ANUSHAKTI CHEMICALS & DRUGS LTD.(FORMERLY AARTI HEALTHCARE LTD.), MUMBAI v. A.C.I.T.RG.10(3), MUMBAI

ITA 2572/MUM/2012 | 2008-2009
Pronouncement Date: 19-11-2014

Appeal Details

RSA Number 257219914 RSA 2012
Assessee PAN AAACA3517H
Bench Mumbai
Appeal Number ITA 2572/MUM/2012
Duration Of Justice 2 year(s) 7 month(s) 2 day(s)
Appellant ANUSHAKTI CHEMICALS & DRUGS LTD.(FORMERLY AARTI HEALTHCARE LTD.), MUMBAI
Respondent A.C.I.T.RG.10(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-11-2014
Appeal Filed By Assessee
Bench Allotted A
Tribunal Order Date 19-11-2014
Date Of Final Hearing 29-10-2014
Next Hearing Date 29-10-2014
Assessment Year 2008-2009
Appeal Filed On 17-04-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH MUMBAI BEFORE SHRI D. KARUNAKARA RAO ACCOUNTANT MEMBER AND SHRI SANJAY GARG JUDICIAL MEMBER ./I.T.A. NO. 2572/M/2012 ( AY: 2008 - 2009 ) ANUSHAKTI CHEMICALS & DRUGS LTD (FORMERLY AARTI HEALTHCARE LTD) 2 ND FLOOR UDYOG KSHETRA MULUND GOREGAON LINK ROAD MUMBAI 400 080. / VS. ACIT RANGE 10(3) MUMBAI. ./ PAN : AAACA3517H ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI VIJAY MEHTA / RESPONDENT BY : SHRI ASGHAR ZAIN / DATE OF HEARING : 29 .10.2014 / DATE OF PRONOUNCEMENT : 19 .11.2014 / O R D E R PER D. KARUNAKARA RAO AM: THIS APPEAL FILED BY THE ASSESSEE OPNM 17.4.2012 IS AGAINST THE ORDER OF THE CIT (A) - 22 MUMBAI DATED 30.11.2011 FOR THE ASSESSMENT YEAR 2008 - 2009. 2. IN THIS APPEAL ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: THE APPELLANT SUBMITS THE FOLLOWING GROUNDS WHICH ARE WITHOUT PREJUDICE TO ONE ANOTHER: 1. RE: TREATMENT OF INCOME FROM MANUFACTURING SERVICES AS INCOME FROM OTHER SOURCES AMOUNTING TO RS 2 70 75 330/ - : 1.1 ON THE F A CTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME T AX (APPEALS) [HEREINAFTER REFERRED TO AS 'THE CIT (A)'J ERRED IN UPHOLDING THE STAND OF THE ASSESSING OFFICER THAT THE INCOME RECEIVED FOR MANUFACTURING SERVICES RENDERED IS ASSESSABLE UNDER THE HEAD 'INCOME FROM O THER SOURCE S' ON THE GROUND THAT THERE WAS NO INVOLVEMENT OF THE APPELLANT IN THE MANUFACTURING ACTIVITY. 2. RE: TREATMENT OF LEASE RENTAL AS INCOME FROM OTHER SOURCES - RS 3 00 00 000/ - : 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (A) ERRED IN UPHOLDING THE S TAND OF THE ASSESSING OFFICER THAT THE INCOME FROM LEASE RENTAL OF THE PLANT AND MACHINER Y TOGETHER WITH BUILDING IS ASSESSABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES ' WITHOUT APPRECIATING THAT THE APPELLANT CONTINU ED TO DEVELOP AND DEPLOY ITS INTELLECTUAL PROPERTY RIGHTS ENGAGE A HUGE WORK FORCE OF 2 SCIENTISTS AND ENGINEERS FOR RENDERING OF MANUFACTURING S ERVICES TO THE LESSEE AS A COMPOSITE ARRANGEMENT. 2.2. ON THE FACTS A ND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (A) GROSSLY ERRED IN UPHOLDING THE STAND OF THE ASSESSING OFFICER THAT SINCE THE APPELLANT DID NOT HAVE THE INTENTION OF CARRYING ON BUSINESS THE ASSETS OF THE APPELLANT CEASED TO BE COMMERCIAL ASSETS. 