Pr. Commissioner of Income-Tax-14 v. Pfizer Products India Pvt. Ltd. - Income Tax Appeal

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Pr. Commissioner Of Income-Tax-14, ... vs Pfizer Products India Pvt. Ltd. on 12 March, 2026

Author: M. S. Karnik

Bench: M. S. Karnik, S. M. Modak

2026:BHC-OS:6985-DB

            Bhogale                                              901.itxa-2479-2018.odt

                      IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                          ORDINARY ORIGINAL CIVIL JURISDICTION

                           INCOME TAX APPEAL NO.2479 OF 2018
          Pr. Commissioner of Income-Tax-14, Mumbai
          Aayakar Bhavan,
          M. K. Road,
          Mumbai - 400 020                      ... Appellant
                  Versus
          Pfizer Products India Pvt. Ltd.
          5, Patel Estate, Off S. V. Road,
          Jogeshwari (W), Mumbai - 400 102.
          PAN No. AADCP8985B                       .... Respondent
                                           ****
          Adv. Simran Hadi h/f Adv. Suresh Kumar, for the Appellant.
          Adv. Paras Savla a/w Adv. Pratik Poddar, Adv. Harsh Shah and Adv.
          Rajnandini Shukla, for the Respondent.
                                           ****
                                          CORAM : M. S. KARNIK &
                                                   S. M. MODAK, JJ.

                                            DATE :   12th MARCH, 2026

          JUDGMENT (PER M. S. KARNIK, J.) : 1.           The challenge in this appeal filed by the Revenue under [Section 260A](https://indiankanoon.org/doc/167321801/) of the Income Tax Act, 1961 ("the said Act", for

          short) is to the order dated 01.09.2017 passed by the Income Tax

          Appellate Tribunal, Mumbai, ("ITAT", for short). The Tribunal

          dismissed the Revenue's appeal and upheld the decision of

          Commissioner of Income Tax (Appeals) ("CIT(A)", for short)

          rendered vide order dated 31.12.2014, deleting the disallowance

Bhogale 901.itxa-2479-2018.odt

of cross charges of Rs.14,51,77,000/- undertaken under [section

40(a)(ia)](https://indiankanoon.org/doc/1918609/) of the said Act for non-deduction of tax at source while

filing the income tax returns for the Assessment Year 2009-10.

1. The appeal raises the following substantial questions of

law :-

"(i) Whether on the facts and in the circumstances of the
case and in law, the Hon'ble ITAT erred in confirming the
decision of Ld. CIT(A), deleting the disallowances of cross
charges of Rs.14,51,77,000/- for non-deduction of TDS u/s
40(a)(ia) holding that these charges represent mere
reimbursement without appreciating the fact that these
payments were made for rendering business auxiliary
services through invoices inclusive of the service tax and
therefore, includes profit component and thus cannot be
said to be pure reimbursement charges not liable for
deduction of TDS?

(ii) Whether on the facts and in the circumstances of the
case and in law, the Hon'ble ITAT erred in confirming the
decision of Ld. CIT(A), deleting the disallowances of cross
charges of Rs. 14,51,77,000/- for non-deduction of TDS u/s
40(a)(ia) holding that these charges represent mere
reimbursement without appreciating the fact that the
assessee has stopped itself from taking a stand that these
payments are mere reimbursement as it has taken a
contrary stand before the service tax authority that the
payments were made for providing business auxiliary
services on which service tax has been paid?"
3. The facts in brief are as under :-

(i) The Assessee is a company incorporated under

the provisions of the Companies Act, 1956 and is, inter

Bhogale 901.itxa-2479-2018.odt

alia, engaged in the business of trading of pharmaceutical

products.

(ii) The respondent-Assessee (Pfizer Products India

Pvt. Ltd.) e-filed its return of income for the assessment

year 2009-10, declaring a total income of

Rs.19,62,50,782/- which was subject to a scrutiny

assessment whereby the total income was assessed at Rs.
34,42,08,170/-

(iii) It was noticed that the discrepancy between the

      returned and assessed income primarily arose on account

      of disallowances made by the Assessing Officer ("AO", for

      short) under [Sections 40(a)(ia)](https://indiankanoon.org/doc/1918609/) and [40(a)(i)](https://indiankanoon.org/doc/420239/) of the Act, as

      well as unreconciled interest income reflected in the TDS

      certificates. Notably, the assessee had paid cross charges

      of ₹14,51,77,000/- to M/s. Pfizer Ltd., its sister concern,

      towards the use of "Field Force Facility" of M/s. Pfizer Ltd.

      for marketing and promotion of products which expenses,

      the     assessee   contended,   represented    the    expenses

      reimbursed to M/s. Pfizer Ltd. It was further contended

      that the payments were merely in the nature of

Bhogale 901.itxa-2479-2018.odt

      reimbursement of expenses without any markup and

      therefore not liable to TDS and, in any case, M/s. Pfizer

      Ltd. had deducted the requisite TDS whenever required.

      However, the AO rejected this contention and disallowed

      the expenditure under [Section 40(a)(ia)](https://indiankanoon.org/doc/1918609/) of the Act.

(iv) Aggrieved by the order of the AO, the Assessee

      preferred an appeal before the CIT(A). Vide order dated

      31.12.2013, the CIT(A) partly allowed the appeal,

      holding that the invocation of [Section 40(a)(ia)](https://indiankanoon.org/doc/1918609/) was not

      justified in respect of the payment made to M/s. Pfizer

      Ltd., as the same was in the nature of reimbursement of

      costs without any mark-up, in terms of the cost-sharing

      agreement between the Assessee and its sister concern.

(v) Aggrieved by the order of the CIT(A), the

      Revenue preferred an appeal before the ITAT. The ITAT

      concurred with the findings of the CIT(A) that the

      payment of Rs.14,51,77,000/- to M/s. Pfizer Ltd. was

      purely in the nature of reimbursement of expenses

      incurred under a cost-sharing agreement without any

      markup and therefore contained no income element and

Bhogale 901.itxa-2479-2018.odt

       that consequently, no disallowance under [Section 40(a)

       (ia)](https://indiankanoon.org/doc/1918609/) was warranted. Furthermore, the ITAT also noted that

       the CIT(A) had relied on the amendments introduced by

       the [Finance Act, 2012](https://indiankanoon.org/doc/26112980/), namely the first proviso to [Section

       201(1)](https://indiankanoon.org/doc/1049794/) and the second proviso to [Section 40(a)(ia)](https://indiankanoon.org/doc/1918609/), and

       had held them to be retrospective and applicable to the

       relevant assessment year, ruling that since the payee had

       filed its return, accounted for the income, and paid the

       due taxes, no disallowance under [Section 40(a)(ia)](https://indiankanoon.org/doc/1918609/) could

       be made, which finding the ITAT concurred with. The

       appeal of the Revenue was thus dismissed by the ITAT

       vide order dated 01.09.2017.

(vi) The legality and validity of the order of the ITAT

       dated 01.09.2017 ("impugned order", for short) has been

       challenged before this Court on the afore-quoted

       substantial questions of law.

1. Mr. Suresh Kumar, learned counsel for the Appellant-

Revenue submitted that the ITAT erred in confirming the order of

the CIT(A), deleting the disallowance of the cross-charge of

Rs.14,51,77,000/- without appreciating that the payments were

Bhogale 901.itxa-2479-2018.odt

made for rendering business auxiliary services through invoices

inclusive of service tax and, therefore, contained a profit

component and could not be treated as being purely in the nature

of reimbursement not liable for deduction of TDS and that the said

stand was taken before the Service Tax Authority. Mr. Suresh

Kumar invited our attention to the findings recorded by the AO.

It is submitted that the findings of the AO are in consonance with

the provisions of law and ought not to have been upheld by the

CIT(A) and the ITAT.

1. Per contra, Mr. Paras S. Savla, learned counsel for the

Respondent- Assessee advanced the following submissions:

(i) That the said cross-charge paid for having used

field force facilities of M/s. Pfizer Ltd. was covered by the

cost sharing agreement dated 21 November 2003 and a

supplementary agreement dated 13 December 2004

between the Assessee and M/s. Pfizer Ltd., pursuant to

which the Assessee merely reimbursed M/s. Pfizer Ltd. for

expenses incurred towards personnel costs, travelling,

advertising and promotion and miscellaneous expenses,

without any markup and with no component of profit and

Bhogale 901.itxa-2479-2018.odt

that the presumption of profit by the AO has been thus

negated by the CIT(A) after considering the cost-sharing

agreement and supplementary agreement between the

Assessee and M/s. Pfizer Ltd, holding that TDS was thus

not warranted.

(ii) That, levy of service tax cannot be a determining

factor to ascertain the nature of any payment. When the

payment itself does not constitute income, merely because

service tax has been charged in compliance with the

specific laws, the nature of the payment would not

become income.

(iii) That, the service tax was levied on the

reimbursements on a conservative basis, owing to the

ambiguity surrounding levy of service tax on

reimbursements, which has now been settled by the

Hon'ble Supreme Court in Union of India and another vs.

Intercontinental Consultants and Technocrats Private

Limited1 and Gujarat State Fertilizers and Chemicals Ltd.
vs. Commissioner of Central Excise2, holding that Service

1 (2018) 4 SCC 669.

2 (2017) 5 SCC 198.

Bhogale 901.itxa-2479-2018.odt

      Tax is not to be levied on reimbursements.

      (iv)       That, the Assessee had deducted TDS on the said reimbursement in the subsequent years on a without-

      prejudice basis and out of abundant caution, just to keep

      the claim alive.

(v) That, without prejudice, in view of the insertion

      of second proviso to [section 40(a)(ia)](https://indiankanoon.org/doc/1918609/) by the [Finance Act,

      2012](https://indiankanoon.org/doc/26112980/), which was made retrospectively applicable, no

      disallowance can be made where the payee has furnished

      its return of income, paid due tax and a Chartered

      Accountant's certificate to that effect has been furnished,

      which conditions stand satisfied in the Assessee's case,

      and thus the Assessee cannot be treated as assessee in

      default.

(vi) That, there is no loss of revenue as Pfizer Ltd.

      had already deducted TDS wherever applicable, while

      making payments to the third party vendors and

      employees. It is the stand of the Assessee that these facts

      are not disputed and the Revenue has not challenged the

 Bhogale                                                          901.itxa-2479-2018.odt

          finding of CIT (A) that no disallowance can be made on

          account      of    the    retrospective    applicability        of      the

          amendment brought about in [Section 40(a)(ia)](https://indiankanoon.org/doc/157505711/) vide [Finance Act, 2012](https://indiankanoon.org/doc/26112980/).

1. Learned Counsel for the Respondent-Assessee relied on

the following judgments in support of the arguments advanced:

(i) Commissioner of Income-tax vs. Siemens
Aktiongesellschaft3

(ii) The Commissioner of Income Tax-3 vs. M/s.
Emerson Process Management (India) Pvt. Ltd.4

(iii) The Pr. Commissioner of Income Tax-1 vs.
Goldmansach (India) Finances Pvt. Ltd.5

(iv) Commissioner of Income Tax-1, Mumbai vs. IDFC
Investment Advisors Ltd.6

(v) The Commissioner of Income Tax-6 vs. M/s. Ask
Wealth Advisors Pvt. Ltd.7

(vi) Commissioner of Income-tax, TDS-2, Mumbai
vs. Zee Entertainment Enterprises Ltd.8

(vii) Principal Commissioner of Income-tax vs.
Morgan Stanley India Capital Pvt. Ltd.9 3 [2009] 177 Taxman 81 (Bombay)

8 [2018] 92 taxmann.com 30 (Bombay)
9 [2025] 177 taxmann.com 699 (Bombay)

Bhogale 901.itxa-2479-2018.odt

(viii) Pr. Commissioner of Income Tax-5 vs. Perfect
Circle India Pvt. Ltd.10

(ix) Commissioner of Income-tax-1 vs. Ansal Land
Mark Township (P.) Ltd.11

(x) Hindustan Coca Cola Beverage (P.) Ltd. vs.
Commissioner of Income-tax.12
7. We have heard Mr. Suresh Kumar, learned counsel for the

Appellant-Revenue and Mr. Paras Savla, learned counsel for the

Respondent-Assessee. Having carefully perused the order passed

by the CIT(A), for the reasons hereinafter recorded we are in

respectful agreement with the view taken by the ITAT.

1. We find that a cross charge to the tune of Rs.

14,52,77,000/- was paid by the Assessee to its sister concern (M/s.

Pfizer Ltd.). The CIT(A) in its order dated 31.12.2014 has

recorded the details of the said expenditure in a tabular form,

classifying the said expense under four heads, namely, 'staff cost',

'travelling', 'advertising and promotional expense' and 'other

miscellaneous expenses'. It can be seen that the said expense has

been incurred on account of a cost sharing agreement between the

Assessee and the said sister concern, in terms of which the assessee

11 [2015] 61 taxmann.com 45 (Delhi)
12 [2007] 163 Taxman 355 (SC)

Bhogale 901.itxa-2479-2018.odt

was sharing services of certain employees and other facilities

which belonged to M/s. Pfizer Ltd, the expense incurred on which

totalled Rs.14,51,77,000/-, which had to be reimbursed to the said

sister concern. The CIT(A), while rendering its finding on whether

or not the payment of the said cross charge by the Assessee was in

the nature of reimbursement of expense incurred in terms of the

cost-sharing agreement, has duly perused the relevant clauses of

the said agreement.

1. Moreover, as confirmed by M/s. Pfizer Ltd., it had

deducted tax at source at appropriate rates on the payments made

to third party vendors or employees wherever applicable. Moreso,

M/s. Pfizer Ltd. has admittedly not claimed any deduction for

having incurred the expenditure in question. This was the basis on

which the CIT(A) came to a conclusion that in the absence of any

element of income in the said payment of cross-charge without

mark-up, there was no requirement of deducting tax at source. The

said finding was upheld by the ITAT.

1. It is the contention of Revenue that the said transaction

has an income-component, owing to the fact that service tax was

charged on the same. Whether levy of service tax is a factor

Bhogale 901.itxa-2479-2018.odt

determining the nature of the transaction, when the transaction

itself is not in the nature of income, is the moot question. Learned

Counsel on behalf of the Assessee submits that when the inherent

nature of the payment itself is not income, mere levy of service tax

would not change the nature of such a payment. The order passed

by the ITAT quotes the relevant portion of the cost sharing

agreement and the supplementary agreement. The payment of

cross-charge by the Assessee to M/s. Pfizer Ltd. was pursuant to

the said cost-sharing arrangement detailed in the agreement. The

cost-sharing is on cost-to-cost basis, without any component of

income and the said transaction is purely in the nature of

reimbursement.

1. Moreover, the longstanding ambiguity pertaining to the

levy of service tax on reimbursements was settled by the Hon'ble

Supreme Court in [Union of India vs. Intercontinental Consultants

and Technocrats Private Limited](https://indiankanoon.org/doc/64314027/) ([supra) and Gujarat State Fertilizers

and Chemicals Ltd. vs. Commissioner of Central Excise](https://indiankanoon.org/doc/55026905/) (supra),

wherein it is held that no service tax should be charged on

reimbursement of expenses when no service element is involved. In [Union of India vs. Intercontinental Consultants and Technocrats

Bhogale](https://indiankanoon.org/doc/64314027/) 901.itxa-2479-2018.odt

Private Limited (supra), the Hon'ble Supreme Court observed thus:

"26. In this hue, the expression "such" occurring in Section
67 of the Act assumes importance. In other words, valuation of
taxable services for charging service tax, the authorities are to
find what is the gross amount charged for providing "such"
taxable services. As a fortiori, any other amount which is
calculated not for providing such taxable service cannot be a
part of that valuation as that amount is not calculated for
providing such "taxable service". That according to us is the
plain meaning which is to be attached to Section 67 (unamended i.e. prior to 1-5-2006) or after its amendment,
with effect from 1-5-2006. Once this interpretation is to be
given to Section 67, it hardly needs to be emphasised that Rule
5 of the Rules went much beyond the mandate of Section 67.
We, therefore, find that the High Court was right in
interpreting Sections 66 and 67 to say that in the valuation of
taxable service, the value of taxable service shall be the gross
amount charged by the service provider "for such service" and
the valuation of tax service cannot be anything more or less
than the consideration paid as quid pro qua for rendering such
a service."

(Emphasis Supplied)

1. Thus, the Hon'ble Supreme Court held that service tax

can be levied only on the gross amount charged for the taxable

service itself and that any additional amounts that are not directly

charged for providing the taxable service cannot be included in the

taxable value.

1. In light of the decision rendered by the Hon'ble Supreme

Court in [Union of India and another vs. Intercontinental Consultants

and Technocrats Private Limited](https://indiankanoon.org/doc/64314027/) (supra) we are in agreement with

the submission of learned counsel for the Assessee that, payment

of service tax would not make the said transaction taxable, given

Bhogale 901.itxa-2479-2018.odt

that the same is in the nature of reimbursement of expense

incurred without markup, as has been established. Furthermore, in

view of the amendment introduced vide Finance Act, 2012, we

also agree with the submission of the Learned Counsel for the

Assessee that the Assessee in the present case cannot be treated as

an assessee in default.

1. Now let us discuss the amendment introduced to [Section

40(a)(ia)](https://indiankanoon.org/doc/157505711/) and Section 201(1) vide the Finance act, 2012. [Section

40(a)(ia)](https://indiankanoon.org/doc/157505711/), reads thus :

"Amounts not deductible.

1. Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession",--

(a) in the case of any assessee--

.....

(ia) thirty per cent of any sum payable to a resident, on which
tax is deductible at source under Chapter XVII-B and such tax
has not been deducted or, after deduction, has not been paid
on or before the due date specified in sub-section (1) of section 139:

Provided that where in respect of any such sum, tax has been
deducted in any subsequent year, or has been deducted during
the previous year but paid after the due date specified in sub-
section (1) of section 139, thirty per cent of such sum shall be
allowed as a deduction in computing the income of the
previous year in which such tax has been paid:

Provided further that where an assessee fails to deduct the
whole or any part of the tax in accordance with the provisions
of Chapter XVII-B on any such sum but is not deemed to be an
assessee in default under the first proviso to sub-section (1) of
section 201, then, for the purpose of this sub-clause, it shall be

Bhogale 901.itxa-2479-2018.odt

deemed that the assessee has deducted and paid the tax on
such sum on the date of furnishing of return of income by the
payee referred to in the said proviso.
Explanation.--For the purposes of this sub-clause,--

(i) "commission or brokerage" shall have the same meaning as
in clause (i) of the Explanation to section 194H;

(ii) "fees for technical services" shall have the same meaning
as in Explanation 2 to clause (vii) of sub-section (1) of section
9;

(iii) "professional services" shall have the same meaning as in
clause (a) of the Explanation to section 194J;

(iv) "work" shall have the same meaning as in Explanation III
to section 194C;

(v) "rent" shall have the same meaning as in clause (i) to the
Explanation to section 194-I;

(vi) "royalty" shall have the same meaning as in Explanation 2
to clause (vi) of sub-section (1) of section 9;"
15. The second proviso to section 40(a)(ia) was inserted by

the Finance Act, 2012, with effect from 01.04.2013. The Delhi

High Court in [Commissioner of Income-tax-1 vs. Ansal Land Mark

Township (P](https://indiankanoon.org/doc/136961639/).) Ltd. (supra) discussed at length, the validity of

retrospective applicability of [Commissioner of Income-tax-1 vs.

Ansal Land Mark Township (P](https://indiankanoon.org/doc/136961639/).) Ltd. (supra) and observed thus :

"9. It is seen that the second proviso to section 40(a)(ia) was inserted by the Finance Act, 2012, with effect from April
1, 2013. The effect of the said proviso is to introduce a legal
fiction where an assessee fails to deduct tax in accordance
with the provisions of Chapter XVII-B. Where such assessee is
deemed not to be an assessee in default in terms of the first
proviso to sub- section (1) of section 201 of the Act, then, in
such event, "it shall be deemed that the assessee has deducted
and paid the tax on such sum on the date of furnishing of
return of income by the resident payee referred to in the said
proviso".

Bhogale 901.itxa-2479-2018.odt

1. It is pointed out by learned counsel for the Revenue that the first proviso to section 201(1) of the Act was inserted with effect from July 1, 2012. The said proviso reads as under:

"Provided that any person, including the principal
officer of a company, who fails to deduct the whole or
any part of the tax in accordance with the provisions
of this Chapter on the sum paid to a resident or on the
sum credited to the account of a resident shall not be
deemed to be an assessee in default in respect of such
tax if such resident--

(i) has furnished his return of income under section
139;

(ii) has taken into account such sum for computing
income in such return of income; and

(iii) has paid the tax due on the income declared by
him in such return of income,
and the person furnishes a certificate to this effect
from an accountant in such form as may be
prescribed."
11. The first proviso to section 201(1) of the Act has been
inserted to benefit the assessee. It also states that where a
person fails to deduct tax at source on the sum paid to a
resident or on the sum credited to the account of a resident
such person shall not be deemed to be an assessee in default
in respect of such tax if such resident has furnished his return
of income under section 139 of the Act. No doubt, there is a
mandatory requirement under section 201 to deduct tax at
source under certain contingencies but the intention of the
Legislature is not to treat the assessee as a person in default
subject to the fulfilment of the conditions as stipulated in the
first proviso to section 201(1). The insertion of the second
proviso to section 40(a)(ia) also requires to be viewed in the
same manner. This again is a proviso intended to benefit the
assessee. The effect of the legal fiction created thereby is to
treat the assessee as a person not in default of deducting tax at
source under certain contingencies.

1. Relevant to the case in hand, what is common to both the provisos to section 40(a)(ia) and section 201(1) of the Act is that the as long as the payee/resident (which in this case is APIL) has filed its return of income disclosing the payment received by and in which the income earned by it is embedded and has also paid tax on such income, the assessee would not be treated as a person in default. ..."

(Emphasis Supplied)

Bhogale 901.itxa-2479-2018.odt 16. Similarly, in [Pr. Commissioner of Income Tax-5 vs. Perfect

Circle India Pvt. Ltd.](https://indiankanoon.org/doc/105410252/) (supra), referring to Commissioner of Income-

tax-1 vs. Ansal Land Mark Township (P.) Ltd. (supra), this Court

observed thus :

"2. It is not necessary to record background facts since the
question of law raised by the Revenue is whether the second
proviso to Section 40(a)(ia) of the Income Tax Act, 1961 ("the
Act" for short) would have retrospective effect. We may notice
that the said proviso was inserted w.e.f 1.4.2013 and in
essence, it provides that where an assessee fails to deduct
whole or any part of the tax at source but is not deemed to be
an assessee in default under the first proviso to Section
201(1), then for the purpose of clause 40(a)(ia), it shall be
deemed that the assessee has deducted and paid the tax on
such sum on the date of furnishing of return of income by the
payee. The Revenue would content that the benefit of this
proviso would be available to the assessee only prospectively
w.e.f. 1.4.2013. Various Courts, however, have seen this
proviso as beneficial to the assessee and curative in nature.
The leading judgment on this point was of the Division Bench
of Delhi Court in the case of CIT Vs. Ansal Land Mark
Township P Ltd. The Court held that Section 40(a)(ia) is not a
penalty and insertion of second proviso is declaratory and
curative in nature and would have retrospective effect form
1.4.2005 i.e the date from the main proviso 40(a)(ia) itself
was inserted. Several High Courts have adopted the same
lines."
17. The upshot of the above afore-cited decisions is that,

although the proviso was inserted by the Finance Act, 2012 with

effect from 1 April 2013, the same was held to be beneficial,

declaratory, and curative in nature. The proviso creates a legal

fiction whereby if an assessee fails to deduct tax at source, but the

Bhogale 901.itxa-2479-2018.odt

payee has furnished the return of income under Section 139,

included the relevant income, and paid the due taxes, then the

assessee shall be deemed to have deducted and paid such tax. This

position aligns with the first proviso to Section 201(1), which

provides that in such circumstances the payer shall not be treated

as an assessee in default. The courts emphasized that the

legislative intent is to avoid undue hardship and double taxation,

and that Section 40(a)(ia) is not penal in nature. Consequently,

the second proviso was held to operate retrospectively from 1st

April 2005, i.e., the date on which Section 40(a)(ia) was originally

introduced.

1. Thus, considering the above discussion, we are of the

opinion and as rightly held by the ITAT as well as CIT(A),

disallowance cannot be made in this case as:

(i) the payee has furnished its return of income,

(ii) the payee has paid due taxes, and

(iii) a Chartered Accountant's Certificate to that effect has

been furnished.
19. Thus, the Assessee cannot be treated as an assessee in

default and a categorical finding to that effect has been rendered

                           Bhogale                                                 901.itxa-2479-2018.odt

                       by the CIT(A), recording that the payee viz. M/s. Pfizer Ltd. had

                       duly filed and considered the cross charges while filing the said

                       return of income inasmuch as it has credited the same to profit

                       and loss account. Further, Pfizer Ltd. had duly paid taxes and a

                       certificate dated 15.11.2014 issued by Chartered Accountant S.K.

                       Patodia & Associates was brought on record. This factual position

                       is also undisputed.

1.      In our considered opinion, in light of the above discussion,
   
                      precedents relied upon and the material before us, it can be
   
                      concluded that the cross-charge paid by the Assessee-Respondent
   
                      in terms of the cost-sharing agreement between the Assessee and
   
                      M/s. Pfizer Ltd, did not have any income/profit component
   
                      embedded with it and the said transaction was purely in the nature
   
                      of reimbursement of expenditure incurred by M/s. Pfizer Ltd
   
                      without any markup and therefore is not liable to TDS.
   

2.      We therefore do not find that the present appeal involves
   
                      any substantial question of law. The appeal is dismissed.
   

(S. M. MODAK, J.) (M. S. KARNIK, J.)

Signed by: Pradnya Bhogale
Designation: PA To Honourable Judge