to adopt internal comparable. The reason is that the various factors having bearing on the quality of output. assets employed, input cost etc. continue to remain by and large same in case of an internal comparable.The effect of difference due to such inherent factors on comparison made with the third parties, gets neutralized when comparison is made with internal comparable.
Facts of the Case
The assessee company is engaged in the business of manufacture and marketing of pharmaceutical products, besides product development and has a well-diversified portfolio of products across product group. For the AY 2010-11 the assessee filed its return of income on 14.10.2010 declaring a loss of Rs. 376,181,078, claiming a refund of Rs 1,025,499. During the course of assessment proceedings, the international transactions entered into by the Assessee were referred by the Assessing Officer to the Transfer Pricing Officer [TPO] for determination of arm’s length price [ALP] under section 92CA of the Income-tax Act, 1961.
Simultaneously, the assessment proceedings were initiated under section 143(2) . The AO issued a draft assessment order dated 28.02.2014 u/s. 143(3) r.w.s. 144C(1), wherein the total income of the assessee was proposed to be computed at a loss of Rs 256,046,157 under normal provisions of the Act, after making various additions /disallowances to the returned income.The AO make addition of Rs. 105,063,004 on account of adjustment following the order pased by TPO and disallowance of Rs. 15,064,297 on account of sec.40(a)(i).
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