DCIT, Chandigarh v. M/s Parabolic Drugs Ltd., Chandigarh

ITA 230/CHANDI/2015 | 2011-2012
Pronouncement Date: 06-10-2016 | Result: Dismissed

Appeal Details

RSA Number 23021514 RSA 2015
Assessee PAN AACCP1419K
Bench Chandigarh
Appeal Number ITA 230/CHANDI/2015
Duration Of Justice 1 year(s) 7 month(s) 1 day(s)
Appellant DCIT, Chandigarh
Respondent M/s Parabolic Drugs Ltd., Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 06-10-2016
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 06-10-2016
Date Of Final Hearing 21-09-2016
Next Hearing Date 21-09-2016
Assessment Year 2011-2012
Appeal Filed On 05-03-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH CHANDIGARH BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA ACCOUNTANT MEMBER ITA NO.227 228 229 & 230/CHD/2015 (ASSESSMENT YEAR :2006-07 2009-10 2010-11 & 2011- 12) THE D.C.I.T. VS. M/S PARABOLIC DRUGS LTD. CENTRAL CIRCLE-1 SCO 99-100 SECTOR 17B CHANDIGARH. CHANDIGARH. PAN: AACCP1419K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUSHIL KUMAR CIT DR RESPONDENT BY : SHRI SUDHIR SEHGAL DATE OF HEARING : 27.09.2016 DATE OF PRONOUNCEMENT : 06.10.2016 O R D E R PER ANNAPURNA GUPTA A.M . : THE ABOVE FOUR APPEALS HAVE BEEN FILED BY THE REVENUE AGAINST SEPARATE ORDERS OF LEARNED COMMISS IONER OF INCOME TAX (APPEALS)-3 GURGAON DATED 16.12.2014 RELATING TO ASSESSMENT YEAR 2006-07 2009-10 2010- 11 & A.Y 2011-12. SINCE THE ISSUE INVOLVED IN ALL THE AP PEALS IS IDENTICAL THEY WERE HEARD TOGETHER AND ARE BEING D ISPOSED OFF BY THIS COMMON ORDER. FOR THE SAKE OF CONVENIENCE WE SHALL BE DEALING WIT H THE FACTS IN ITA NO.227/CHD/2015. 2 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND AS PER PROVISIONS OF LAW THE LD. CIT(A) IS CORRECT IN DELETING THE PROTECTIVE ADDITION MADE BY THE ASSESS ING OFFICER ON THE GROUND THAT THE ISSUE INVOLVED HAS ATTAINED FINALITY WHEREAS THE REVENUE HAS FILED AN APPEAL VIDE DIARY NO. 154880/2014 & WHICH IS PENDING FOR ADJUDICATION BEFORE DELHI HIGH COURT? 3. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE A SSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURI NG OF BULK DRUGS AND FINE CHEMICALS ETC. HAVING MANUFACT URING FACILITIES AT DERABASSI PUNJAB AND PANCHKULA HARY ANA AND R&D FACILITIES AT DERABASSI PUNJAB AND BARWALA HARYANA. THE ASSESSEE HAD OBTAINED APPROVAL FROM TH E PRESCRIBED AUTHORITY FOR CLAIMING WEIGHTED DEDUCTIO N @ 150% OF THE EXPENDITURE INCURRED ON SCIENTIFIC RESE ARCH AND DEVELOPMENT U/S 35(2AB) OF THE ACT. DURING THE IMPUGNED YEAR THE ASSESSEE INCURRED THE FOLLOWING EXPENSES ON SCIENTIFIC RESEARCH AND DEVELOPMENT: CAPITAL EXPENDITURE RS.44 41 522/- REVENUE EXPENDITURE RS.7 38 11 965/- TOTAL RS.7 82 53 487/- IN THE RETURN OF INCOME FILED U/S 139(1) OF THE ACT THE ASSESSEE CLAIMED WEIGHTED DEDUCTION U/S 35(2AB) OF THE ACT ON THE SAME AMOUNTING TO RS.11 73 80 230/-. LAT ER IT WAS GRANTED APPROVAL FROM THE PRESCRIBED AUTHORITY IN FORM NO.3CL FOR CLAIMING DEDUCTION TO THE EXTENT O F THE FOLLOWING 3 CAPITAL EXPENDITURE RS. 41.70 LACS REVENUE EXPENDITURE RS. 26.17 LACS TOTAL RS.67.87 LACS THE ASSESSEE REVISED ITS RETURN ON 07/11/2007 AND CLAIMED WEIGHTED DEDUCTION ON THE SAME AMOUNTING TO RS.1 03 28 830/-.THE BALANCE REVENUE EXPENSES AMOUNTING TO RS 7 10 95 947/- ON WHICH APPROVAL WAS NOT GRANTED WAS CLAIMED U/S 37(1) OF THE ACT. IN THE ASSESSMENT FRAMED U/S 143(3) OF THE ACT THE ASSESS EE WAS DENIED THE CLAIM MADE U/S 37(1) OF THE ACT. BEFORE THE FIRST APPELLATE AUTHORITY THE ASSESSEE ALONGWITH T HE CLAIM MADE U/S 37(1)ALSO ALTERNATELY CLAIMED DEDUCTION U/ S 35(1)(I) OF THE ACT WHICH WAS DENIED BY THE CIT(A) .IN APPEAL FILED BEFORE THE ITAT THE CLAIM OF THE ASSES SEE WAS UPHELD VIDE ORDER DATED 17-06-2011 IN IT APPEAL NO.2111(DELHI) OF 2010 .IN THE MEANWHILE SEARCH U/S 132 WAS CONDUCTED ON THE ASSESSEE ON 17/09/2010 AND IN RESPONSE TO NOTICE U/S 153A THE ASSESSEE FILED RETU RN CLAIMING DEDUCTION U/S 35(2AB) OF RS.8 10 14 225/-. THE AO IN THE ORDER PASSED U/S 153A(1)(B) R.W.S 143(3) OF THE ACT DT.31-03-2013 ALLOWED THE ASSESSES CLAIM OF WE IGHTED DEDUCTION U/S 35(2AB) TO THE EXTENT APPROVED AMOUNT ING TO RS.1.03 CRORES WHILE THE BALANCE AMOUNTING TO RS.7 08 33725/- WAS DENIED AND ADDED BACK TO THE IN COME OF THE ASSESSEE ON PROTECTIVE BASIS SINCE THE AO H ELD THAT WHILE THE HONBLE ITAT HAD GRANTED RELIEF TO THE AS SESSEE OF THE SAME IN SEPARATE PROCEEDINGS AGAINST ORDER P ASSED 4 U/S 143(3) OF THE ACT BUT THE REVENUE HAD FILED AN APPEAL AGAINST THE ORDER OF THE ITAT AND SUBSTANTIVE ADDIT ION WOULD BE MADE IF THE REVENUE SUCCEEDED IN ITS APPEA L BEFORE THE HIGH COURT. THE ASSESSEE SUCCESSFULLY CONTESTED THE DISALLOWANCE BEFORE THE LD.CIT(A) WHO ALLOWED THE ASSESSES CLAIM FOLLOWING THE ORDER OF T HE ITAT IN THIS RESPECT IN THE PROCEEDINGS AGAINST ORDER PA SSED U/S 143(3) OF THE ACT FOR THE SAME YEAR IN THE CASE OF THE ASSESSEE. 4. AGGRIEVED BY THE SAME THE REVENUE FILED PRESENT APPEAL BEFORE US. 5. DURING THE COURSE OF HEARING BEFORE US THE LEAR NED D.R. FILED WRITTEN SUBMISSIONS STATING THAT THE LEA RNED CIT (APPEALS) HAD ERRED IN RELYING ON THE DECISION OF THE HON'BLE I.T.A.T. CHANDIGARH IN THE CASE OF THE AS SESSEE SINCE THE FACTS IN BOTH THE CASES WERE DIFFERENT. THE LEARNED D.R. POINTED OUT THAT IN THE ORIGINAL PROCE EDINGS THE ASSESSEE HAD REVISED ITS RETURN OF INCOME RESTR ICTING ITS CLAIM MADE UNDER SECTION 35(2AB) OF THE ACT WH ILE CLAIMING THE BALANCE DEDUCTION UNDER SECTION 37(1) OF THE ACT. WHILE IN THE IMPUGNED CASE THE ASSESSEE HAD NOT REVISED ITS RETURN AND CLAIMED THE ENTIRE DEDUCTION ONLY UNDER SECTION 35(2AB) OF THE ACT. IN THE ABSENCE OF ANY CLAIM MADE BY THE ASSESSEE THE LEARNED D.R. PLEADE D THAT THE SAME SHOULD NOT BE ALLOWED AT THIS STAGE AND SH OULD NOT HAVE BEEN ADMITTED BY THE LEARNED CIT (APPEALS) AND THEREFORE THE RELIEF GRANTED TO THE ASSESSEE WAS W RONG. 5 6. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND RELIED UPON THE ORDER OF THE LEARNED CIT (APP EALS) AND STATED THAT THIS ISSUE OF ALTERNATIVE CLAIM OF THE ASSESSEE FOR THE IMPUGNED YEAR HAD ALREADY BEEN DEC IDED BY THE I.T.A.T. IN THE APPEAL FILED AGAINST THE ASS ESSMENT PROCEEDINGS UNDER SECTION 143(3) OF THE ACT AND THEREFORE THERE WAS NO REASON TO DIFFER FROM THE S AME. AS FAR AS THE ARGUMENT OF THE LEARNED D.R. THAT THE AS SESSEE HAD NOT CLAIMED DEDUCTION UNDER SECTION 37(1) OR UN DER SECTION 35(1)(I) OF THE ACT IN THE FIRST PLACE THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE CLAIM OF THE ASSESSEE MADE IN THE RETURN FILED UNDER SECTION 15 3A AMOUNTING TO RS.8 10 14 225/- UNDER SECTION 35(2AB) OF THE ACT WAS IN FACT AN INADVERTENT ERROR. THE LEAR NED COUNSEL POINTED OUT THAT IN FACT THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 35(2AB) OF RS.1 03 28 830/- AND UNDER SECTION 37(1)) OF RS.7 10 95 947/- AS CLAIME D IN THE REVISED RETURN FILED ON 7.10.2007 AND THE SUM TOTAL OF WHICH CAME TO RS.8 10 14 225/-. BY MENTIONING ONLY SECTION 35(2AB) OF THE ACT IN THE RETURN OF INCOME THE ASSESSEE HAD MADE AN INADVERTENT MISTAKE WHILE THE FACT WAS THAT IT HAD CLAIMED DEDUCTION UNDER TWO SEPARAT E SECTIONS OF THE ACT AND THUS THE ARGUMENT OF THE L EARNED D.R. WAS IN FACT FACTUALLY INCORRECT AND HENCE DID NOT MERIT ANY CONSIDERATION AT ALL. 6 7. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE ORDERS OF THE AUTHORITIES BELOW AS ALSO THE DOCUMEN TS PLACED BEFORE US. 8. THE ONLY GRIEVANCE OF THE REVENUE IN THE PRESENT APPEAL IS AGAINST THE ACTION OF THE CIT (APPEALS) I N ALLOWING THE CLAIM OF THE ASSESSEE OF REVENUE EXPE NSES INCURRED ON SCIENTIFIC RESEARCH AND DEVELOPMENT UND ER SECTION 37(1)/35(1)(I) OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT). 9. WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) GRANTING DEDUCTION OF THE REVENUE EXPENSES U/S 37(1)/35(1)(I) OF THE ACT FOLLOWING THE DECISION O F THE ITAT IN ASSESSES OWN CASE FOR THE SAME YEAR IN SEPA RATE PROCEEDINGS. ADMITTEDLY THE ITAT HAD IN AN EARLIER ORDER ON IDENTICAL ISSUE FOR THE SAME YEAR ALLOWED THE ALTERNATIVE CLAIM OF THE ASSESSEE OF THE IMPUGNED EXPENSES U/S 37(1)/35(1)(I) OF THE ACT.FURTHER NEIT HER THE REVENUE NOR THE ASSESSEE COULD ENLIGHTEN THE BENCH ON THE STATUS OF THE APPEAL FILED BY THE REVENUE AGAIN ST THE ORDER OF THE ITAT DESPITE SPECIFIC QUERY RAISED BY THE BENCH IN THIS REGARD.IT THEREFORE FOLLOWS THAT IN T HE ABSENCE OF ANY DECISION OF THE HIGH COURT THE ORD ER PASSED BY THE ITAT STANDS AS RIGHTLY HELD BY THE LD.CIT(A) AND SINCE THE ISSUE STANDS DECIDED BY THE ITAT IN FAVOUR OF THE ASSESSEE WE FIND NO REASON TO TA KE ANY OTHER VIEW IN THE MATTER AT ALL. 7 FURTHER WE FIND NO MERIT IN THE ARGUMENT OF