Income Tax Appellate Tribunal - Ahmedabad
Acit.,(Osd)Range-1,, Ahmedabad vs Cadila Pharmaceuticals Ltd.,, ... on 4 January, 2017
आयकर अपील
य अ धकरण, अहमदाबाद यायपीठ 'B' अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH, AHMEDABAD
BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER
AND
SHRI AMARJIT SINGH, ACCOUNTANT MEMBER
ITA No.383/Ahd/2012
( नधा रण वष / Asstt Year : 2007-08)
Cadila Pharmaceuticals Ltd. Vs. DCIT, Range-1
708, Sarkhej Dhoka Road Ahmedabad.
Bhat, Ahmedabad 382 210.
PAN : AAACC 6251 E
ITA No.544/Ahd/2012
( नधा रण वष / Asstt Year : 2007-08)
DCIT, Range-1 Vs. Cadila Pharmaceuticals Ltd.
Ahmedabad. 708, Sarkhej Dhoka Road
Bhat, Ahmedabad 382 210.
PAN : AAACC 6251 E
(Appellant) (Respondent)
अपीलाथ ओर से / Appellant by : Shri S.N. Soparkar with
Shri Parin Shah, AR
यथ क ओर से/Respondent by : Shri Jagdish, CIT-DR
ु वाई क तार ख /
सन Date of Hearing 14-12-2016
घोषणा क तार ख /Date of Pronouncement 04-01-2017
आदे श / O R D E R
PER S.S. GODARA, JUDICIAL MEMBER
The assessee and Revenue has instituted the instant cross appeals against CIT(A)-6, Ahmedabad's order dated 19.12.2011, in case no.CIT(A)- VI/DCIT.(OSD).R.1/2015/10-11 in proceedings under section 143(3) of the Income Tax Act, in short "the Act".
ITA Nos.383 and 544/Ahd/2012 -2-
2. We come to assessee's appeal first. It has filed the following concised/modified grounds.
"1. General
2. Ld. CIT(A) erred in law and on facts in confirming Rs. 12, 23,772/- of leave encashment. Ld. CIT (A) also ought to have considered submission of the appellant and delete the balance disallowance. It be so held now.
3. Ld. CIT (A) erred in law and on facts in partially confirming disallowance of out of disallowance of interest of Rs. 37, 72,463/- by applying average cost of borrowing in respect of interest free advances given for business transaction. Ld. CIT (A) ought to have deleted disallowance as appellant has sufficient interest free funds. It be so held now.
4. Ld. CIT (A) erred in law and on facts in confirming write off of business advances of Rs. 36, 21,619/-. Ld. CIT (A) ought to have allowed same as it is given for business purpose. It be so held now.
5. Ld. CIT (A) erred in law and on facts in confirming loss due to fire of Rs. 2, 34, 97, 227/- ignoring various evidences place on records by the appellant. Ld. CIT (A) ought to have deleted disallowance considering submissions of the appellant. It be so held now.
6. Ld. CIT (A) erred in law and on facts in confirming Rs. 1,14,785/- in respect of advances for expenses. Ld. CIT (A) ought to have allowed write off of same as per various judicial pronouncement. It be so held now.
7. (a) Ld. CIT (A) erred in law and on facts in directing AO to allow weighted deduction of 150% on research and development expenses toward capital account of Rs. 3,73,29,509/- in respect of which is duly certified by DSIR. Ld. CIT (A) ought not to have given direction and allowed expenses as same are duly certified by DSIR. It be so held now.
7 (b) Ld. CIT (A) erred in law and on facts in not granting weighted deduction of 50% of revenue expenditure of Rs. 12,55,65,701/- (out of the same Rs 11,95,53,000/- has already certified by DSIR being revenue expenditure eligible for weighted deduction in Form 3CL) on ground that necessary evidences not submitted by the appellant. Ld. CIT (A) ought to have allowed deduction as appellant submitted all details. It be so held now.
