DCIT Vs Pfizer Ltd (ITAT Mumbai)
AO treated the rental income of Rs. 5,47,89,000/- received by the assessee from subleasing of commercial properties as income from business as against claim of the assessee being income from house property on the ground that renting out of premises amounts to commercial exploitation for business purpose by the assessee. However, Ld. CIT(A) by relying on the order passed by Tribunal in assessee‟s own case for AY 1998-99, 1999-00, 2000-01 and 2001-02 qua identical issues deleted the additions.
We have perused the order passed by Ld. CIT(A) who has duly thrashed the facts that when the period of lease exceeds 12 years (including renewal period), it could be considered as the „deemed owner of the property‟ within the meaning of section 27(iiib) r.w.s. 269UA(f) of the Act. So, we find no scope to interfare into the findings rendered by Ld. CIT(A). Consequently, this Ground is determined against revenue.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The Assistant Commissioner of Income Tax, Range(2), Mumbai [hereinafter referred to as the revenue] by filing of aforesaid appeal sought to set aside impugned order passed by AO u/s 143(3)/144C(13) for AY 2004-05 on the grounds interalia that:-
1. “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the Transfer Pricing Adjustment” of Rs.3.71 crores made u/s. 92CA(3) of the Act, without appreciating the facts of the case.’
2. “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in ignoring TPO’s comparable set of 3 companies, which includes only one comparable selected by the TPO i.e. Siro Clinpharm Pvt. Ltd. & other two by the assessee and was also confronted to the assessee during the transfer pricing proceedings.
3. “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the Transfer Pricing Adjustment of Rs.2.34 crores related to the Import of Finished Drugs Formulation (‘FDFs’) (i.e. Minipress’) from the AEs, without appreciating the facts of the case.
4. “On the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in ignoring TPO’s adjustment of Rs.2.34 crores, based on the comparison of the assessee’s operating loss of 16.90% with the average operating profit margin of comparable companies of 3.47%, without distinguishing the finding of the TPO and working of the ALP and deciding the issue solely on the basis of the submission made by the assessee”.
5. “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance related to Market Research Expenses of Rs.73,29,752/-, without appreciating the facts of the case.
6. “On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding to Market Research Expenses as revenue expenditure, without appreciating the fact that the expenses in the nature of Marketing Research yield enduring benefit to the assessee, spread over several years”. “”*
7. “On the facts and in the circumstances of the case and-in-law, the Ld. CIT (A) erred in directing the A.O to allow depreciation on plant and machinery of Ankleshwar Plant solely on the basis of the decision of ITAT in A. Y. 2001-02, disregarding the fact that the said unit had stopped operations in F. Y. 99-2000”.
2. The appellant prays that the order of the CIT (A) on the above ground be set aside and that of the A.O. be restored.
3. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary.
2. Briefly stated facts necessary for adjudication of the controversy at hand are:
The Assessee is into the business of manufacturing and trading in pharmaceutical and healthcare products as well as in the export of goods and services. During the year under consideration assessee entered into international transactions with its AEs as under:-
