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Case Law Details

Case Name : CIT Vs. Nova Nordisk Pharma India Ltd. (Karnataka High Court)
Appeal Number : ITA No. 1262/2006
Date of Judgement/Order : 05/01/2012
Related Assessment Year :
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CIT Vs. Nova Nordisk Pharma India Ltd. (HC of Karnataka)- We find that this is not simply a situation of a product manufactured to the specifications of the assessee, being sold to the assessee at the price fixed by the supplier but this is a situation where a product manufactured out of raw materials supplied by a foreign company who had direct interest in the assessee company so manufactured to the specification of the assessee company utilising the technical know-how supplied by it and also labeling the product with the brand name of the assessee and supplying the entire product only to the assessee company and not to anyone else and it is throughout to be held as a specific contract for manufacturing of a particular product notwithstanding the fact that the supplier had paid the price for the raw-material directly to the foreign company which supplied the raw material to the manufacturer, but had interest in the assessee company in India while bearing the trade mark of the foreign supplier, but having a definite communication and in such a situation one has to really look into the real nature of the transaction that emerges on the conjoint reading of the three agreements and the assessing officer in fact having undertaken this exercise and having arrived at the conclusion that the assessee company is one who fits into the definition and situation contemplated u/s.194C of the which on an examination is found is a proper reasoned approach and in consonance with the statutory provision.

We are also of the view that the situation contemplated u/s.194C of the Act i.e. the payment for carrying out any work which is to improve the situation of such nature and of course preceded between the contract between the assessee and the manufacturer company;

It was a situation where the provisions of Section 194C of the Act applied to the assessee and is clearly attracted to the present situation. The assessing authority has rightly applied the provisions of Section 194 of the Act to the present situation and has very correctly estimated the interest payable in terms of Section 201 (1A) and the Appellate Commissioner and the Tribunal are in error in taking the contrary view.


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