THE LD DR THAT THE FACTS OF THE PRESENT CASE ARE DIFFERENT FR OM THAT DECIDED BY THE ITAT IN THAT IN THE PRESENT CASE TH E ASSESSEE HAD MADE NO CLAIM OF DEDUCTION U/S 37(1) W HILE IT HAD DONE SO IN THE CASE BEFORE THE ITAT. THE AO WE FIND HAS DISALLOWED THE CLAIM MERELY BY NOT FOLLO WING THE ORDER OF THE ITAT WHICH OBLIQUELY MEANS THAT THE C LAIM WAS MADE BEFORE HER .EVEN OTHERWISE WE FIND THAT TH E ASSEESSEE HAD INADVERTENTLY MENTIONED SECTION 35(2A B) ONLY IN THE RETURN OF INCOME WHILE ACTUALLY INTENDI NG TO CLAIM DEDUCTION BOTH UNDER SECTION 35(2AB) AND 37 O F THE ACT. THIS BECOMES EVIDENT FROM THE FACT THAT IN THE REVISED RETURN FILED ON 07-11-2007 THE ASSESSEE HAD CLAIMED TOTAL DEDUCTION OF RS.8.14 CRORES AS FOLLOWS: U/S 35(2AB) RS. 1.03 CRORES U/S 37(1) RS.7.11 CRORES TOTAL RS.8.14 CRORES THIS WAS ALLOWED IN ENTIRETY BY THE ITAT ALSO. IN T HE RETURN FILED U/S 153A THE ASSESSEE CLAIMED THE ENTI RE AMOUNT OF RS.8.10 CRORES U/S 35(2AB) ONLY WITHOUT BIFURCATING THE SAME BETWEEN U/S 35(2AB) AND U/S 37 (1) OF THE ACT.IN THE PRESENT SET OF FACTS THAT THE EX PENDITURE APPROVED FOR PURPOSES OF SECTION 35(2AB) REMAINING THE SAME AS ALSO THE TOTAL QUANTUM OF EXPENSES INCURRED ON RESEARCH AND DEVELOPMENT THERE WAS NO OCCASION FOR THE ASSESSEE TO CLAIM WEIGHTED DEDUCTION U/S 35(2AB) AMOUNTING TO RS.8.10 CRORES AND OBVIOUSLY IT WAS ON LY AN 8 INADVERTENT ERROR ON THE PART OF THE ASSESSEE.WE FI ND THAT THE ASSESSEE HAD CLARIFIED THIS TO THE LD CIT(A) AL SO IN ITS WRITTEN SUBMISSIONS FILED AND REPRODUCED AT PARA 5 OF THE ORDER. CLEARLY THE ASSESSEE HAD CLAIMED DEDUCTION O F THE IMPUGNED SUM U/S 37(1)/35(1)(I) OF THE ACT AND THE ARGUMENT OF THE LD. DR ON THIS ACCOUNT IS THEREFORE REJECTED. IN VIEW OF THE ABOVE WE UPHOLD THE ORDER OF THE LEARNED CIT (APPEALS) ALLOWING THE ASSESSEES CLAIM OF DEDUCTION AMOUNTING TO RS.7 08 33 725/- UNDER SECTI ONS 37(1) AND 35(1)(I) OF THE ACT. 10. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ITA NOS. 228 229 & 230/CHD/2015 11. THE ISSUE IN THE ABOVE THREE APPEALS IS IDENTICAL TO THAT IN ITA NO. 227/CHD/2015 RELATING TO ALLOWANCE BY THE LD. CIT(A) OF THE ASSESSEES CLAIM OF EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH AND DEVELOPMENT UNDER SECTION 37(1) / 35(1)(I) OF THE ACT FOLLOWING THE DECISION OF THE ITAT IN ASSESSEES OWN CASE IN AY 2006-07 AS AGAINST PROTECTIVE ADDITION MADE OF THE SAME BY THE AO. SINCE WE HAVE DECIDED THIS ISSUE IN ITA NO. 227/CHD/2015 THE DECISION RENDERED THEREIN SQUA RELY APPLIES TO THE PRESENT APPEALS ALSO FOLLOWING WHIC H WE UPHOLD THE ORDER OF THE LD. CIT(A) ALLOWING THE CLA IM OF THE ASSESSEE UNDER SECTION 37(1) / 35(1)(I) OF THE ACT. 9 12. THE APPEALS OF THE REVENUE ARE THEREFORE DISMISSED. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 06 TH OCTOBER 2016 *RATI/RKK* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR ITAT CHANDIGARH