Income Tax Appellate Tribunal - Mumbai
Cipla Ltd, Mumbai vs Assessee on 10 September, 2014
आयकर अपील य अ धकरण "C" यायपीठ मब
ंु ई म।
IN THE INCOME TAX APPELLATE TRIBUNAL "C" BENCH, MUMBAI
BEFORE S/SHRI VIJAY PAL RAO, JM AND N.K. BILLAIYA, AM
ी ी वजय पाल राव, या यक सद य एवं ी एन. के. बलै या, लेखा सद य के सम ।
आयकर अपील सं./I.T.A. No.5336 /Mum/2012
( नधारण वष / Assessment Year : 2010-11
Cipla Limited, बनाम/ ACIT CC -2,
Mumbai Central, CGO Building, 9 t h floor,
Vs.
Mumbai- 400 008. M.K. Marg,
Mumbai 400 020.
थायी ले खा सं . /PAN : AAACC1450B
(अपीलाथ /Appellant) .. ( यथ / Respondent)
आयकर अपील सं./I.T.A. No.5529 /Mum/2012
( नधारण वष / Assessment Year : 2010-11
ACIT CC -2, बनाम/ Cipla Limited,
R. No. 904, Mumbai Central,
Vs.
Pratistha Bhavan, Mumbai- 400 008.
Marine Lines,
Mumbai 400 020.
थायी ले खा सं . /PAN :
AAACC1450B
(अपीलाथ /Appellant) .. ( यथ / Respondent)
Assessee by Shri Dilip P. Bapat
Department by A.C. Tejpal
ु वाई क तार ख / Date of Hearing
सन : 4-9-2014
घोषणा क तार ख /Date of Pronouncement : 10-09-2014
[
आदे श / O R D E R
PER N.K. BILLAIYA, A.M. :
एन. के. बलै या, लेखा सद य These cross appeals by the assessee and the Revenue are directed against the order of the ld. CIT(A) 36, Mumbai dated 20-06-2012 pertaining to 2 ITA 5336/M/12 & 5529/M/12 A.Y. 2010-11. These appeals are heard together and dispose of by this common order for the sake of convenience and brevity.
ITA NO. 5336/Mum/12 (Assessee's appeal for A.Y. 2010-11).
2. The assessee has raised the following six substantive grounds of appeal:-
1. "The commissioner of Income-tax (Appeals)-36, Mumbai, [hereinafter referred to as the CIT(A)] erred in upholding that receipts by way of DEPB credits do not qualify to be included in the profit derived from the undertaking in the context of section 80IB/80IC/80IE/10B of the Act.
2. The learned CIT(A) has further erred in holding that receipts by way of insurance claims do not qualify to be included in the profits derived from the undertaking in the context of section 80IB/80IC/80IE/10B of the Act and the same claim is restricted to the cost of goods.
3. The learned (CIT) has erred in upholding denial of deduction from the income of the appellant of a sum of Rs.28,44,74,457/- being the amount of credit under DEPB Scheme which was not actually utilized before the close of the relevant previous year for payment of duty on the importation of goods.
4. The learned CIT(A) has further erred in upholding disallowance of alleged bogus purchases in the amount of Rs.21,39,414/-
5. The learned CIT(A) has erred in upholding the denial of weighted deduction under section 35(2AB) of the Income Tax Act read with the Explanation thereto with reference to the expenditure of Rs.4032.54 lacs incurred on scientific research, not being expenditure in the nature of cost of land or building, on in-house research and development facility as approved by the prescribed authority.
6. The learned CIT(A) erred in denying deduction of Rs.104,97,93,011/- for the disallowance made in A.Y.2009-10 for the exchange fluctuations pertaining to outstanding forward contracts as on 31st March 2009 entered into for hedging foreign currency fluctuation risks arising from the transactions of export of goods and services. It is submitted that this amount has been credited to the profit & loss account of A.Y.2010-11. Since the same has been
3 ITA 5336/M/12 & 5529/M/12 disallowed already in A.Y.2009-10, taxing in again in A.Y.2010-11 would amount to double taxation of the same amount. Therefore, it is prayed that AO be directed to allow the same as a deduction for A.Y.2010-11."
3. At the outset, the ld. Representatives of both the sides agreed that the issues raised by the assessee have been decided either in favour of the assessee or in favour of the Revenue.
4. Ground No. 1 relates to the exclusion of the receipt by way of DEPB credit as they are not qualify to be included in the profits derived from the undertaking in the context of section 80IB/80IC/80IE/10B of the Income Tax Act, 1961.
5. The issue raised vide this ground has been decided against the assessee by the judgment of the Hon'ble Supreme Court in the case of Liberty India Ltd., 317 ITR 218. As the receipts do not have a first degree nexus with the profit derived from the undertaking, respectfully following the judgment of the Hon'ble Supreme Court, ground No. 1 is dismissed.
6. Ground No. 2 is not pressed and is dismissed accordingly.
7. Ground No. 3 relates to the denial of deduction from the income of the assessee of a sum of Rs. 28,44,74,457/- being amount of credit under DEPB scheme.
8. An identical issue was considered by the Tribunal in assessee's own case in ITA No. 6471/Mum/2010 for A.Y. 2008-09. We find that the Tribunal has decided this issue at para No. 5 of its order wherein it has followed the judgment of the Hon'ble Supreme Court in the case of CIT vs. Excel Industries Limited (258 ITR 294). Respectfully following the decision of the co-ordinate Bench, ground No. 3 raised by the assessee is allowed.
4 ITA 5336/M/12 & 5529/M/12
9. Ground No. 4 relates to the disallowance of alleged bogus purchases in the amount of Rs. 21,39,414/-.
10. An identical issue was considered by the Tribunal in assessee's own case in ITA No. 5813/M/2011 for A.Y. 2009-10. We find that the Tribunal has considered this issue at para 28 of its order wherein it has followed the decision for A.Y. 2008-09 and accordingly the Tribunal has remanded this matter to the file of the A.O. for fresh adjudication after affording a reasonable opportunity of being heard to the assessee. As no distinguishing fact has been brought before us, respectfully following the findings of the co-ordinate Bench, we restore this issue to the file of the A.O. for fresh adjudication after hearing the assessee. Ground No. 4 is accordingly allowed for statistical purpose.
11. Ground No. 5 relates to the denial of weighted deduction u/s 35(2AB) of the Income tax Act, 1961.
12. This issue was also before the Tribunal in A.Y. 2009-10 in ITA No. 5813/M/2011 order dated 25-7-14. The Tribunal has considered this issue at para 29 of its order wherein it has remanded this matter to the file of the A.O. for adjudicating the issue afresh after affording reasonable opportunity of being heard to the assessee. As no distinguishing fact has been brought to our notice, we restore this issue to the file of the A.O. for adjudicating the issue afresh as per the provisions of law after affording a reasonable opportunity of being heard to the assessee. Ground No. 5 is accordingly allowed for statistical purpose.
13. The issue raised vide ground No. 6 as stated by the ld. Counsel for the assessee has become infructuous as mark to mark losses have been allowed by the Tribunal in ITA No. 6558/M/2011 for A.Y. 2009-10 order dtd. 25-7-14. Ground No. 6 is accordingly dismissed as infructuous.
5 ITA 5336/M/12 & 5529/M/12
14. In the result, assessee's appeal in ITA No. 5336/M/2012 is partly allowed for statistical purpose.
ITA No. 5529/Mum/2012 (Revenue's appeal for A.Y. 2010-11)15. The Revenue has raised four substantive grounds of appeal which read as under:-
"1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in not confirming the basis adopted by Assessing Officer for computing 80IB deduction admissible to the eligible units and in holding that the assessing Officer was not justified in invoking the provisions of section 80IB(13) r.w. proviso to section 80IA(8) of the Act, when the assessee was under the obligation of law to adopt the 'market value' for the goods transferred to and from the 80IB undertaking.
2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in holding that the assessee is eligible for claiming deduction u/s 80IB on the profits derived from the work/manufacturing got done through Lease and License manufacturers (LLMs).
3. On the facts and in the circumstances of the case and in law, the ld. CIT(A) was not justified in holding that miscellaneous receipts, sale of scrap, miscellaneous sales/processing charges are eligible for computation of profits for the purpose of claiming deduction u/s 80IB.
4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in directing the Assessing Officer to make adjustment to value of opening stock in A.Y. 2010-11 in consonance with adjusted valuation of closing stock in A.Y. 2009-10 without appreciating the fact that :
(a) No direction to make adjustment to closing stock has been issued
(b) The resultant effect of making adjustment to opening stock would result in the assessed income being lower than returned income, which is not permissible in view of decision in the case of Goetz India Ltd."
16. The first ground relates to the grievance that the ld. CIT(A) erred in not confirming the basis adopted by the A.O. for computing 80IB deduction admissible to the eligible unit.
6 ITA 5336/M/12 & 5529/M/12
17. This issue has been decided against the Revenue by the Tribunal in ITA No. 6558/M/2011 for A.Y. 2009-10. The Tribunal has considered this issue at para 32 of its order wherein it has followed the finding given in A.Y. 2008- 09 in ITA No. 6299/M/2010. We find that in ITA No. 6299/M/2010, the Tribunal has followed the decisions of the co-ordinate Benche in ITA No. 7412/M/05 for A.Y. 2003-04, ITA No. 4320/M/2006 for A.Y. 2004-05 and ITA No. 4321/M/2006 for A.Y. 2005-06. Respectfully following the findings of the co-ordinate Bench in assessee's own case (supra), ground No. 1 of the Revenue is dismissed.
18. Ground No. 2 relates to the grievance that the ld. CIT(A) erred in holding that the assessee is eligible for claiming deduction u/s 80IB of the Income Tax Act, 1961 on the profit derived from the work/manufacturing got done through lease and licence manufacturers.
19. An identical issue was considered by the Tribunal in ITA No. 6299/M/2010 for A.Y. 2008-09 vide ground No. 2 of that appeal and has considered this issue at para 17 of its order and decided the ground against the Revenue. The facts and issue being identical, respectfully following the findings of the Tribunal (supra), ground No. 2 is dismissed.
20. Ground No. 3 relates to allowing the claim of deduction u/s 80IB of the Act on miscellaneous receipts, sale of scrap, miscellaneous sales/processing charges.
21. A similar issue was considered by the Tribunal in ITA No. 6299/M/2010 for A.Y. 2008-09 vide ground No. 4 of that appeal and has discussed this issue at para 22 of its order. In so far as the proceeds from sale of scrap is concerned, the Tribunal has set aside the issue to the file of the A.O. to be decided afresh whether the sale of scrap has arising during the manufacturing activity or it relates to other scrap proceed and other receipts was accepted to be eligible for deduction u/s 80IB of the Act. The facts and 7 ITA 5336/M/12 & 5529/M/12 issue being identical, we accordingly set aside the issue relating to the sale of scrap to the file of the A.O. The A.O. is directed to decide the issue afresh in the light of direction given in A.Y. 2008-09. In so far as the other receipts are concerned, respectfully following the decision of the Tribunal in A.Y. 2008-09, the A.O. is directed to allow the claim of deduction u/s 80IB of the Act. Ground No. 3 is accordingly allowed in part for statistical purpose.
22. Ground No. 4 relates to the direction to make adjustment to value of opening stock in A.Y. 2010-11 in consonance with the adjusted valuation of closing stock in A.Y. 2009-10. The fact of this issue is that the A.O. has enhanced the closing stock of A.Y. 2009-10 which was not contested by the assessee. The only point raised by the assessee was that corresponding effect should be given to the opening stock of A.Y. 2010-11 which the ld. CIT(A) directed to the A.O. We do not find any error or infirmity in this direction of the ld. CIT(A) as the value of the closing stock of one year has to be taken as the value of opening stock of the immediately succeeding year. This ground is accordingly dismissed.
23. In the result, Revenue's appeal in ITA No. 5529/M/2012 is partly allowed for statistical purpose.
24. In the result, appeals filed by the assessee as well as Revenue are partly allowed for statistical purposes.
Order pronounced in the open court on 10th September, 2014.
आदे श क घोषणा खल
ु े यायालय म दनांकः 10-9-2014 को क गई ।
Sd/- sd/-
(VIJAY PAL RAO) (N.K. BILLAIYA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
मुंबई Mumbai; दनांक Dated 10-09-2014
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8 ITA 5336/M/12 & 5529/M/12
व. न.स./ R.K., Sr. PS
आदे श क त ल प अ े षत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. आयकर आयु त(अपील) / The CIT(A) -36, Mumbai
4. आयकर आयु त / CIT- Central I, Mumbai
5. वभागीय त न ध, आयकर अपील य अ धकरण, मुंबई / DR, ITAT, Mumbai C Bench
6. गाड फाईल / Guard file.
ु ार/ BY ORDER,
आदे शानस
स या पत त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt. Registrar)
आयकर अपील य अ धकरण, मुंबई / ITAT, Mumbai