8. Ld. CIT (A) erred in law and on facts in disallowing Rs. 750/- of late payment of employees contribution to provident fund ignoring fact that out of which Rs. 414/- for the month of August 2006 was paid within 5 days ITA Nos.383 and 544/Ahd/2012 -3- grace period allowed under Provident fund Act. Ld. CIT (A) ought to have allowed deduction in respect of Rs. 414/- out of total disallowance of Rs. 750/-. It be so held now.
9. Ld. CIT (A) erred in law and on facts in confirming disallowance of Rs. 1,09,56,337/- u/s 14A of the Act by applying rule 8D of the Income Tax Rules, 1962 ignoring fact that rule 8D is applicable form A.Y. 2008-09 as held by various high court including jurisdictional high court. Ld. CIT (A) ought to have deleted disallowance considering fact that appellant has sufficient interest free funds and no expenses incurred for earning exempt income. It be so held now.
10. Ld. CIT (A) erred in confirming disallowance of Rs.1,50,78,467/- of refund of excise duty out of total deduction of Rs. 10,98,90,328/- u/s 80IB of the Act. Ld. CIT (A) ought to have allowed same considering various judicial pronouncement. It be so held now.
11. Ld. CIT (A) erred in law and on facts in rejecting additional claim raised during assessment proceedings regarding allowance non -compete fees of Rs. 16,88,27,093/- paid to Apollo Hospitals International Ltd as revenue expenditure.
Without prejudice to the above and in alternative, same is required to be allowed as capital expenditure and depreciation on same be allowed. It be so held now.
12. (a)(i)Ld. CIT (A) erred in law and on facts in confirming addition of Rs.36,21, 619/- (correct figure Rs.36,27,619/-) of provision of doubtful debts by invoking Clause (i) to Explanation of Section 115JB of the Act.
(a)(ii) Ld. CIT (A) also erred in law and on facts in confirming addition of Rs.36,06,638/- of provision for diminution in value of investment by invoking Clause (i) to Explanation of Section 115JB of the Act (a)(iii) Both the lower authorities erred in law and on facts in making double addition of Rs. 36,21,619/- (correct figure Rs. 36,27.619/-) as addition mentioned on page 27 of assessment order under head provision for diminution in value of investments of Rs. 74,46,037/-comprises of following items:
Particulars Amount Total
(a) Diminution in value of Rs. 36,06,638/- Rs. 36,06,638/-(P/B
investment Page 22)
ITA Nos.383 and 544/Ahd/2012
-4-
(b)(i)Provision for doubtful debts Rs. 36,27,6 19/-
(addition wrongly made
as Rs. 36,21, 619/- as
per ground 13(a) above)
(b)(ii)Provision for doubtful debts Rs. 2,11,780/- Rs. 38,39,399/-(P/B
(No addition made by AO) Page 22)
(TOTAL) Rs. 74, 46,037/-
Ld. CIT (A) ought not to have confirmed double addition made by the AO.
(b)Ld. CIT (A) also erred law and on facts in confirming addition of Rs.1,73,79,923/- disallowed u/s 14A by invoking Clause (f) to Explanation of section 115JB of the Act."
3. The assessee' first substantive ground pleads that CIT(A) has erred in affirming Assessing Officer's action making leave encashment disallowance of Rs.12,23,772/-. Shri Soparkar states very fairly that this tribunal in assessee's case itself ITA 1146/Ahd/2011 decided on 11.7.2014 for preceding assessment year has upheld the very disallowance. He however points out that the impugned sum includes opening balance of the above leave encashment head amounting to Rs.2,04,973/- as already disallowed in immediate preceding assessment year. The Revenue fails to rebut this factual position. We thus direct the Assessing Officer to pass consequential order ensuring that the very sum does not face double disallowance in preceding as well as the impugned assessment year. This first substantive ground is accordingly partly accepted for statistical purpose.
4. The assessee's second substantive ground is that the ld.CIT(A) has erred in restricting interest disallowance from 7.25% of the average cost of borrowing to the extent of 4% i.e. Rs.37,72,463/- in respect of interest free advances to M/s.CHPL and Apollo Hospital Ltd. Shri Soparkar submits herein as well that the assessee has succeeded on the very issue before this tribunal in preceding assessment year (supra). This plea goes unrebutted from the Revenue's end. Learned departmental representatives, however, submits that the said co-ordinate bench had found commercial expediency on interest free advances pertaining to former entities only stated to be assessee's sister concern. Shri Soparkar invites our attention at this stage towards CIT(A)'s finding accepting M/s.Apollo Hospital to be assessee's sister ITA Nos.383 and 544/Ahd/2012 -5- concern. He then takes us to assessee's stand before the lower authorities to have made interest free advances of Rs.7.86 crores to M/s.Apollo Hospitals Ltd. in the nature of share application money to enhance its business. The assessee accordingly pleads that the same is in the nature a strategic investment involving commercial expediency. We notice in this background that the above coordinate bench relies upon a catena of case laws including CIT Vs. Raguvir Synthetics, (2013) 354 ITR 222 (Guj) holding that interest free advances in case of a sister concern have to be appreciated from commercial expediency point of view instead of maximum profits angle. We thus adopt the very reasoning herein as well to accept the instant substantive ground.
5. The assessee's third substantive ground assail correctness of the CIT(A)'s order confirming disallowance/addition of write of business advances of Rs.36,21,619/-. The assessee's case is that it had given the same only for business purposes. The Assessing Officer was of the view that it had claimed the impugned deduction in the nature of a provision made for doubtful debts. Both the lower authorities conclude that neither the assessee has written off these amounts nor considered the same in computing income of any preceding assessment year. The assessee then raises an alternative contention to treat the above sum as business loss under section 28 of the Act. The CIT(A) declines this plea after holding that the assessee has failed to discharge its onus in proving beyond doubt that the above loss was incidental to running of its business without any sign of recovery.
6. Learned counsel representing assessee vehemently argues in support of its alternative plea of business loss claim. He however states that the lower authorities have not even adverted to nature of assessee's advances as to whether the same amounts to a trading loss or business loss nor do they discuss each and every advance had recorded in books of accounts. The Revenue is fair enough in making a limited plea that the Assessing Officer could be directed in such facts to ascertain the true character of each and every transaction before coming a conclusion of allowability of trading or business loss. We thus direct the Assessing Officer to re-decide the issue ITA Nos.383 and 544/Ahd/2012 -6- afresh as per allow after affording adequate opportunity of hearing to the assessee. This ground is partly accepted for statistical purpose.
7. The assessee's next substantive ground is that both the lower authorities have erred in confirming disallowance of loss caused due to fire as amounting to Rs.2,34,97,227/-. There is no dispute raised about genuineness of assessee's loss of materials on account of the above fire incident on 17.2.2007. It completed all formalities thereafter with the insurer for reimbursement of the above loss by lodging a formal claim. The Assessing Officer took note of the fact that the assessee had been following mercantile system of accounting. His view is that the claim in question had been raised without showing the amount of reimbursement received/receivable during the year. The Assessing Officer further opined that the impugned claim was also not that of actual loss since the goods destroyed in the fire incident in question were duly insured. He also observed that the same would be crystalised in the succeeding assessment year after reimbursement of loss claim.
8. The CIT(A) upholds Assessing Officer's action as follows:
"7.3 I have considered the facts of the case; assessment order and appellant's submission. Appellant claimed loss of inventory in fire. It is not in dispute that inventory was insured against loss by fire. The appellant was paying fire insurance premium which was claimed and allowed. Therefore in the event of any fire, the loss is to be borne by insurance company and not by the appellant. After the claim is lodged, there may be some difference not recovered from insurance company which can be claimed as loss. However, claiming the entire loss of inventory due to fire in the year even when the inventory was insured against fire is without any basis. Loss under section 28 can be claimed only when it is fully crystallized. If appellant did not have fire insurance then appellant could have claimed loss of inventory in fire this year but when the inventory is insured, the loss can be determined only after the settlement of the claim by the insurance company. Before that there cannot be any loss. Even if the value of inventory is reduced due to fire, the difference has to be accounted for against the insurance company. Whatever amount is not recovered from insurance company, the same can be claimed as business loss in the year in which the claim of the appellant is crystallised i.e. financial year 2007-08. In the current year, no loss was crystallized. Only fire took place which did not result in business loss since inventory is covered by fire insurance. Therefore I'm fully in agreement with the assessing officer that there was no business loss due to fire during the year. The loss was of the insurance company and only after settlement of the claim; appellant is ITA Nos.383 and 544/Ahd/2012 -7- entitled to claim the difference as loss. Accordingly the disallowance made by the assessing officer is confirmed."
9. Heard both sides. Case files perused. Page no.28 of the paper book contains assessee's Notes on Account that it had charged the above amount of loss of material to profit & loss account pending its insurer's approval. Both the lower authorities hold that assessee's loss claim is yet to be crystallised pending insurance claim. We notice in this background that a coordinate bench of the Tribunal in M/s.Navkar International Pvt. Ltd. Vs. DCIT, ITA 273/CHD/2011 rejects the very reasoning as under:
"7. We have heard both the parties and carefully considered their submissions. The assessee is a private limited company and is therefore required to maintain its accounts on mercantile basis. It is stated in the assessment order that the assessee follows mercantile system of accounting. As held in Calcutta Company Ltd. v. CIT, 37 ITR 1 (SC) {followed in CIT v. Burhwal Sugar Mills C. Ltd., 82 ITR 784 (All.)}, it is settled law that when an assessee maintains his accounts on mercantile basis of accounting, the date on which the liability accrues is the date to be considered for the purpose of entering that liability in the accounts. That is so even though the liability is capable of estimate only. The difficulty in making the estimate does not convert the accrued liability into a conditional or contingent one, because it is always open to the AO to arrive at a proper estimate thereof having regard to all the circumstances of the case.
8. In the present case, the assessee has suffered loss on account of damage/destruction of stock by fire in the year under appeal and therefore the liability in this behalf has accrued in the year under appeal. The assessee has also entered liability to the aforesaid effect in its accounts for the year under appeal. Besides, the fact that the assessee has suffered loss is not disputed. Thus the loss suffered by the assessee is real. It cannot be said that the liability arising on account of damage/destruction of stock in the year under appeal is a contingent or conditional one. Therefore the liability is required to be considered for allowance in the year under appeal and in no other year. The mere fact that the insurance company has settled the claim in subsequent year is irrelevant as the loss has been suffered and therefore arisen in the year under appeal. The aforesaid view is well supported by the judgment of the Hon'ble Punjab High Court in CIT v. Tulsi Ram Karam Chand, 51 ITR 180 (Pun.) in which it has been held that the claim of loss of goods has to be considered in the year in which loss occurs and not in the year in which claim is settled. In this view of the matter, the finding recorded by both the authorities below that the loss to stock caused by fire would be considered in the year in which the insurance company has settled the claim is vacated. The ITA Nos.383 and 544/Ahd/2012 -8- Assessing Officer is directed to consider the claim of the assessee in this behalf in the year under appeal.
9. We find that both the authorities below have decided the issue on the short ground that the loss claimed by the assessee was not liable to be allowed in the year under appeal but in the year in which its claim is settled by the insurance company. They have however not adjudicated upon the correctness of the computation of loss/claim as submitted by the assessee before them. We therefore direct the Assessing Officer to consider and adjudicate upon the claim of the assessee on merits in the year under appeal, after giving reasonable opportunity of hearing to the assessee."
We draw support from the above extracted coordinate bench decision to observe that the assessee is very much entitled to claim the impugned loss caused by fire in this assessment year itself and the same is indeed in the nature of an accrued liability. The Assessing Officer is accordingly directed to allow the impugned claim of loss caused due to fire amounting to Rs.2.34 crores in question.
10. The assessee's next substantive grounds assails correctness of both lower authorities action disallowing bad debts claim of Rs.1,14,785/- in respect of advances for expenses. The Assessing Officer would narrate assessee's failure in explaining nature, allowability and business purpose thereof to make the impugned disallowance. We notice herein as well that the assessee sought to claim the same as business loss before the lower appellate authority. The CIT(A) appears to have adopted the same reasoning as with regard to above substantive ground no.3 to decline this contention.
11. Both the learned representatives state very fairly in the course of hearing that we have already remitted the very issue back to the file of Assessing Officer to verify nature of these advances so as to adjudicate assessee's trading loss claim as per law. We deem it appropriate to adopt the same course of action herein as well since the instant issue stands on the very footing. The Assessing Officer shall now verify nature of assessee's advances in order to adjudicate its loss claim as per law. This substantive ground is partly accepted for statistical purposes.
ITA Nos.383 and 544/Ahd/2012 -9-
12. Assessee's next substantive ground involves two components of research and development expenses towards capital account of Rs.3,73,29,509/- and revenue account of Rs.12,55,65,701/- (out of which Rs.11,95,53,000/- already stands certified by the "DISIR" in form 3CL for the purpose of section 35(2AB) weighted deduction claim. The CIT(A) accepted assessee's contention in order to direct the Assessing Officer to allow the above deduction qua former head after examining its details. We however confirm assessing authority's action pertaining to latter head of revenue expenses.
13. Shri Soparkar restricts assessee's grievance qua the above latter head of revenue expenditure only involving total sum of Rs.12,55,65,701/-. There is no dispute that the DSIR (Department of Scientific and Industrial Research ) has already approved a sum of Rs.11,95,53,000/- out of the above gross sum in form 3CL issued on 5.2.2011. Relevant details are at page no.118 onwards upto page 147 of the paper book forming part of the instant case. We notice from the lower appellate order that the CIT(A) has rejected assessee's claim that once the very sum stand accepted as revenue expenditure at the rate of 100% under normal provisions, the impugned weighted deduction under section 35(2AB) ought not to be denied. The CIT(A) on the other hand concludes that the assessee had failed to get the expenses verified in course of remand proceedings.
14. We have heard both the parties reiterating their respective stands. Case record indicates that the above prescribed authority has further approved the assessee's in- house research and development facilities in form 3M on 21.7.2005 as effective from 1.4.2005 to 31.3.2007. This follows form 3CL (supra) approving expenses of Rs.11.95 crores. We notice in this background that hon'ble jurisdictional high court in CIT Vs. Claris Lifesciences (2010) 326 ITR 251 (Guj) holds in such circumstances that the impugned weighted deduction under section 35(2AB) would not be disallowed for the purpose of expenditure prior to issuance of form 3CM. We repeat that the assessee's case rather stands on a better footing since the impugned expenditure is post-facto form 3CM as approved in form 3CL hereinabove qua almost the entire expenditure amount. We further find that a coordinate bench in ACIT Vs. Torrent Pharmaceuticals, ITA 3569/Ahd/2004 decided on 13.9.2009 also holds that ITA Nos.383 and 544/Ahd/2012
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once an assessing officer accepts revenue expenditure claim, the very sum eligible for impugned weighted deduction. Learned departmental representative does not rebut the above factual and legal position. We thus accept assessee's arguments qua the latter head of revenue expenditure disallowance for the purpose of section 35(2AB) weighted deduction. The Assessing Officer shall accordingly frame consequential assessment.
15. Assessee's next substantive ground challenges employee's provident fund disallowance of Rs.750/- on the ground of its late payment. We find first of all the CIT(A)'s order in para 11 page 42 that the assessee itself had not pressed this substantive ground in the lower appellate proceedings resulting in confirmation impugned disallowance.).
16. Shri Soparkar invites our attention to Revenue's cross-appeal ITA 554/Ahd/2012 raising identical first substantive ground that the CIT(A) has erred in directing the Assessing Officer to allow the impugned ESI/PF contribution if the same is deposited before the due date of filing of return. We again repeat that the CIT(A) has issued no such direction at page 42 para 11 of his order. We accordingly reject both the corresponding substantive grounds for want of a valid locus.
17. Assessee's next substantive ground pleads that the CIT(A) has erred in agreeing with the Assessing Officer's finding making section 14A read with rule 8D disallowance of Rs.1,09,56,337/- as pertaining its exempt income from dividend amounting to Rs.7680/-. We further notice that the assessee has filed an additional ground as well on 23.1.2016 by quoting NTPC's case 229 ITR 383 (SC) that even its voluntary disallowance under section 14A of the Act amounting to Rs.64,23,586/- made on protective basis is not sustainable since it had sufficient interest funds to be invested in yielding tax free income.
18. We have heard both parties. The assessee as well as Revenue have first of all argued vehemently qua admission of the above additional grounds. After arguing for some time, the learned counsel representing assessee quotes hon'ble Delhi high court decision in 372 ITR 694 (Del) Join Stock Investment case upholding a similar plea ITA Nos.383 and 544/Ahd/2012
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that the impugned disallowance cannot exceed the entire exempt income. The same goes un-rebutted from Revenue's end. We thus direct the Assessing Officer to restrict the impugned disallowance of Rs.1,09,56,337/- to the extent of exempt income of Rs.7680/- only. The assessee's additional ground hereinabove is accordingly rendered academic.
19. The assessee's next substantive ground avers that both the lower authorities have erred in making disallowance of section 80IB deduction claim of Rs.1,50,78,467/- representing excise refund received. The Assessing Officer declined the above deduction relief mainly on the ground that the amount in question of excise refund could not be said to have been derived from the eligible undertaking as per hon'ble apex court decision in Liberty India Ltd. Vs. CIT, 317 ITR 218 (SC). The CIT(A) confirms the above view. He concludes that assessee's excise refund arises on account of incentive only which could not be interpreted to have been derived its industrial undertaking.
20. Heard both sides. Case file perused. There is hardly any quarrel that the assessee has claimed the impugned 80IB deduction qua the excise refund amount received. The CIT(A) treats it as a case of government scheme offering incentives. We notice in this factual background that hon'ble apex court in a very recent judgement of CIT Vs. Meghalaya Steels Ltd. Civil Appeal No.7622/2014 decided on 9.3.2016 analysis all case laws including that of Liberty India (supra) to conclude that section 28(iii)(b) reads any income from cash assistance; by whatever name called, received or receivable, as income chargeable to income tax under the head "profits & gains of business and profession". Their lordships then conclude that such cash income by way of incentive subsidy result in reimbursement of cost of production of goods of a particular business and the same would be covered under section 28 of the Act. Shri Soparkar accordingly argued that the assessee has paid the above excise duty on manufactured goods and recorded the same in its P&L account. His case thus is that now the very cost stands reimbursed as treated in the nature of receipt in P& L account. Learned departmental representative fails to rebut all this. We draw supports from hon'ble apex court decision herein in these circumstances and direct ITA Nos.383 and 544/Ahd/2012
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the Assessing Officer to allow the assessee's deduction claim under section 80IB of the Act on consequential assessment.
21. Assessees' next substantive grounds pleads that the CIT(A) erred in confirming disallowance of claim of deduction of Rs.16,88,27,000/- pertaining to non-compete fee paid to M/s.Apollo Hospitals Ltd. There does not appear to be any dispute that the assessee has indeed paid the above non-compete fee. The Assessing Officer declined assessee's deduction claim interalia on the ground that the above non-compete fee is not in the nature of expenditure relating to earning of any income so as to form revenue expenditure, the same is further not allowable for depreciation since non-compete clauses would not be treated as a right being restrictive covenant. The CIT(A) confirms the said view in the lower appellate order.
22. We have heard both the parties. Shri Soparkar submits not to press for assessee's claim qua the impugned claim of non-compete fee to be revenue expenditure despite the fact that the hon'ble Madras high court in (2012) 26 taxmann.com 268 (Mad) Carborandum Universal Ltd. Vs. JCIT holds the same to be revenue expenditure. He rather seeks to treat assessee's non-compete fees as capital expenditure for purpose of claiming depreciation relief. The Revenue strongly supports CIT(A)'s above reasoning. We notice in this background that hon'ble Karnataka High Court in the CIT Vs. M/s.Ingersoll Rand International, ITA 452/2013 decided on 30.6.2014 upholds tribunal's order concluding that such non-compete fees results in acquisition of business of commercial right under section 32(1)(ii) of the Act entitled for depreciation relief. We thus accept assessee's arguments and direct the Assessing Officer to allow depreciation claim on assessee's above non-compete fees as per law.
23. Assessee's next substantive ground no.12 has four components. The first one assails the correctness of the above appellate order confirming addition of Rs.36,21,619/- (correct figure stated to be Rs.36,27,619/-) of provision of doubtful debts by invoking section 115JB explanation 1 (i) of the Act. We find that hon'ble jurisdictional high court in Tax Appeal no.1775/2008 CIT Vs. IPCL Ltd. decided on ITA Nos.383 and 544/Ahd/2012
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19.7.2016 has held that such a provision is not to be added under section 115JB explanation 1(c) of the Act. Learned departmental representative however submits that their lordships have now ordered a full bench constitution in Tax Appeal No.749 of 2012 CIT Vs. Vodafone Essar Gujarat Ltd. as per order dated 23.8.2016. We thus deem it proper in the background of facts that the Assessing Officer shall keep the issue in abeyance till the above full bench decision and decide the same accordingly. This assessee's argument is accordingly accepted for statistical purpose.
24. Assessee's second limb of argument pertaining to this substantive ground pleads that the CIT(A) has erred in confirming addition of Rs.36,06,638/- pertaining to provision of diminution in the value of security under section 115JB explanation 1(i) of the Act. Learned counsel fails to rebut application of the above specific clause in the facts of the case as pertaining to provision of diminution of value of its investment as stated in the CIT(A)'s order. We thus reject assessee's instant limb of substantive ground in question.
25. Assessee's next argument is that the CIT(A) has erred in making double addition of Rs.36,21,619/- under the head "provision for diminution of value of investment of Rs.74,46,037/-. Shri Soparkar concedes very fairly that our finding in preceding paragraphs seals the fate of instant limb of assessee's substantive ground as well.
26. Assessee's last argument with respect to instant substantive ground is 4that the ld.CIT(A) has erred in confirming addition of Rs.1,73,79,923/- under section 115JB for disallowance under section 14A by invoking explanation 1(f) of the former statutory provisions. Shri Soparkar quotes hon'ble jurisdictional high court decision in Tax Appeal No.1249/2014 CIT Vs. Alembic Ltd. decided on 20.7.2016 upholding tribunal's view restricting the impugned addition to the extent of section 14A disallowance only. We repeat that we have confirmed the said disallowance to the extent of exempt income of Rs.7680/- only. We thus direct the Assessing Officer to confine the impugned addition upto the sum involved of Rs.7680/-. The assessee gets ITA Nos.383 and 544/Ahd/2012
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part relief in the instant substantive ground as well as its main appeal ITA 383/Ahd/2012.
27. We now advert to Revenue's appeal ITA No.544/Ahd/2012. Its latter remaining substantive ground challenges the CIT(A)'s order holding assessee's product registration expenses of Rs.1,53,17,558/- as revenue expenditure thereby reversing Assessing Officer's view treating the same as capital expenditure. Both the learned representatives pointed out at the outset that a coordinate bench in preceding assessment year (supra) has decided the very issue in assessee's favour. We appreciate this fair stand. The CIT(A)'s finding are accordingly confirmed. This Revenue's ground as well as main appeal ITA 544/Ahd/2012 fails.
28. The assessee's appeal ITA 383/Ahd/2012 is partly allowed and Revenue's cross-appeal ITA 544/Ahd/2012 is dismissed.
29. This assessee's appeal is allowed.
Order pronounced in the Court on 4th January, 2017 at Ahmedabad.
Sd/- Sd/- (AMARJIT SINGH) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER