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A.C.I.T. Central Circle-20, Mumbai vs Ankur Drugs & Pharma Ltd., Mumbai on 27 February, 2018 cites

Commissioner Of Income-Tax vs Penwalt India Ltd. on 24 April, 1991

9. The Ld. CIT DR in rejoinder submitted that in the case of Penwalt India Limited(supra) some manufacturing activity was done by the taxpayer but in 22 I.T.A. No. 7529/Mum/2011 the instant case no manufacturing was done by assessee . It was submitted by learned CIT DR that it is claimed that there was an opinion taken by the assessee from professionals but no such opinion was brought on record as it was not filed before the authorities below and not even before the tribunal. It was also submitted that provisions of Section 10B and 80IC are different which operate in altogether different field wherein Section 80IC clearly requires manufacturing . Thus, learned CIT DR strongly supported the levying of penalty u/s 271(1)(c) of the 1961 Act and contended that the appellate order of learned CIT(A) is erroneous which needed to be reversed and penalty levied by the AO be confirmed.
Bombay High Court Cites 10 - Cited by 43 - Full Document

Commissioner Of Income-Tax vs Sree Valliappa Textiles Ltd. on 8 August, 1986

The ld. Counsel for the assessee submitted 21 I.T.A. No. 7529/Mum/2011 that in respect of the decision of Hon'ble Karnataka High Court in the case of CIT v. Sree Valliappa Textiles(supra) relied upon by the Ld. CIT-DR was a case wherein bogus claim was lodged and the machinery was never put to use by the taxpayer as it was not even dispatched by the seller and hence penalty was confirmed under those circumstances and hence the said case was distinguishable on facts.
Karnataka High Court Cites 29 - Cited by 14 - Full Document

C.I.T.,Ahmedabad vs Reliance Petroproducts Pvt.Ltd on 17 March, 2010

In the instant case in our considered view , the assessee has been able to demonstrate that although claim for deduction u/s. 80IC as lodged by the assessee with the revenue was not tenable but the assessee made a bona- fide claim as the loan license issued by Licesning authority was held in the name of the assessee to manufacture pharma products at Vaibhav's unit at Baddi, HP, manufacturing was done under assessee's supervision and control to utilise the spare capacity of Vaibhav unit at Baddi, HP under contract manufacturing agreement, raw material and packing material was supplied by the assessee to Vaibhav and even sale orders were issued by it . Ultimately it was also proposed to merge the said sister/associated concern namely M/s Vaibhav with assessee under a scheme of merger approved by Hon'ble Bombay High Court w.e.f. 01-01-2006 which falls within the impugned assessment year, which date of merger was later advanced to 01- 04-2006 . It is also demonstrated by the assessee that Vaibhav unit at Baddi, HP was entitled for deduction u/s 80IC . Thus , it is a case where legal claim was raised by the assessee as to deduction u/s 80IC w.r.t. manufacturing done by the assessee at Vaibhav's unit at Baddi, HP which ultimately did not found favour with the Revenue and the issue is squarely covered by decision of Hon'ble Supreme Court in the case of Reliance Petroproducts Private Limited(supra) wherein it is held that just making of legal claim which does not found favour with Revenue will not make the taxpayer automatically liable for penalty. We have observed that assessee has made all the due declarations/disclosures with the Revenue in the return of income filed with the revenue and in the audited financial statements w.r.t its claim for deduction u/s 80IC with respect to manufacturing done by the assessee at Vaibhav's Baddi, HP unit, thus, it cannot be said that assessee has either furnished inaccurate particulars of income or had concealed particulars of income from revenue . Under these circumstances, we are directing deletion of the penalty levied by the Revenue u/s. 271(1)(c) and we uphold/confirm the well reasoned order of the learned CIT-A deleting penalty levied by the AO u/s 271(1)(c), in which we do not find any infirmity.
Supreme Court of India Cites 13 - Cited by 1723 - V S Sirpurkar - Full Document

Sunrise Metal Industries vs Income-Tax Officer on 21 November, 2002

The learned counsel for the assessee also relied upon the decision of ITAT, Mumbai in the case of Sunrise Metal Industries v. ITO reported in (2004) 89 ITD 406(Mum.). It was submitted that there was a loan licence agreement with Vaibhav Healthcare Private Limited and complete details were submitted before the authorities below . It was submitted that the AO erred in holding that there is no loan license agreement entered into by the assessee. It was submitted that it was only that the assessee claim which was rejected by the AO but that will not mean that the assessee has filed a claim which was patently wrong as the manufacturing was done at the unit of the Vaibhav Healthcare Private Limited which is a sister concern of the assessee located at Baddi, Himachal Pradesh and the assessee was entitled for deduction u/s. 80IC . It was submitted that belief of the assessee while claiming deduction u/s 80IC was a bonafide belief. It was submitted that the said unit of Vaibhav was proposed to be merged with the assessee with effect from 01.01.2006 which was later changed to be with effect from 01.04.2006 and the said scheme of merger was approved by Hon'ble Bombay High Court. It was submitted that no inaccurate particulars of income were furnished by the assessee while the 19 I.T.A. No. 7529/Mum/2011 AO may differ with the legal claim made by the assessee but that is not sufficient to fasten liability for levy of penalty u/s 271(1)(c) of the 1961 Act. The Ld. AR would rely on the appellate order passed by learned CIT-A. It was submitted that the AO invoked second limb of Section 271(1)(c) of the 1961 Act and penalty was levied for furnishing of inaccurate particulars of income. It was submitted by learned counsel for the assessee that its sister concern Vaibhav Healthcare Private Limited was entitled for Section 80IC benefits and no undue advantage has been taken by the assessee . It was submitted that there was no incorrect statements made by the assessee and the manufacturing was infact done at the unit of Vaibhav Healthcare Private Limited at Baddi (Himachal Pradesh) under the control and supervision of assessee. It was submitted that no inaccurate particulars of income were furnished by the assessee. It was also submitted that penalty on additions of Rs. 7 lacs has no connection with the disallowance u/s 80IC of the 1961 Act. It was submitted that disallowance of claim u/s 80IC has nothing to do with search conducted by the Revenue u/s 132(1) and explanation 5 to Section 271(1)(c) has no relevance so far as disallowance u/s 80IC of the 1961 Act is concerned. It was submitted that no undue utilisation of deduction u/s 80IC was claimed as in any case sister concern Vaibhav Healthcare Private Limited was entitled for deduction u/s 80IC. It was submitted that in computation of income filed with the Revenue, it was clearly reflected that the deduction u/s 80IC to the tune of Rs.9.99 crore was claimed . Our attention was also drawn to page no. 4 to 39 wherein the annual report of the assessee for financial year 2005-06 is placed. It was submitted that there was proper disclosure by the assessee in the financial statements and manufacturing of pharma product was done on contract basis at the unit of the sister company of the assessee Vaibhav Healthcare Private Limited located at Baddi , HP which was later merged with the assessee on 01.04.2006 . It was submitted that said Vaibhav was duly entitled for deduction u/s 80IC of the 1961 Act. Our attention was also drawn to page no. 11 and 15 of paper book and it was submitted that was a legal claim made by the assessee for claiming deduction u/s. 80IC which did not found favour with the revenue . Our attention was also drawn to page no. 40 and 41 of the paper book wherein the job charges paid to Vaibhav Healthcare Private Limited unit at Baddi,HP was reflected. In the said unit wise P&L statement , the profits of the Daman unit and Baddi units are separately 20 I.T.A. No. 7529/Mum/2011 reflected. It was submitted that depreciation has been claimed with respect to the Baddi unit only on the car as the Plant & Machinery was not installed. It was submitted that Drug Controller has issued loan licence in the name of the assessee for carrying manufacturing at the premises of Vaibhav Healthcare Private Limited unit at Baddi, HP. Our attention was also drawn to the contract manufacturing agreement which is placed in paper book page no. 44 to 55 and it was submitted by drawing attention to the clauses of contract manufacturing agreement that the entire manufacturing was done under the assessee supervision and control. It was submitted that there is no requirement u/s. 80IC for ownership of plant & machinery before claiming deduction u/s 80IC .
Income Tax Appellate Tribunal - Mumbai Cites 11 - Cited by 20 - Full Document
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