3. RE: TREATMENT OF OTHER INCOME AMOUNT ING TO RS. 3 86 542/ - AS INCOME FROM OTHER SOURCES: 3.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (A) ERRED IN HOLDING THE CONTENTION OF THE AO BY TREATING OTHER INCOME OF RS. 3 86 542/ - AS INCOME FROM OTHER SOURCES. 4. RE: DISALLOWANCE OF EXPENDITURE PERTAINING TO THE BUSINESS ACTIVITY . 4.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW CIT (A) GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE BY THE AO OF THE ENTIRE EXPENDITURE CLAIMED BY THE APPELLANT AGAINST IT S BUSINESS INCOME ON THE GROUND THAT THE APPELLANT WAS NOT ACTIVELY ENGAGED IN THE MANUFACTURING AND RUNNING OF BUSINESS ACTIVITY DURING THE YEAR. 4.2 WITHOUT PREJUDICE TO THE ABOVE THE CIT (A) ERRED IN DENYING THE DEDUCTION U/ S 57 IN RESPECT OF THE ACTUAL EXPENDITURE INCURRED FOR EARNING THE ABOVE INCOME. 5. DEDUCTION U/S 35 (1) (I) IN RESPECT OF EXPENDITURE INCURRED FOR R&D ACTIVITY: 5.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (A) GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE U/S 35(1)(I) CLAIMED BY THE APPELLANT. 5.2 WITHOUT PREJUDICE TO THE ABOVE THE CIT (A) GROSSLY ERRED IN NOT ALLOWING DEDUCTION U/ S. 37 (1) OR U/S. 57 WITH REGARD TO THE R&D EXPENDITURE INCURRED . 6. RE: DISALLOWANCE OF DEDUCTION U/S. 35(1){IV) OF RS. 2 08 27 122/.: 6.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (A) ERRED IN UPHOLDING THE DISALLOWANCE OF DEDUCTION U/S 35(1) (IV) CLAIMED BY THE APPELLANT ON THE CAPITAL EXP ENDITURE INCURRED ON BUILDING FOR ITS IN - HOUSE RESEARCH CENTRE ON THE GROUND THAT NO BUSINESS ACTIVITY WAS CARRIED ON. 7. BOOK PROFIT U/S 115JB WRONGLY CONSIDERED: 7.1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT (A) ERRED IN UPHOLDING INCORRECT WORKING OF BOOK PROFIT U/S 115JB . 3. AT THE OUTSET LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THERE IS A DELAY OF 65 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. IN THIS REGARD HE BROUGHT OUR ATTENTION TO THE AF FIDAVIT DATED 13.4.2012 FILED BY THE MANAGING DIRECTOR OF THE ASSESSEE AND READ OUT THE RELEVANT CONTENTS OF THE SAME WHICH READ AS UNDER: 1.. 2 THE CIT (A) PASSED THE ORDER DATED 30.11.2011 WHICH WAS RECEIVED ON 14.12.2012 BY MR. SANJAY DIWEDI AND THE SAME WAS PASSED ON TO MR. PRASHANT SHELAR ACCOUNTS OFFICER OF THE APPELLANT COMPANY. MR. PRASHANT SHELAR LEFT THE COMPANY ON 3.2.2012 AND FAILED TO HANDOVER THE SAID ORDER TO THE TAX ADVISORS / SENIOR EXECUTIVES FOR FILING AN APPEAL TO THE INCOME TAX AP PELLATE TRIBUNAL. THE APPELLANT CAME TO KNOW ABOUT THE CIT (A) ORDER WHEN THE TAX ADVISORS AND AUTHORIZED REPRESENTATIVE OF THE APPELLANT CA DEEPESH CHHEDDA ENQUIRED WITH THE 3 OFFICE OF CIT (A) REGARDING THE ORDER AND WAS INFORMED THAT THE ORDER WAS ALREAD Y PASSED AND DISPATCHED TO THE APPELLANT SOME TIME BACK. ON RECEIVING THE SAID INFORMATION FROM TAX ADVISORS THE IMPUGNED ORDER WAS FOUND. THE CIT (A) ORDER WAS RECEIVED BY THE APPELLANT ON 14.12.2011 AND DUE DATE OF FILING AN APPEAL TO ITAT WAS ON 12.2. 2012 HENCE THERE IS A DELAY OF 64 DAYS IN FLING THE APPEAL. 4 . CONSIDERING THE ABOVE WE ARE OF THE OPINION THAT THERE IS A SUFFICIENT AND REASONABLE CAUSE FOR NOT FILING THE APPEAL BEFORE THE ITAT WITHIN THE STIPULATED TIME. THEREFORE WE CONDONE THE DELAY OF 65 DAYS IN FILING THE APPEAL BEFORE THE ITAT AND PROCEED TO ADJUDICATE THE APPEAL ON MERITS. 5 . AT THE VERY OUTSET LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE GROUNDS AND MENTIONED THAT ALL THE GROUNDS REVOLVE AROUND THE ISSUE OF CHA RGING OF CERTAIN RECEIPTS UNDER THE HEAD INCOME FROM OTHER SOURCES AND ALLOWABILITY OF THE CLAIM OF EXPENDITURE AGAINST THE SAID RECEIPTS. ASSESSEE RECEIVED SUCH RECEIPTS OUT OF MANUFACTURING SERVICES AS WELL AS RENTAL RECEIPTS AND OFFERED THE SAME UNDE R THE HEAD INCOME FROM BUSINESS OR PROFESSION AND CLAIMED CERTAIN EXPENDITURE AGAINST THE SAME. AO HELD THAT THE SAID RECEIPTS HAVE TO BE TAXED UNDER THE HEAD INCOME FROM OTHER SOURCES. MATTER TRAVELLED TO THE CIT (A). 6 . DURING THE PROCEEDINGS BEFOR E THE CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CIT (A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED WITH THE DECISION OF THE CIT (A) ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7 . DURING THE PROCEEDINGS BEFORE US LD COUNSEL FOR THE ASSESSEE FILED A COPY OF THE ORDER S OF THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NO.9039/M/2010 (AY 2006 - 07) DATED 10.7.2013 AND ITA NO.9240/M/2010 (AY 2007 - 2010) DATED 15.7.2014 WHEREIN THE IDENTICAL ISSUES WERE ADJUDICATED BY THE TRIBUNAL AND THE ISSUES WERE REMANDED TO THE FILE OF THE AO FOR FRESH ADJUDICATION IN BOTH THE YEARS. 8 . ON THE OTHER HAND LD DR RELIED ON THE ORDER OF THE AO / CIT (A). 9 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE CITED ORDERS OF THE TRIBUNAL (SUPRA). ON PERUSAL OF THE SAID ORDERS OF THE TRIBUNAL WE FIND THE ITAT ADJUDICATED THE IDENTICAL ISSUES AND REMANDED THE GROUNDS TO THE FILE OF THE AO FOR A FRESH ADJUDICATION. RESPECTFULLY FOLLOWING THE ORDERS OF THE TRIBUN AL (SUPRA) AS WELL AS FOLLOWING THE PRINCIPLE OF 4 CONSISTENCY WE REMAND THE GROUNDS RAISED IN THE PRESENT APPEAL ALSO WITH IDENTICAL DIRECTIONS GIVEN BY THE TRIBUNAL IN THE AYS 2006 - 2007 AND 2007 - 2008 TO THE FILE OF THE AO FOR ADJUDICATING THEM AFRESH. AC CORDINGLY GROUND NOS.1 TO 7 RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 10. . IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUN CED IN THE OPEN COURT ON 1 9 T H NOVEMBER 2014. S D / - S D / - ( SANJAY GARG ) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 1 9 /11/2014 . . ./ OKK SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. / DR ITAT MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI