ACIT RG 9(1), MUMBAI v. AJANTA PHARMA LTD, MUMBAI

ITA 1582/MUM/2009 | 2000-2001
Pronouncement Date: 03-12-2010 | Result: Dismissed

Appeal Details

RSA Number 158219914 RSA 2009
Assessee PAN AAACA5579P
Bench Mumbai
Appeal Number ITA 1582/MUM/2009
Duration Of Justice 1 year(s) 8 month(s) 24 day(s)
Appellant ACIT RG 9(1), MUMBAI
Respondent AJANTA PHARMA LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 03-12-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 03-12-2010
Assessment Year 2000-2001
Appeal Filed On 09-03-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI BEFORE SHRI J.SUDHAKAR REDDY (A.M.) AND SHRI V.D. R AO (J.M.) ITA NO.1582/MUM/2009 ASSESSMENT YEAR : 2000-2001 ITA NO.1583/MUM/2009 ASSESSMENT YEAR : 2001-2002 ITA NO.1584/MUM/2009 ASSESSMENT YEAR : 2002-2003 ITA NO.1585/MUM/2009 ASSESSMENT YEAR : 2004-2005 D.C.I.T. RG.9(1) R.NO.223 AAYAKAR BHAVAN M.K. RD. MUMBAI 400 020. VS. M/S.AJANTA PHARMA LTD. AJANTA HOUSE GOVT. INDUSTRIAL ESTATE CHARKOP KANDIVLI (W) MUMBAI 400 067. PAN : AAACA5579P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.T. BIDARI RESPONDENT BY : SHRI MADHUR AGARWAL O R D E R PER BENCH ALL THESE ARE REVENUES APPEALS DIRECTED AGAINST SE PARATE ORDERS OF THE LEARNED CIT (A)- IX MUMBAI DATED 30.12.2008 FOR TH E ASSESSMENT YEARS 2000-01 TO 2003-2004. GROUND OF APPEAL IS COMMON AND READS AS FOLLOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN REDUCING THE BOOK PROFI T U/S.115JA OF THE I.T. ACT BY 100% OF THE AMOUNT BEING PROFIT DERIVED FROM THE EXPORT OF GOODS OR MERCHANDISE COMPUTED U/S.80H HC(1) WITHOUT APPRECIATING THE FACT THAT THE DEDUCTION AS PER CLAUSE (VIII) OF THE SECTION 115JA IS TO BE ALLOWED FROM B OOK PROFIT TO THE EXTENT OF DEDUCTION U/S.80HHC ALLOWABLE UNDER T HE I.T. ACT 1961. 2. WE HAVE HEARD SHRI S.T. BIDARI LEARNED DR AND S HRI MADHUR AGARWAL LEARNED COUNSEL FOR THE ASSESSEE. ITA NO.1582 TO 1585/MUM/2009 2 3. THE ISSUE IS BROUGHT OUT IN THE ORDER OF THE CIT (A) AT PAGE 10 PARA 7 AND 7.1 WHICH IS EXTRACTED BELOW: 7. 6 TH GROUND RELATES TO THE ASSESSING OFFICERS ACTION O F NOT ACCEPTING CLAIM OF THE ASESEE THAT ON TRUE AND CORRECT INTERPRETATION OF SECTION 115JA R.W.S. 80HHC REDUC TION ENVISAGED IN TERMS OF CLAUSE (VIII) OF THE EXPLANAT ION TO SECTION 115JA WAS REQUIRED TO BE CALCULATED BY ADOPTING BOO K PROFIT AS PER CORPORATE ACCOUNTS IN THE PLACE AND INSTEAD OF ASSESSABLE BUSINESS INCOME. 7.1 IT IS THE ASSESSEES CONTENTION THAT DEDUCTION UNDER CLAUSE (VIII) OF EXPLANATION TO SECTION 115JA NEEDS TO BE GRANTED AFTER CONSIDERING REDUCTION ENVISAGED IN TE RMS OF SAID CLAUSE (VIII) W.R.T. BOOK PROFIT AS PER CORPORATE A CCOUNTS INSTEAD OF ASSESSABLE BUSINESS INCOME. THE ASSESSING OFFI CER RELYING ON THE HONBLE ITAT DECISION IN THE CASE OF M/S. OM NITEX INDUSTRIES (I) LTD. IN ITA NO.2049/MUM/2003 ASSESS MENT YEAR 1998-99 HAS REJECTED THE ASSESSEES CONTENTION . THE ASSESSEE FURTHER SUBMITS THAT FOR THE PURPOSE OF RE DUCTION FROM BOOK PROFIT AS ENVISAGED IN CLAUSE (VIII) OF EXPL ANATION TO SECTION 115JA BY CONSIDERING THE ASSESSABLE BUSINES S INCOME AS PER NORMAL PROVISIONS INSTEAD OF PROFIT AS REFLE CTED IN THE CORPORATE ACCOUNTS OF THE ASSESSEE. THE AR SUBMITT ED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE MUMBAI TRIBUNAL IN ASSESSEES OWN C ASE FOR ASSESSMENT YEAR 2001-01 IN ITA NO.7202/M/2004 DATED 30.11.2004 WHICH IN TURN HAS FOLLOWED BINDING SPECI AL BENCH DECISION OF MUMBAI TRIBUNAL IN THE CASE OF DCIT VS. SYNCOME FORMULATIONS (I) LTD. (106 ITD 193). IT IS FURTHER STATED THAT THE ASSESSING OFFICER HAD RELIED UPON A DECISION OF MUM BAI TRIBUNAL IN THE CASE OF OMNITEX INDUSTRIES (I) LTD. IN ITA NO.2049/M/03 WHICH WAS RENDERED PRIOR TO THE SPECIA L BENCH DECISION. 