Income Tax Appellate Tribunal - Ahmedabad
M/S. Ranbaxy Laboratories Ltd.,, New ... vs The Additional Commissioner Of Income ... on 8 June, 2018
ITA No, 3338 and 3654/Del/13
Assessment year: 2007-08
Page 1 of 3
IN THE INCOME TAX APPELLATE TRIBUNAL,
AHMEDABAD A BENCH, AHMEDABAD
[Coram: Pramod Kumar AM and Rajpal Yadav JM]
ITA No.3338/Del/13
Assessment year: 2007-08
Ranbaxy Laboratories Limited ....................Appellant
(now merged with Sun Pharmaceutical Industries Limited
SPARCL, Tandalja, Vadodara 390 020
[PAN: AAACRO127N]
Vs
Additional Commissioner of Income Tax
Range 15, New Delhi ...................Respondent
ITA No. 3654/Del/13
Assessment year: 2007-08
Deputy Commissioner of Income Tax
Range 15 (1), New Delhi .....................Appellant
Vs
Ranbaxy Laboratories Limited ...................Respondent
(now merged with Sun Pharmaceutical Industries Limited
SPARCL, Tandalja, Vadodara 390 020
[PAN: AAACRO127N]
Appearances by
S N Soparkar for the assessee
Aparna Agrawal for the Assessing Officer
Dates of hearing : March 13, 2018
Date of pronouncement : June 8, 2018
O R D E R
Per Pramod Kumar, AM:
1. These cross appeals are directed against the order dated 18th March 2013 passed by the CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2007-08. As these appeals pertain to the same assessee, involve some interconnected issues and were heard together, these two appeals are being disposed of by this consolidated order.
2. We will first take up the appeal filed by the assessee.
ITA No, 3338 and 3654/Del/13 Assessment year: 2007-08 Page 2 of 3
3. Ground no. 1 is general in nature and does not call for any specific adjudication by us. It is, accordingly, dismissed as such.
4. In the second ground of appeal, the assessee has raised grievance against learned CIT(A)'s sustaining the disallowance of Rs 2,59,01,854 under section 14A read with rule 8D.
5. Learned representatives fairly agree that the actual tax exempt income in this case is only Rs 8,395 and, in the light of Hon'ble Delhi High Court's judgment in the case of Joint Investments Pvt Ltd Vs CIT [(2015) 372 ITR 694 (Del)], the disallowance under section 14A cannot exceed the tax exempt income itself. Learned Departmental Representative, nevertheless, relied upon the orders of the authorities below.
6. Respectfully following the views expressed by Hon'ble Delhi High Court, in the case of Joint Investments (supra), and having noted that there are no decisions contrary thereto by Hon'ble jurisdictional High Court, we restrict the disallowance under section 14A to the amount of actual income i.e. Rs 8,395. Learned counsel for the assessee fairly submits that looking to the smallness of this amount, he would not press his grievance further and other legal objections to the aforesaid disallowance are not, therefore, required to be adjudicated upon by us.
7. Ground no. 2 is thus partly allowed in the terms indicated above.
8. In ground no. 3, the assessee has raised grievance against learned CIT(A) upholding the disallowance of Rs 2,77,56,788 in respect of raising loan amount to US $ 440,000,000 through issue of zero coupon foreign currency optionally convertible bonds.
9. Learned counsel submits that, in view of the relief granted by a coordinate bench of this Tribunal in the assessment year 2007-07 on the same issue, he does not wish to press this grievance.
10. Ground no. 3 is thus dismissed as not pressed.
11. In ground no. 4, the assessee is aggrieved of the learned CIT(A) upholding the disallowance of Rs 2,73,29,462 being deferred employees compensation debited to the profit and loss account pursuant to company's employee stock option scheme (ESOP).
12. Learned representatives fairly agree that this issue is now squarely covered, by a decision of the coordinate bench in assessee's own case for the immediately preceding assessment year, wherein, following the Special Bench decision in the case of Biocon Ltd Vs DCIT [(2004) 144 ITD SB 21] and Hon'ble Madras High Court decision in the case of CIT Vs PVP Ventures Limited [(2012) 23 taxmann.com 268 (Mad)], similar disallowance was deleted. We see no reasons to take any other view of the matter than the view so taken by the coordinate bench. Respectfully following the same, we delete this disallowance as well.
13. Ground no. 4 is thus allowed.
14. In ground nos, 5,6,7 and 8, grievance of the assessee is that the CIT(A) declined to admit the grievances, with respect to exchange fluctuation gains on ECB amounting to Rs ITA No, 3338 and 3654/Del/13 Assessment year: 2007-08 Page 3 of 3 13,01,52,868 and gains of Rs 5,08,56,719 on hedging contracts being treated as income and in not reducing the sum of Rs 33,00,00,000 withdrawn from provision for bad and doubtful debts for computing book profit under section 115JB, on the ground that the assessee had not made these claims by way of revised returns.
15. Learned representatives fairly agreed that this Tribunal had powers to admit these grievances and direct the CIT(A) to decide the same on merits, and that it is a fit case to do so. With the consent of the parties, therefore, these grievances are remitted to the file of the CIT(A) for adjudication on merits, in accordance with the law, after giving one more opportunity of hearing and by way of a speaking order. Ordered, accordingly.
16. Ground nos. 5,6,7 and 8 are thus allowed for statistical purposes.
17. In the result, the appeal of the assessee is partly allowed in the terms indicated above.
18. In the appeal filed by the Assessing Officer, only effective grievance is against learned CIT(A)'s deleting the disallowance of Rs 35 lakhs on account of contribution to Ranbaxy Community Healthcare Society and of Rs 20 lakhs to Ranbaxy Science Foundation.
19. Learned representatives fairly agree that this issue is also covered by the decisions of the coordinate benches in the assessment years 2005-06 and 2006-07 in assessee's own case. The copies of these decisions were also placed before us. No reasons are pointed out to us for making any deviation from these judicial precedents. Respectfully following the same, we uphold the relief granted by the CIT(A) and decline to interfere in the matter.
20. In the result, the appeal filed by the Assessing Officer is dismissed.
21. To sum up, while the appeal of the assessee is partly allowed in the terms indicated above, the appeal of the Assessing Officer is dismissed. Pronounced in the open court today on the 8th day of June, 2018.
Sd/- Sd/-
Rajpal Yadav Pramod Kumar
(Judicial Member) (Accountant Member)
Ahmedabad, Dated the 8 th day of June, 2018
Copies to: (1) The appellant (2) The respondent
(3) CIT (4) CIT(A)
(5) DR (6) Guard File
By order
Assistant Registrar
Income Tax Appellate Tribunal
Ahmedabad benches, Ahmedabad