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Re: Contribution to Ranbaxy Community Healthcate Society (RCHS)- Rs30,992,839/: 2.1 The Ld. DRP erred both on facts and in law in nol directing the Assessing Officer TO allow the contribution made to Ranbaxy Community Healthcare Society (RCHS), under the provisions of section 37(1) of the Act without appreciating that the contribution was made in furtherance of business objective of the Appellant Company and the same has been decided in earlier years by the Delhi Income Tax Appellate Tribunal (ITA No 743/2009) for A Y 1997-98 in favour of the Appellant Company and the departments' appeal before the Honourable High Court has not been admitted.

4. Ground No. 1 is of general nature of ground of appeal not specifically contested by the assessee, therefore, the same stands dismissed.

Ground No. 2.1 to 2.2 (contribution to Ranbaxy Community Healthcare Society (RCHS) of Rs. 30,992,839/- u/s. 37(1) of the Act and disallowing on the ground of non-deduction of TDS u/s. 40(a)(ia) of the Act)

5. During the year under consideration, the assessee has made contribution of Rs. 3,09,92,839/- to Ranbaxy Community Healthcare Society (RCHS). The assessee submitted before the Assessing Officer that this expenditure has been incurred for promoting its business, therefore, the same may be allowed as business expenditure u/s. 37 of the Act. The assessee has I.T.A No. 702 & 729/Ahd/2016 A.Y. 2011-12 Page No 9 Sun Pharmaceutical Industries Ltd. Vs. ACIT/Dy. CIT vs. Sun Pharmaceutical Industries Ltd also submitted that ITAT Delhi has examined this issue of assessee's appeal for the assessment year 1997-98, 2001-02, 2002-03, 2004-05 and 2005-06 in its own case and held that the contribution made to RCHS was an expenditure for the purpose of promoting its business and same was allowable as business expenditure u/s. 37 of the Income Tax Act. It was also submitted that Hon'ble High Court of Delhi had also rejected the revenue's appeal against the aforesaid decision of the ITAT Delhi, for assessment year 1997-98, in ITA No. 743/2009 on 17th March, 2011. The Assessing Officer has not accepted the submission of the assessee stating that this issue has been contested in the past assessment year and the department has not accepted the decision of ITAT and filed appeal before the Hon'ble High Court of Delhi. The Assessing Officer stated that assessee was only entitled for deduction u/s. 80G on the amount computed and such contribution cannot be allowed as deduction u/s. 37 of the Act. The Assessing Officer has stated that assessee has also not deducted any TDS on the said amount and the same would automatically disallowed u/s. 40(a)(ia) of the act. The Assessing Officer also stated that assessee entitled for deduction u/s. 80G and the donation is a voluntary contribution without any benefit and cannot form a business expenditure u/s. 37(1) of the Act. Therefore, the Assessing Officer has treated the aforesaid contribution of Rs. 3,09,92,839/- as donation and only eligible for deduction u/s. 80G and not for deduction as business expenditure. The assessee has filed objection before the ld. DRP and the ld. DRP vide letter dated 23.11.2015 dismissed the objection of the assessee retreating the facts reported by the Assessing Officer. Consequently to the direction of the DRP, the Assessing Officer disallowed the said expenditure of Rs. 3,09,92,839/- as business expenditure u/s. 37 of I.T.A No. 702 & 729/Ahd/2016 A.Y. 2011-12 Page No 10 Sun Pharmaceutical Industries Ltd. Vs. ACIT/Dy. CIT vs. Sun Pharmaceutical Industries Ltd the Act. During the course of appellate proceedings before us, the ld. counsel brought to our notice that identical issue on similar fact has been adjudicated in the case of the assessee itself in its favour by the Co-ordinate Bench of the ITAT Ahmedabad for assessment year 2009-10 vide ITA No 1782/Del/2014. The ld. Departmental Representative is fair enough not to controvert these undisputed facts that the instant issue in this ground of appeal is covered by the aforesaid cited decision of the ITAT. With the assistance of ld. representatives we have gone through the aforesaid cited decision of the Co-ordinate Bench of the ITAT and the relevant part of the decision is reproduced as under: -

"23. The issue raised by the assessee in ground no 7 is that the Ld. DRP erred in confirming the disallowance of deduction in respect of contribution of Rs. 22,50,000/- and Rs. 50,00,000/- made to Ranbaxy community healthcare society ( for short RCHS) and Ranbaxy Science Foundation (for short RCF).

24. The assessee company made a contribution of Rs.22,50,000/ to RCHS and Rs.50,00,000/- to RSF and claimed as deduction u/s 80G but the deduction has not been set off due to a loss in the return.

"6. We have carefully considered the rival contentions. In view of the decision of Hon'ble Delhi high court in case of assessee for AY 1997-98 order dated 17.03.2012 in ITA no.743/2008 and 20.11.2012 for AY 2002-03 to 2005-06, We reverse the decision of the AO and direct to delete the disallowance of Rs.47 lacs and Rs.1250000/- of contribution made by appellant to Ranbaxy Community Healthcare Society and Ranbaxy Science Foundation. Furthermore regarding failure to deduct tax on this sum, Ld. DR. could not point out particular section, which warrants deduction of tax at sources on this payment. Therefore, we also hold that in absence of specific section under which the tax is required to be deducted on such contribution without their being any service rendered by the recipient of the contribution disallowance u/s 40a(ia) also cannot be made. In the result ground no.9 of the appeal is allowed."