The DCIT, Circle-4,, Ahmedabad v. Lincoln Pharmaceuticals Ltd.,, Ahmedabad

ITA 257/AHD/2007 | 1999-2000
Pronouncement Date: 08-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 25720514 RSA 2007
Assessee PAN AAACL2711N
Bench Ahmedabad
Appeal Number ITA 257/AHD/2007
Duration Of Justice 2 year(s) 11 month(s) 23 day(s)
Appellant The DCIT, Circle-4,, Ahmedabad
Respondent Lincoln Pharmaceuticals Ltd.,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 08-01-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted C
Tribunal Order Date 08-01-2010
Assessment Year 1999-2000
Appeal Filed On 15-01-2007
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD. BEFORE: HON'BLE SHRI T.K. SHARMA JUDICIA L MEMBER AND HON'BLE SHRI D.C. AGRAWAL ACCOUNTANT MEMBER ITA NOS.257/AHD/2007 & 258/AHD/2007 ASSESSMENT YEAR : 1999-2000 & 2003-2004 DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-4 AHMEDABAD VERSUS LINCOLN PHARMACEUTICALS LTD. AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAACL 2711 N FOR THE APPELLANT : SHRI M.C. PANDIT SR. DR FOR THE RESPONDENT : SHRI A.C. SHAH ORDER PER T K SHARMA JUDICIAL MEMBER :- THESE TWO APPEALS BY THE REVENUE ARE AGAINST COMMON ORDER DATED 18.10.2006 OF LD. COMMISSIONER O F INCOME TAX(APPEALS)-VIII AHMEDABAD FOR THE ASSESSMENT YEARS 1999-2000 & 2003 -2004 RAISING FOLLOWING GROUNDS :- ITA NO.257/AHD/2007(ASSESSMENT YEAR 1999-2000) : 1. THE LD. C.I.T.(A) HAS ERRED IN LAW AND ON THE FA CTS OF THE CASE IN DIRECTING TO DELETE THE ADDITION OF RS.5 98 230/- B EING THE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASES FROM M/S. ALEX PHARMA CEUTICALS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE ID. C1T(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 3. IT I THEREFORE PRAYED THAT THE ORDER OF THE LD. C.I.T.(A) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EFFECT. ITA NO.258/AHD/2007 (ASSESSMENT YEAR 2003-04): 1. THE ID. CIT(A) HAS ERRED IN LAW AND ON THE FACT S OF THE CASE IN DIRECTING TO EXCLUDE EXCISE DUTY OF RS.2 38 11 687/ - AND SALES TAX OF RS.6 72 628/- FROM THE TOTAL TURNOVER IN COMPUTING DEDUCTION U/S. 80HHC OF THE I.T. ACT. 2. THE ID. CIT(A) HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DIRECTING TO DELETE THE ADJUSTMENT ADDITION OF 20% OF AVERAGE RATE OF RS.9 23 882/- ON PURCHASE IN COMPUTING DEDUCTION U/ S. 80IB OF THE I.T. ACT. 2 ITA NO.257-58/AHD/2007 3. THE ID. C1T(A) HAS ERRED IN LAW AND ON THE FAC TS OF THE CASE IN DIRECTING TO DELETE THE ADDITION OF RS.2 62 473/- B EING THE DISALLOWANCE ON ACCOUNT OF BOGUS PURCHASE FROM M/S. ALEX PHARMAC EUTICALS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE ID. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 5. IT IS THEREFORE PRAYED THAT THE ORDER OF THE L D. C.I.T.(A) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED TO THE ABOVE EFFECT. 2. BOTH THE APPEALS WERE ARGUED BY COMMON LD. REPRE SENTATIVES THEREFORE THESE ARE DECIDED BY THE COMMON ORDER FOR THE SAKE OF CON VENIENCE. 3. BRIEF FACTS RELATING TO CONTROVERSY INVOLVED IN THE ONLY GROUND RAISED BY THE REVENUE IN ITS APPEALS I.E. ITA NO. 257/AHD/2007 F OR THE ASSESSMENT YEAR 1999- 2000 AND GROUND NO. 3 OF ITA NO.258/AHD/2007 FOR TH E ASSESSMENT YEAR 2003-04 ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDING S THE A.O. MADE THE ADDITION OF RS.5 98 230/- AND RS.2 62 473/- ON ACCOUNT OF BOGUS PURCHASES MADE FROM M/S. ALEX PHARMACEUTICALS THANE. M/S. ALEX PHARMACEUTICALS I S ONE THE BUSINESS CONCERNS OF SHRI KETAN P. OZHA. THE DETAILS OF PURCHASES MADE B Y THE ASSESSEE FOR THE ASSESSMENT YEAR 1999-2000 ARE AS UNDER :- SR. NO. NAME OF ITEM DATE OF PURCHASE QUANTITY RATE AMOUNT(RS .) 1. PREDINISOLONE 30.07.1998 12 KG. 34 500/KG. 4 22 280/- 2. PREDINISOLONE 03.09.1998 5 KG. 34 500/KG. 1 75 950/- TOTAL 17 KG. 5 98 230/- DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 1999-2000 THE A.O. ASKED THE ASSESSEE TO FURNISH THE COPY OF PURC HASE BILLS AND L.RS. IN RESPECT OF THE ABOVEMENTIONED PURCHASES VIDE LETTER DATED 08.0 8.2005. BEFORE THE A.O. THE ASSESSEE COULD NOT PRODUCE THE COPY OF THE RELEVANT PURCHASE BILLS AND L.RS. BEFORE THE A.O. THE ASSESSEE SUBMITTED THAT FREIGHT CHARG ES FOR PURCHASE OF GOODS FROM M/S. ALEX PHARMACEUTICALS WERE DEBITED IN THE BOOKS OF A CCOUNTS BUT THE ASSESSEE COULD NOT FURNISH ANY DETAILS REGARDING NAME AND ADDRESS OF THE PARTY DATE OF PAYMENT AMOUNT MODE OF PAYMENT ETC. BEFORE THE A.O. THE ASSESSEE MERELY SUBMITTED THAT IN THE SALES TAX ASSESSMENT THE PURCHASES MADE FROM A LEX PHARMACEUTICALS HAVE BEEN ACCEPTED. IN SUPPORT OF THIS NO SALES TAX ASSESSME NT ORDER OF ALEX PHARMACEUTICALS WAS FURNISHED BEFORE THE A.O. SUBSEQUENTLY BEFORE THE A.O. IT WAS SUBMITTED THAT 3 ITA NO.257-58/AHD/2007 RELEVANT RECORDS FOR THE ASSESSMENT YEAR 1999-2000 WERE DAMAGED/ DESTROYED DUE TO FLOOD IN AHMEDABAD DURING THE YEAR 2000. IN SUPPORT OF THIS THE ASSESSEE COULD NOT PRODUCE ANY FIR. IT WAS SUBMITTED THAT INTIMATION O F DAMAGED /DESTROYED BOOKS WERE GIVEN TO CHIEF CIT AHMEDABAD ON 21.07.2000. HOWEVE R SUBSEQUENTLY BEFORE THE A.O. VIDE LETTER DATED 28.01.2004 THE ASSESSEE SUBM ITTED THE FOLLOWING DOCUMENTS :- (I) EXCISE FORM AR-4 DATED 17.12.1998; (II) EXCISE FORM AR-4 DATED 30.11.1998; (III) ORDER IN ORIGINAL OF ASST. COMMISSIONER OF CE NTRAL EXCISE RURAL DIV. AHD-II DATED 13.09.1999; (IV) ORDER IN ORIGINAL OF ASST. COMM. OF CENTRAL EX CISE RURAL DIV. AHD-II DATED 10.08.1999; (V) EXCISE REFUND ORDER OF RS.77 832/- DATED 13.09 .99; (VI) DEBIT NOTE OF RS.14 01 800/- ISSUED BY THE ASS ESSEE TO LINCOLN PHARMACEUTICALS PVT. LTD. DATED 31.03.99. AFTER GOING THROUGH THE AFORESAID DOCUMENTS ACCORD ING TO A.O. THE QUESTION ARISES AS TO HOW THE COPIES OF THE ABOVEMENTIONED DOCUMENTS W ERE FURNISHED ON 28.01.2004 WHEN ALL THE RECORDS WERE DAMAGED/DESTROYED DUE TO FLOOD IN JULY 2000. THE A.O. NOTED THAT IT SHOWS THAT THE ABOVE REFERRED DOCUMEN TS WERE IN POSSESSION OF THE ASSESSEE EVEN IF THEY WERE REPORTED TO BE DESTROYE D/ DAMAGED DURING FLOOD IN THE MONTH OF JULY 2000. THIS RAISES PRESUMPTION THAT I F THE ASSESSEE WAS IN POSSESSION OF THE ABOVE REFERRED DOCUMENTS THEN IT WOULD HAVE BE EN IN POSSESSION OF OTHER RECORDS OF THE SAME PERIOD I.E. FINANCIAL YEAR 1998-99. ON THIS BASIS THE A.O. CAME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT DISCHARGED ITS ONUS TO PROVE THAT EXPENSES RELATING TO PURCHASES FROM ALEX PHARMACEUTICALS WER E GENUINE. 4. IN PARA 3.7 OF THE ASSESSMENT ORDER FOR THE ASSE SSMENT YEAR 1999-2000 THE A.O. RELIED ON THE STATEMENT OF SHRI KETAN P. OZHA PROPRIETOR OF M/S. ALEX PHARMACEUTICALS WHICH WAS RECORDED UNDER SECTION 1 33A OF THE INCOME TAX ACT ON 10.01.2003 WHEREIN HE ADMITTED THAT ALEX PHARMACEU TICALS WAS ENGAGED IN THE BUSINESS OF ISSUING BOGUS SALE BILLS OF NEEDY PARTI ES. IT WAS NEVER ENGAGED IN GENUINE PURCHASE AND SALE OF ANY ITEM. ACCORDING TO A.O. W HEN ALEX PHARMACEUTICALS HAD NEVER PURCHASED ANY MATERIAL FOR TRADING HOW COULD IT SALE THE MATERIAL TO THE ASSESSEE-COMPANY. THE A.O. ACCORDINGLY DISALLOWED T HE ENTIRE AMOUNT OF PURCHASES 4 ITA NO.257-58/AHD/2007 AMOUNTING TO RS.5 98 230/-. ON IDENTICAL REASONS I N THE ASSESSMENT YEAR 2003-04 THE A.O. DISALLOWED RS.2 62 473/-. 5. ON APPEAL FOR BOTH THE ASSESSMENT YEARS THE LEA RNED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADDITION OF RS.5 98 230/- FOR THE ASSESSMENT YEAR 1999-2000 THE DETAILED REASONS GIVEN IN PARA 10 OF THE IMPUGNED ORDER READ AS UNDER :- 10. GROUND NO. 2 RELATES TO DISALLOWANCE OF PURCHA SE AND ADDITION THEREOF AT RS.5 98 230/- BEING ALLEGED BOG US PURCHASES FROM M/S. ALEX PHARMACEUTICALS AS DETAILED IN THE P RECEDING PARAGRAPHS. THIS ADDITION WAS EFFECTED IN THE REASS ESSMENT U/S. 147. THE APPELLANT CONTENDED THAT THE PURCHASES WERE ALL ROUTED THROUGH REQUISITE REGISTERS AND PRODUCTION WAS ACCOUNTED ON LY AS DETAILED IN PRECEDING PARA OF THIS ORDER FOR AY 2003-04. AS RIG HTLY CONTENDED BY THE APPELLANT WHEN SALES ARE TAKEN AS INCOME PERTA INING TO THE SAME ITEMS THEN THE CORRESPONDING PURCHASES CANNOT BE I GNORED. FOR THE REASONS ELABORATELY STATED IN THE A.Y. 2003-04 THE TRANSACTION OF PURCHASE FROM M/S. ALEX PHARMACEUTICALS CANNOT BE H ELD AS NOT GENUINE AND THE APPELLANT HAS DISCHARGED THE ONUS O N ITS PART WITH REFERENCE TO THE ACCOUNTING OF PRODUCTION SALES AN D QUANTITY. ACCORDINGLY I HOLD THAT THE ADDITION OF RS.5.98 LA CS ON A ONE SIDE STATEMENT OF SHRI K.P. OZA CANNOT BE SUSTAINED AND THE SAME IS DIRECTED TO BE DELETED. 5.2. FOR THE ASSESSMENT YEAR 2003-04 ALSO THE LEAR NED COMMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADDITION IN RESPECT OF ALL EGED BOGUS PURCHASES FROM M/S. ALEX PHARMACEUTICALS AMOUNTING TO RS.2 62 473/-. TH E DETAILED REASONS GIVEN IN PARA 7.2 OF HIS IMPUGNED ORDER IS AS UNDER :- 7.2. I HAVE GONE THROUGH THE RELEVANT PORTION OF T HE ASSESSMENT ORDER AS WELL AS THE WRITTEN SUBMISSIONS AND CONSID ERED THE ARGUMENTS ALSO. IT IS AN ADMITTED FACT THAT PRODUCT ION OUT OF THE SAID PURCHASES WERE RECORDED IN THE BOOKS AND THE CORRES PONDING SALES WITH EXCISE CLEARANCE AND ALSO CREDITED TO THE PROF IT AND LOSS ACCOUNT. THIS ASPECT IS NOT CONTROVERTED BY THE A.O . DISALLOWANCE WAS MERELY ON THE BASIS OF STATEMENT GIVEN BY THE S UPPLIER WHO HAPPENED TO BE THE PROPRIETOR FOR SEVERAL CONCERNS IN THE NAMES OF WHICH HE ALLEGEDLY ISSUED ADJUSTMENT BILLS FOR PURC HASES. INSOFAR AS THE APPELLANT IS CONCERNED THE MATERIALS COVERED B Y THE PURCHASE BILLS FROM M/S. ALEX PHARMACEUTICALS HAVE BEEN ROUT ED THROUGH THE NECESSARY CONTROL REGISTERED AND PRODUCTION REGISTE RS AND ACCOUNTING OF SALES THEREOF WITH EXCISE CLEARANCE I S NOT IN DISPUTE. THE APPELLANT ALSO WAS NOT OFFERED ANY OPPORTUNITY FOR CROSS EXAMINING THE SAID SUPPLIER. FURTHER THE PAYMENTS WERE MADE IN MAY AND JULY 2003 WHEREAS THE SAID STATEMENT WAS G IVEN ON 10.01.2003. CONSIDERING THE ABOVE FACTS AND SEQUENC E OF EVENTS IT CANNOT BE HELD THAT THE PURCHASE WERE EARLIER INFLA TED OR BOGUS. 5 ITA NO.257-58/AHD/2007 CORRESPONDING PRODUCTION AND SALES BEING NOT DISPRO VED THEN THE DISALLOWANCE OF PURCHASES IS UNCALLED FOR. IT WOULD BE ONLY AS ONE SIDED APPROACH TO DISBELIEVE PURCHASE WHILE ACCEPTI NG THE PRODUCTION AND SALES ON THE CREDIT SIDE OF THE PROF IT AND LOSS ACCOUNT. ALSO FOR A.Y. 1999-2000 DAMAGE OF RECORDS IN FLOOD WAS INTIMATED IN JULY 2000 WHEREAS THE STATEMENT OF THE SUPPLIER WAS IN JANUARY 2003. HENCE NO INTENTION OR DESIGN COULD BE ATTRIBU TED ON THE PART OF THE APPELLANT TO WITHHOLD ANY RECORDS OR INFORMATIO N AS REGARDS THE TRANSACTIONS IN DISPUTE. IN THAT VIEW OF THE MATTER THE ACTION OF THE A.O. IN DISALLOWING PURCHASE FROM M/S. ALEX PHARMAC EUTICALS IGNORING OTHER VITAL ASPECTS OF THE ISSUE IS NOT JU STIFIABLE AND HENCE THE ADDITION OF RS.2 63 473/- A PURCHASE NOT GENUIN E IS DELETED. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF I NCOME TAX(APPEALS) THE REVENUE IS IN APPEALS BEFORE US. 6. AT THE TIME OF HEARING ON BEHALF OF REVENUE SHR I M.C. PANDIT SR. D.R. APPEARED AND RELYING ON THE DETAILED REASONS GIVEN BY THE A.O. IN THE ASSESSMENT ORDER CONTENDED THAT THE GOODS WERE NEVER PURCHASED FROM M/S. ALEX PHARMACEUTICALS BECAUSE IT IS CONCLUSIVELY PROVED THAT THE SAID PAR TY WAS MERELY ISSUED BOGUS BILLS. 7. ON THE OTHER HAND SHRI A.C. SHAH LD. COUNSEL F OR THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS RECEIVED RAW MATERIAL. THE SAID RA W MATERIAL IS USED BY THE ASSESSEE FOR FINISHED PRODUCTS NAMELY BET CREAME-EX LINCODE RM 15 GM LINCOSONE CREAM 10 GM LINCODERM CREAM 15 GM NC DERM 10 GM L-BEX FORT INJECTION L BEX INJECTION PROTOSOL LIQUID. IN SUPPORT OF THIS THE LD. COUNSEL OF THE ASSESSEE FILED A CERTIFICATE DATED 30.12.2009 FROM SHRI KANUBHAI M. PATEL B.SC. (CHEMIST) (CONSULTANT CHEMIST) CERTIFYING THAT THE RAW MATERI AL FROM M/S. ALEX PHARMACEUTICALS LTD. WERE USED FOR THE PURPOSE OF MANUFACTURE OF FI NISHED PRODUCTS. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT VARIOUS DOCUMEN TS ARE IN POSSESSION OF THE ASSESSEE WHICH INDICATE THAT THE GOODS WERE PURCHA SED FROM M/S. ALEX PHARMACEUTICALS LTD. AND PAYMENT WAS MADE THROUGH ACCOUNT PAYEE CHEQUE. THE A.O. HAS NOT BROUGHT ANY MATERIAL FROM THE RECORD T O PROVE THAT THE ASSESSEE HAS RECEIVED THE CASH BACK FROM M/S. ALEX PHARMACEUTICA LS LTD. HE SUBMITTED THAT THE SURVEY WAS CONDUCTED IN THE OFFICE OF ALEX PHARMACE UTICALS ON 10.01.2003. STATEMENT BY SHRI KETAN OZA PROPRIETOR OF M/S. ALEX PHARMACE UTICALS ABOUT ISSUE OF BILLS WAS RECORDED ON 10.01.2003 AND EVEN AFTER THIS CHEQUES WERE ACCEPTED BY SHRI KETAN OZA ON 10.05.2003 AMOUNTING TO RS.1 63 490/- AND ON 25. 07.2003 AMOUNTING TO RS.450/-. THE LD. COUNSEL ALSO CONTENDED THAT HE WOULD NOT HA VE ACCEPTED THE CHEQUES BECAUSE 6 ITA NO.257-58/AHD/2007 OF SURVEY IF HE IN FACT WAS INDULGED IN ISSUING FIC TITIOUS BILLS. THEREFORE HE SUBMITTED THAT THE ADDITION IS MADE ON DOUBT AND SUSPICION B E DELETED. 8. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY G ONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT NO PURCHASES WERE MADE FROM M/S. ALEX PHARMACEUTICALS BECAUSE SAID CONCERN IS MERELY ENGA GED IN ISSUING BOGUS BILLS ON COMMISSION BASIS. WITH REGARD TO THE CONTENTION OF THE ASSESSEE THAT THE STATEMENT OF SHRI KETAN OZA PROPRIETOR OF M/S. ALEX PHARMACEUTI CALS IS A SELF-CERTIFICATE WHICH CANNOT BE ACCEPTED BECAUSE HE MADE A GENUINE SALE TO THE ASSESSEE. IN THAT EVENT HE COULD HAVE EASILY STATED THE SAME BEFORE THE SURVEY PARTY. AS A MATTER OF FACT THAT FOR THE ASSESSMENT YEAR 1999-2000 THE ASSESSEE IS NOT HAVING PURCHASE BILLS ETC. IN HIS POSSESSION. THE DOCUMENTS FURNISHED IN THE ASSESSME NT YEAR 2003-04 IN RESPECT OF PURCHASES ARE NOTHING BUT SELF-SERVING. IN THESE CI RCUMSTANCES A.O. RIGHTLY CONCLUDED THAT M/S. ALEX PHARMACEUTICALS WAS MERELY ISSUING B OGUS BILLS. BE THAT AS IT MAY IT APPEARS THAT RAW MATERIALS WHICH IS ALLEGED TO BE PURCHASED FROM M/S. ALEX PHARMACEUTICALS IS PURCHASED FROM SOMEWHERE ELSE O R USED BY THE ASSESSEE IN MANUFACTURING OF BET CREAME-EX LINCODERM 15 GM LIN COSONE CREAM 10 GM LINCODERM CREAM 15 GM NC DERM 10 GM L-BEX FORT IN JECTION L BEX INJECTION PROTOSOL LIQUID. THIS INDICATES THAT THE ASSESSEE H AS TAKEN BILLS FROM M/S. ALEX PHARMACEUTICALS AND ACTUAL PURCHASES WERE MADE FROM SOME OTHER PARTIES BECAUSE WITHOUT USING RAW MATERIALS MANUFACTURING OF VARIO US ITEMS COULD NOT BE DONE WHICH WAS ALLEGED TO BE PURCHASED FROM M/S. ALEX PHARMACE UTICALS. THE HON'BLE ITAT C BENCH AHMEDABAD IN THE CASE OF VIJAY PROTEINS LTD. VS.- ACIT REPORTED IN 58 ITD 428 HELD THAT WHERE AN ASSESSEE FAILS TO PROVE GENU INENESS OF TRANSACTIONS AND IF PURCHASES ARE MADE FROM OPEN MARKET WITHOUT INSISTI NG FOR GENUINE BILLS THE SUPPLIERS MAY BE WILLING TO SELL THOSE PRODUCTS AT A MUCH LOW ER RATE AS COMPARED TO THE RATE AT WHICH THEY MAY CHARGE IN CASE THE DEALER HAS TO GIV E A GENUINE SALE INVOICE IN RESPECT OF THAT SALE AND SUPPLY THE GOODS. IN SUCH CASES 2 5% OF THE PURCHASE PRICE AMOUNTED FOR IN THE BOOKS OF ACCOUNTS CAN BE DISALLOWED. IN VIEW OF THIS WE FOLLOWING THE DECISION OF THE HON'BLE ITAT C BENCH AHMEDABAD I N THE CASE OF VIJAY PROTEINS LTD. VS.- ACIT REPORTED IN 58 ITD 428 DIRECT THE A .O. TO DISALLOW 25% OF RS.5 98 230/- FOR THE ASSESSMENT YEAR 1999-2000 AND ALSO TO DISALLOW 25% OF RS.2 62 473/- FOR THE ASSESSMENT YEAR 2003-04. THE A.O. IS DIRECTED ACCORDINGLY. 7 ITA NO.257-58/AHD/2007 9. IN THE RESULT THE APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 1999-2000 IS PARTLY ALLOWED AND GROUND NO. 3 FOR THE ASSESSMENT YEAR 2003-04 IS ALSO PARTLY ALLOWED AS MENTIONED HEREINABOVE. 10. WITH REGARD TO THE GROUND NO. 1 FOR THE ASSESSM ENT YEAR 2003-04 WE HAVE HEARD BOTH THE PARTIES. THE EXCISE DUTY AND SALES T AX DO NOT FORM PART OF THE TOTAL TURNOVER ON THE BASIS OF COMPUTATION OF DEDUCTION U NDER SECTION 80HHC AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS.- LAKSHMI MACHINE WORKS REPORTED IN 290 ITR 667 (SC). SINCE THE ISSUE INVOLVED IS SQ UARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF CIT VS.- LAKSHMI MACHINE WORKS REPORTED IN 290 ITR 667 (SC) WE DECLINE TO INTERFERE WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APP EALS). GROUND NO. 1 OF THE APPEAL OF REVENUE FOR THE ASSESSMENT YEAR 2003-04 I S REJECTED. 