In terms of the agreement with M/s. Pfizer Ltd., assessee was sharing services of personnel and other expenses such as marketing, sales and administration which belonged to M/s. Pfizer Ltd. An amount to Rs.14,51,77,000/- was accordingly reimbursed to Pfizer Ltd, for sharing the above expenses and has been included under the aforesaid expenditure heads in the account books of the assessee.

M/s. Pfizer Ltd. had deducted tax at source at the appropriate rates on the payments made to outside vendors/employees wherever applicable and also has not claimed any deduction for the expenditure in question.

CIT(A) has proceeded to conclude that in the absence of any element of income embedded in the reimbursement of expenses to M/s. Pfizer Ltd., there was no requirement of deducting tax at source. a proposition which is approved by the Hon’ble Bombay High Court in the case of CIT vs. Siemens Aktiongesellsch. Moreover, in a similar situation, the Mumbai Bench of the Tribunal in the case of Bayer Material Science Pvt. Ltd. vs. Addl CIT, (2012) 134 ITD 0582 has noted that where the cost sharing agreement envisaged exact reimbursment of the costs without any mark-up or margin, there was no element of income in the hands of the payee so as to require the payer to deduct tax at source.

 In our considered opinion, there was no default on the part of the assessee in not deducting tax at source on the impugned payments to M/s. Pfizer Ltd.

 In this view of the matter, we, therefore, find no reasons to interfere with the ultimate conclusion of the CIT(A) in setting-aside the disallowance made by the Assessing Officer.