M/s. Intas Lifesciences, Ahmedabad Vs The ACIT, Circle-5(2), Ahmedabad

This case involves Intas Lifesciences appealing transfer pricing adjustments made by the ACIT for the assessment years 2013-14 and 2014-15. The company argued that the adjustments were incorrect, particularly concerning domestic transactions and the selection of comparable companies for benchmarking. Intas Lifesciences also contested the CIT(A)'s observations regarding its merger with Intas Pharmaceuticals Ltd. and the implications for tax holidays.

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH,
AHMEDABAD

BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND
SHRI WASEEM AHMED, ACCOUNTANT MEMBER

I.T.A. Nos. 677 & 678/Ahd/2019
Assessment Years : 2013-14 & 2014-15)

Intas Lifesciences Erstwhile known as Intas Pharmaceuticals Since merged with Intas Pharmaceuticals Ltd. ,Intas Corporate House,Nr. Sola Bridge, S. G. Highway, Thaltej,Ahmedabad - 380054
Appellant) . . 

Vs.

ACIT Circle-5(2) Ahmedabad – 380015 1s t Floor, Narayan Chambers, Ashram Road, Ahmedabad PAN/GIR No. : AACFI0241H
Respondent)

Appellant by : Shri S. N. Soparkar, A.R.

Respondent by :
Shri O. P. Sharma, CIT. D.R.

Date of Hearing : 12/03/2020
Date of Pronouncement : 04/06/2020

O R D E R

PER WASEEM AHMED - AM:

Both captioned appeals have been f i led at the instance of the
assessee against the common order of the Commissioner of Income Tax (Appeals)-5, Ahmedabad (CIT(A) in short) dated 25/03/2019 relevant to Assessment Years (AY) 2013-14 & 2014-15.

2. The assessee has raised the following grounds of appeal:

“1. Grounds pertaining to Transfer Pricing Adjustments.

The Ld. CIT(A) have erred on the facts, in circumstances of the case and in law in confirming an upward transfer pricing adjustment as under:

Transfer pricing adjustment on specified domestic transactions of sale of finished goods undertaken with the AE - Rs 192,84,97,000/-

a) In the facts and circumstances of the case and in law, the CIT(A) has erred in not appreciating that in the facts of present case both appellant and Intas Pharmaceuticals Limited (herein after referred "IPL") were paying AMT/MAT and therefore in absence of tax arbitrage, the provisions of specified domestic transactions would not apply to transaction of purchase of finished goods from the IP Firm.

b) Assuming but not accepting and without prejudice to Ground No. 1 (a), in the facts and circumstances of the case and in law, the learned CIT(A) ought to have appreciated that IPL, which fulfils the conditions of selection of the tested party as laid down under Rule 10B of the Income Tax Rules and whose data regarding the comparable companies and the comparable uncontrolled transactions were more reliably available should be considered as a tested party

c) That in the facts and circumstances of the case and in law, the learned CIT(A) erred in not appreciating the fact that the AO/TPO has failed to find out appropriate comparable for IP Firm and benchmarked the IP Firm with entities whose Functions, Assets and Risk ('FAR') Analysis and business profile was more akin to the appellant company and which were used by the appellant company as comparable entity in its TP documentation.

d) That in the facts and circumstances of the case, the learned CIT(A) wholly erred in incorrectly observing that "it is noted after few years, the appellant merged into the flagship concern, which shows the intention of the appellant. As, the appellant failed to take benefit out of the said scheme of arrangement of claiming deduction in one unit and taking benefit in both units were detected by the revenue, the appellant subsequently merged two entities into one concern.)

e) That in the facts and circumstances of the case and in law, the learned CIT(A) while giving incorrect observation as stated in Ground No. 1 (d) failed to appreciate that the appellant merged with effect from 1st April 2014 into Intas Pharmaceuticals Limited/IPL as per scheme of amalgamation sanction by order passed by Hon'ble Gujarat High Court on 1st October 2015, whereas the first order proposing transfer pricing adjustment was passed by TPO on 31st October 2016. Further, the deduction/tax holiday under section 8QIC/80IE qua undertaking and not qua assessee and therefore post amalgamation of appellant into IPL, the IPL continued to enjoy the tax holiday and the tax department also allowed benefit of the same in hands of IPL while passing assessment order for AY 2015-16.

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