11. THE FACTS RELATING TO THE CONTROVERSY INVOLVED IN THE GROUND NO. 2 OF THE APPEAL FOR THE ASSESSMENT YEAR 2003-04 ARE THAT THE A.O. WHILE COMPUTING THE DEDUCTION UNDER SECTION 80IB VIDE PARA 5 OBSERVED T HAT THE ASSESSEE ENJOYED TRADING REBATE RANGING FROM 11% TO 43% ON ITS PURCHASES FRO M GROUP CONCERN NAMELY LINCOLN PARENTERALS PVT. LTD.. THE A.O. ACCORDINGLY ADJUSTED A SUM OF RS.9 23 882/- BEING 20% REBATE ON PURCHASES AND REWORKED THE MANU FACTURING TURNOVER FOR WORKING OUT DEDUCTION UNDER SECTION 80IB IN RESPECT OF PROF IT FROM MANUFACTURING ACTIVITY. ON APPEAL BEFORE THE LEARNED COMMISSIONER OF INCOME TA X(APPEALS) THE ASSESSEE CONTENDED THAT THE A.O. MISLED HIMSELF BY REFERRING TO INTEREST FREE DEPOSIT WITH ASSOCIATE CONCERN AT RS.2.56 CRORES. IT WAS CONTEND ED THAT THE ASSESSEE-COMPANY RECEIVED INTEREST ON DEPOSITS GIVEN TO M/S. LICOLN PARENTERALS PVT. LTD. AND THEREFORE THERE WAS NO QUESTION OF REBATE ON PURCHASES. THERE FORE THERE WAS NO NECESSITY ON THE PART OF A.O. TO MAKE ADJUSTMENT. AFTER CONSIDERING THIS ARGUMENT THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HELD THAT THE A SSESSEE COMPANY HAS NOT EXAMINED ALL THE RELEVANT FACTS IN PROPER PERSPECTI VE. THE ASSESSEE-COMPANY AVAILING REBATE ON PURCHASES IN VIEW OF CERTAIN ADVANCES HAD NOT APPEARED FOR CURRENT YEAR BECAUSE FACTUAL MATRIX IS DIFFERENT THAN IT WAS LAS T YEAR. IN THAT VIEW OF THE MATTER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HELD TH AT THE A.O.S ACTION IN ADJUSTING THE TURNOVER IS PURELY NOTIONAL. THEREFOR E THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DIRECTED THE A.O. TO DELETE THE SAID ADJUSTMENT. 8 ITA NO.257-58/AHD/2007 12. AT THE TIME OF HEARING THE LD. DEPARTMENTAL RE PRESENTATIVE RELYING ON THE REASONING GIVEN BY THE A.O. IN THE ASSESSMENT ORDER CONTENDED THAT THE ADJUSTMENT OF TURNOVER WAS RIGHTLY MADE FOR THE PURPOSE OF COMPUT ING DEDUCTION UNDER SECTION 80IB OF THE INCOME TAX ACT. 13. ON THE OTHER HAND THE LD. COUNSEL OF THE ASSES SEE SUBMITTED THAT DURING THE YEAR THE ASSESSEE-COMPANY RECEIVED INTEREST ON DEPO SIT GIVEN TO M/S. LINCOLN PARENTERALS PVT. LTD. THEREFORE THERE IS NO QUESTI ON OF REBATE ON PURCHASES. 14. HAVING HEARD BOTH THE SIDES WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THIS YEAR THE ASSESSEE-COMPANY RECEIVED INTEREST ON DEPOSIT GIVEN TO M/S. LICOLN PARENTERALS PVT. LTD. THEREFORE THE RE IS NO QUESTION OF REBATE ON PURCHASES. SINCE NO REBATE ON PURCHASE WAS ALLOWED NO ADJUSTMENT IS CALLED FOR. THE DIRECTION GIVEN BY THE LEARNED COMMISSIONER OF INCO ME TAX(APPEALS) IS ACCORDINGLY UPHELD. THIS GROUND OF APPEAL IS REJECTED. 15. IN THE RESULT BOTH THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 8 TH JANUARY 2010. SD/- SD/- SD SD/- SD SD /- (D.C. AGRAWAL) (T.K. SHARMA) ACCOUNTANT MEMBER JUD ICIAL MEMBER DATED: 08 /01/2010 COPY OF THE ORDER IS FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) CONCERNED 4. THE CIT 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER // TRUE COPY // ASSTT. REGISTRAR/ DEPUTY REGISTRAR ITAT AHMEDABAD BENCHES AHMEDABAD. LAHA/SR. P.S.