Itta/496/2014 Of M/S Mylan Laboratories Ltd v. Commissioner Of Income Tax-Iv

HIGH COURT OF JUDICATURE AT HYDERABADFOR THE STATE OF TELANGANA AND THE STATE OF ANDHRAPRADESH PRESENT THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA AND THE HON’BLE SRI JUSTICE M.S. RAMACHANDRA RAO I.T.T.A. NO.496 OF 2014 DATED:30.7.2014 Between: M/s. Mylan Laboratories Ltd.,Having its registered office atPlot No.564/A/22, Jubilee HillsHyderabad … Appellant And Commissioner of Income Tax – IV3[rd] Floor, Annexe BuildingAayakar BhawanBasheerbaghHyderabad … Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA ANDTHE HON’BLE SRI JUSTICE M.S. RAMACHANDRA RAO I.T.T.A. NO.496 OF 2014 JUDGMENT:(per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is directed against the judgment and order of thelearned Tribunal, dated 10.1.2014, in relation to assessment year2008-2009, without suggesting any substantial question of law, butraising the following grounds to make the appeal sustainable. 1.The order of the Income Tax Appellate Tribunal, Hyderabad(ITAT) in the I.T.A. No.66 of 2013 for the Assessment Year 2008-2009 dated 10-1-2014 is bad in law to the extent of denial ofhearing/adjudicating certain objections raised by the appellantcovered under the following grounds.(ITAT) in the I.T.A. No.66 of 2013 for the Assessment Year 2008-2009 dated 10-1-2014 is bad in law to the extent of denial ofhearing/adjudicating certain objections raised by the appellantcovered under the following grounds. 2.The learned ITAT erred in holding that the Appellant is not entitledto deduct Rs.2,17,69,943/- (management fee amounting toRs.1,12,36,000 & reimbursements for ETP and other chargesamounting to Rs.1,05,33,943) from out of its taxable income,being expenditure disallowed in the hands of Astrix LaboratoriesLimited, a resident JV company under Section 92CA of the Act(Ref: Para 32- page 21 of the ITAT Order).to deduct Rs.2,17,69,943/- (management fee amounting toRs.1,12,36,000 & reimbursements for ETP and other chargesamounting to Rs.1,05,33,943) from out of its taxable income,being expenditure disallowed in the hands of Astrix LaboratoriesLimited, a resident JV company under Section 92CA of the Act(Ref: Para 32- page 21 of the ITAT Order). 3.The learned ITAT erred in confirming the disallowance of relief ofRs.26,15,29,315/- under Section 10B based on the order ofCommissioner of Income Tax – IV, Hyderabad, under Section263 for Assessment Year 2005-2006 though the same is beforethe Hon’ble High Court in Appellant Company’s Writ Petition(against the orders passed by the Commissioner of Income Tax-IV, Hyderabad, under Section 263 of the Act, vide W.P.Nos.2148/2012, 1398/2011 & 2150/2012 for AYs 2004-05, 2005-06 & 2006-07 respectively. (Ref: Para 37 – Page 23 of the ITATOrder)Rs.26,15,29,315/- under Section 10B based on the order ofCommissioner of Income Tax – IV, Hyderabad, under Section263 for Assessment Year 2005-2006 though the same is beforethe Hon’ble High Court in Appellant Company’s Writ Petition(against the orders passed by the Commissioner of Income Tax-IV, Hyderabad, under Section 263 of the Act, vide W.P.Nos.2148/2012, 1398/2011 & 2150/2012 for AYs 2004-05, 2005-06 & 2006-07 respectively. (Ref: Para 37 – Page 23 of the ITATOrder) 4.The learned ITAT erred in not allowing depreciation @25% on thenon-compete of Rs.40,00,000/- paid by the Appellant to Mr.non-compete of Rs.40,00,000/- paid by the Appellant to Mr. Sudhir Vaid based on the investment agreement with ConcordBiotech Limited. 5.The learned ITAT erred in confirming the order of the TPO inreducing the operating profits of the tax-payer byRs.26,91,30,023/- being the income from settlement of patentinfringement suit credited to Profit & Loss account. 4.The learned ITAT erred in not allowing depreciation @25% on thenon-compete of Rs.40,00,000/- paid by the Appellant to Mr.non-compete of Rs.40,00,000/- paid by the Appellant to Mr. Sudhir Vaid based on the investment agreement with ConcordBiotech Limited. 5.The learned ITAT erred in confirming the order of the TPO inreducing the operating profits of the tax-payer byRs.26,91,30,023/- being the income from settlement of patentinfringement suit credited to Profit & Loss account. We have heard the learned counsel for the appellant and gonethrough the impugned judgment and order of the learned Tribunal. Weare not impressed with the point taken to get the appeal admitted. Onthe facts and on the aforesaid grounds it is very clear that no elementof law is involved at all. It was a transaction between two sisterconcerns. Therefore, transfer pricing adjustment has been appliedbased on the facts. Though a connected writ petition is pending, itcannot be a ground to admit the appeal for academic purpose. We do not find any merit in this appeal and the same isaccordingly dismissed. There will be no order as to costs. ________________________ K.J. SENGUPTA, CJ _______________________ M.S. RAMACHANDRA RAO, J 30.7.2014bnr