4. THE FIRST APPELLATE AUTHORITY HAS FOLLOWED THE D ECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF SYNCOME FORMUL ATIONS (I) LTD. (106 ITD 193) (SB) (MUM) AND GRANTED RELIEF. 5. AS AGREED BETWEEN BOTH THE PARTIES THE ISSUE NOW STANDS COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY T HE JUDGMENT OF THE HONBLE SUPREME COURT IN ASSESSEES OWN CASE IN CIV IL APPEAL NO.7518 OF 2010 JUDGMENT DATED 09.09.2010. 6. THE QUESTION BEFORE THE HONBLE SUPREME COURT IS BROUGHT OUT AT PARA 3 WHICH IS EXTRACTED FOR THE REFERENCE. 3. THE QUESTION OF LAW RAISED IN THIS CIVIL APPEA L IS : WHETHER FOR DETERMINING THE BOOK PROFITS IN TERMS OF SECTION 115JB THE NET PROFITS AS SHOWN IN THE P&L ACCOUNT HAVE TO BE ITA NO.1582 TO 1585/MUM/2009 3 REDUCED BY THE AMOUNT OF PROFITS ELIGIBLE FOR DEDUC TION UNDER SECTION 80HHC OR BY THE AMOUNT OF DEDUCTION UNDER SECTION 80HHC 7. THE HONBLE SUPREME COURT HELD AS FOLLOWS: (I) THE QUESTION OF LAW IS WHETHER FOR DETERMINING THE BOOK PROFITS IN TERMS OF S. 115JB THE NET PROFITS AS S HOWN IN THE P&L ACCOUNT HAVE TO BE REDUCED BY THE AMOUNT OF PRO FITS ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC OR BY TH E AMOUNT OF DEDUCTION UNDER S. 80HHC? (II) S. 115JB IS A SELF-CONTAINED CODE AND TAXES DE EMED INCOME. S. 115JB BEGINS WITH A NON-OBSTANTE CLAUSE AND REQUIRES VIDE CLAUSE (IV) FOR THE ELIGIBLE PROFIT S DERIVED FROM EXPORTS TO BE EXCLUDED FROM THE BOOK PROFITS. S. 80HHC OPERATES IN A DIFFERENT SPHERE. S. 80HHC(1B) IS CON CERNED WITH THE EXTENT OF DEDUCTION; (III) IF AN ASSESSEE EARNS RS.100 CRORES THEN WHILE FOR AY 2001- 02 THE EXTENT OF DEDUCTION IS 80% THEREOF FOR PUR POSES OF COMPUTATION OF BOOK PROFITS 100% OF THE PROFITS AR E ELIGIBLE PROFITS AND CANNOT BE REDUCED TO 80% BY RELYING ON S. 80HHC(1B). THE IDEA IS TO EXCLUDE EXPORT PROFITS FROM COMPUTATION OF BOOK PROFITS UNDER S. 115JB WHICH IM POSES MAT ON DEEMED INCOME; (IV) THE ARGUMENT OF THE DEPARTMENT THAT BECAUSE CL AUSE (IV) OF EXPLANATION TO S. 115JB PROVIDES THAT THE DEDUCTION IS SUBJECT TO THE CONDITIONS SPECIFIED IN S. 80HHC BOTH ELI GIBILITY AS WELL AS DEDUCTIBILITY OF THE PROFIT HAS TO BE CON SIDERED TOGETHER HAS NO MERIT. IF THE DICHOTOMY BETWEEN EL IGIBILITY OF PROFIT AND DEDUCTIBILITY OF PROFIT IS NOT KEPT IN MIND THEN S. 115JB WILL CEASE TO BE A SELF-CONTAINED CODE. ONE C ANNOT RELY UPON THE LAST SENTENCE IN CLAUSE (IV) OF EXPLANATIO N TO S. 115JB TO OBLITERATE THE DIFFERENCE BETWEEN ELIGIBILITY AND DEDUCTIBILITY OF PROFITS. 8. RESPECTFULLY FOLLOWING THE SAME WE DISMISS ALL T HE FOUR APPEALS OF THE REVENUE. 9. IN THE RESULT APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS 3 RD DAY OF DECEMBER 2010. SD/- (V.D. RAO) (JUDICIAL MEMBER) SD/- (J.SUDHAKAR REDDY) (ACCOUNTANT MEMBER) MUMBAI DATED 03.12.2010 ITA NO.1582 TO 1585/MUM/2009 4 JANHAVI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- MUMB AI 4. COMMISSIONER OF INCOME TAX CITY- MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH MUM BAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI