Neuland Labouratories Limited,, Secunderabad v. Dy.CIT, Circle-16(1),, Hyderabad

ITA 421/HYD/2013 | 2009-2010
Pronouncement Date: 05-10-2016 | Result: Allowed

Appeal Details

RSA Number 42122514 RSA 2013
Assessee PAN AAACN9531E
Bench Hyderabad
Appeal Number ITA 421/HYD/2013
Duration Of Justice 3 year(s) 6 month(s) 7 day(s)
Appellant Neuland Labouratories Limited,, Secunderabad
Respondent Dy.CIT, Circle-16(1),, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 05-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 05-10-2016
Date Of Final Hearing 10-08-2016
Next Hearing Date 10-08-2016
Assessment Year 2009-2010
Appeal Filed On 28-03-2013
Judgment Text
ITA NOS 359 420 361 AND 421 OF 2013 NEW LAND LAB LT D HYDERABAD PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH HYDERABAD BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI .B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NOS.359 & 361/HYD/2013 (ASSESSMENT YEARS:2008-09 & 2009-10) DY. COMMISSIONER OF INCOME TAX CIRCLE 16(1) HYDERABAD VS M/S. NEULAND LABORATORIES LTD HYDERABAD PAN: AAACN 9531 E ITA NOS.420 & 421/HYD/2013 (ASSESSMENT YEARS:2008-09 & 2009-10) M/S. NEULAND LABORATORIES LTD HYDERABAD PAN: AAACN 9531 E VS DY. COMMISSIONER OF INCOME TAX CIRCLE 16(1) HYDERABAD FOR ASSESSEE: SHRI M.V. ANIL KUMAR FOR REVENUE: SHRI P. SOMA SEKHAR REDDY DR O R D E R PER SMT. P. MADHAVI DEVI J.M. THE ABOVE APPEALS ARE CROSS APPEALS BY BOTH THE ASSESSEE AS WELL AS THE REVENUE FOR THE A.YS 2008-09 AND 2009- 10 RESPECTIVELY. AS COMMON ISSUES ARE ARISING IN BOTH THE YEARS THE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON AND CONSOLIDATED ORDER. DATE OF HEARING : 15.09.2016 DATE OF PRONOUNCEMENT : 05 .10.2016 ITA NOS 359 420 361 AND 421 OF 2013 NEW LAND LAB LT D HYDERABAD PAGE 2 OF 10 2. BRIEF FACTS OF THE CASE FOR THE A.Y 2008-09 ARE T HAT THE ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF MANUFA CTURING AND TRADING OF BULK DRUGS AND INTERMEDIATES FILED ITS RETURN OF INCOME RELEVANT TO THE A.Y DECLARING NIL INCOME. DURING THE ASSESSMENT PROCEEDINGS 143(3) OF THE I.T. ACT THE AO OBSERVED THAT THE ASSESSEE HAS NOT DEDUCTED THE TAX AT SOURCE ON SALE S COMMISSIONS TOTAL OF WHICH COMES TO RS.11 77 368. T HEREFORE HE DISALLOWED THE SAID SUM U/S 40(A)(IA) OF THE I.T. A CT AND ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. THEREAFTER HE PROCEEDED TO CONSIDER THE ASSESSEES PAYMENT TO M/S. A.M. PAPPAS & ASSOCIATES LLC AND OBSERVED THAT THE CONSULTANCY CH ARGES OF RS.1 57 45 921 HAVE BEEN PAID TO THE SAID COMPANY I N RESPECT OF AN AGREEMENT TERMED AS MASTER SERVICES AGREEMENT DA TED 1.11.2003. AS PER THE TERMS OF THE AGREEMENT WITH A M PAPPAS & ASSOCIATES THE FOLLOWING SERVICES WERE TO BE RENDE RED: I) IN ITS CONVERSION TO A DRUG DISCOVERY AND DEVELO PMENT TECHNOLOGY COMPANY BY IMPLEMENTING THE COMPREHENSIVE LONG TERM STRATEGIC PLAN COVERING A 10 TO 12 YEAR PERIOD. II) TO DISPATCH DOCTOR JEFFREY COLLINS VICE PRESIDE NT A.M.P. & AS TRANSACTION ADVISORY GROUP AND IF POSSIBLE ON E ADDITIONAL PROJECT TEAM MEMBER TO THE COMPANYS LOCATION IN HYDERABAD. III) MAKE RECOMMENDATION CONCERNING SPECIFIC CO- DEVELOPMENT PARTNERSHIPS WITH EXTERNAL PHARMACEUTICAL COMPANIES TO OBTAIN ACCESS TO SPECIF IC EARLY-STAGE COMPOUNDS IDENTITY. IV) ASSIST IN THE PLANNING AND DESIGNING OF THE COM PANIES R&D FACILITY WHICH MAY INCLUDE SERVING AS A LIAISON WITH AN APPROPRIATE ARCHITECTURAL FIRM./ ITA NOS 359 420 361 AND 421 OF 2013 NEW LAND LAB LT D HYDERABAD PAGE 3 OF 10 3. AO OBSERVED THAT OUT OF THE ABOVE ONLY A FEW OF THE FUNCTIONS/SERVICES ARE TO BE RENDERED IN CONNECTION WITH THE MANAGEMENT SERVICES AGREEMENT AND THAT MANY OF THE FUNCTIONS ARE REQUIRED TO BE CARRIED OUT IN INDIA BY THE SAID CONSULTANT. THEREFORE HE WAS OF THE OPINION THAT THE SERVICES TO BE RENDERED ARE IN THE NATURE OF TECHNOLOGY SERVICES TO BE REND ERED IN INDIA AND CLEARLY FALL WITHIN THE SCOPE OF THE PROVISIONS OF SECTION 9(1)(VI) AND 9(1)(VII) OF THE I.T. ACT 1961 AND THEREFORE ASSESSEE IS LIABLE TO DEDUCT TAX AT SOURCE U/S 195(2) OF THE I.T. ACT. FOR COMING TO THIS CONCLUSION HE PLACED RELIANCE UPON THE FOLLOW ING DECISIONS: A) MANGALORE REFINERY & PETROCHEMICALS LTD VS. DCIT (2008) 113 ITD 85 (MUM.TRIB) B) RE RAJIV MALHOTRA (2006)284 ITR 564 (AAR) C) SOUTH WEST MINING LTD (2005) 278 ITR 233 (AAR) D) LEONHARDT ANDRA UND PARTNER GMBH VS. CIT (249 ITR 418) E) STEFFEN ROBERTSON & KRISTEN CONSULTING ENGINEERS & SCIENTISTS VS. CIT (230 ITR 206). 4. HE FURTHER OBSERVED FROM THE TERMS OF THE AGREEM ENT THAT THE CONSULTANCY IS FOR RENDERING THESE SERVICE S IN INDIA AS THERE IS CLEAR CUT CLAUSE WHICH SAYS THAT CERTAIN P ERSONNEL WILL BE SENT TO INDIA FOR CONDUCTING RELEVANT STUDIES AND R ENDERING ADVISORY SERVICES. HE ALSO OBSERVED THAT THE PLACE OF ACTIVITY IS IN INDIA AS THE MAIN INTENTION WAS SETTING UP OF AN A DVANCED R&D FACILITY AND CONDUCTING OF ADVANCED RESEARCH ACTIVI TY AND PROVIDING GUIDANCE FOR INDUSTRYS BEST PRACTICES FO R MARKETING THE ITA NOS 359 420 361 AND 421 OF 2013 NEW LAND LAB LT D HYDERABAD PAGE 4 OF 10 COMPANYS PRODUCTS AND ALSO TO ASSIST THE ASSESSEE COMPANY IN ACQUIRING MANUFACTURING RIGHTS WITHIN AN AGREED TIM E FRAME. THEREFORE ACCORDING TO THE AO THE SITUS OF THE AG REEMENT IS IN INDIA AND THE ASSESSEE IS LIABLE FOR DEDUCTION OF T AX AT SOURCE U/S 195 OF THE ACT WHICH WAS NOT DONE. THEREFORE HE IN VOKED THE PROVISIONS OF SECTION 40(A)(I) AND DENIED THE CLAIM OF DEDUCTION OF RS.1 57 45 921 AND BROUGHT THE ENTIRE SUM TO TAX FO R BOTH THE A.YS. 5. THEREAFTER THE AO ALSO OBSERVED THAT THE ASSESS EE CLAIMED DEDUCTION OF A SUM OF RS.37 78 11 222 U/S 3 5(2AB) OF THE I.T. ACT FOR THE A.Y 2008-09. HE OBSERVED THAT T HE ASSESSEE HAS SET UP A NEW R&D FACILITY DURING THE YEAR FOR W HICH THE DEDUCTION WAS CLAIMED AT TWO PLACES I.E. UNITS AT B ONTHAPALLY AND PASHAMYLARAM VILLAGES. THEREFORE THE ASSESSEE WAS ASKED TO FURNISH COPIES OF THE 3CM AND 3 CL FORMS AND DETAIL S OF EXPENDITURE WITH RESPECT TO CLAIM OF DEDUCTION U/S 35(2AB) OF THE ACT. HE ALSO OBSERVED THAT THE EXPENDITURE CONSISTS OF MAINLY CONSTRUCTION OF BUILDING AND SETTING UP OF R&D FACI LITIES FOR WHICH VARIOUS EQUIPMENTS HAVE BEEN PURCHASED. FROM THE DE TAILS FURNISHED THE AO ALSO OBSERVED THAT A STEROID PROJ ECT AND R&D PILOT PLANT ARE BEING CONSTRUCTED UNDER THE HEAD R &D CIVIL CWIP AND ADDITIONS HAVE BEEN MADE TO R&D BUILDING AND PLANT & MACHINERY AT BONTHAPALLY VILLAGE APART FROM ADDI TIONS OF R&D BUILDING AND PLANT & MACHINERY AT PASHAMYLARAM VILL AGE. HE OBSERVED THAT THE REVENUE EXPENDITURE CONSISTS OF R&D EXPENSES MATERIALS AND CONSUMABLES POWER & FUEL PROFESSION AL CHARGES PAID AND OTHER MISC. EXPENSES AND THE EXPENDITURE A T BONTHAPALLY UNIT @ 100% IS RS.6 37 77 345 WHEREAS T HE ITA NOS 359 420 361 AND 421 OF 2013 NEW LAND LAB LT D HYDERABAD PAGE 5 OF 10 EXPENDITURE @ 100% AT PASHAMYLARAM VILLAGE WHERE A P ILOT PLANT IS BEING SET UP IS RS.13 62 79 117. 6. ON PERUSAL OF THE BILLS AND VOUCHERS PRODUCED DU RING THE ASSESSMENT PROCEEDINGS THE AO OBSERVED THAT TH E ASSESSEE HAS FURNISHED COPY OF FORM 3CM DATED 31.10.2007 IN WHICH IT IS STATED THAT THE R&D FACILITY IS APPROVED FOR THE PU RPOSE OF SECTION 35(2AB) FROM 1.4.2005 TO 31.3.2009 AND THAT IT IS P ERTAINING TO ONLY BONTHAPALLY VILLAGE UNIT. HE FURTHER OBSERVED THAT FORM NO.3CM FROM THE PRESCRIBED AUTHORITY FOR THE OTHER UNIT AT PASHAMYLARAM VILLAGE HAS NOT BEEN PRODUCED SO AS TO EXAMINE THE FULFILLMENT OF CONDITIONS CONTAINED IN SECTION 35(2AB) OF THE ACT. HE OBSERVED THAT AS PER THE LANGUAGE USED IN S ECTION 35(2AB) NOT ONLY THE IN HOUSE RESEARCH & DEVELOPME NT FACILITY BUT ALSO THE EXPENDITURE SHALL BE APPROVED BY THE P RESCRIBED AUTHORITY FOR THE PURPOSE OF SECTION 35(2AB). SINCE THE ASSESSEE HAS NOT FURNISHED EVIDENCE THAT THE EXPENDITURE HAS ALSO BEEN APPROVED BY THE AUTHORITY HE DISALLOWED THE ENTIRE EXPENDITURE INCLUDING THE WEIGHTED DEDUCTION CLAIMED BY THE ASS ESSEE I.E. RS.5 96 87 946 ON WHICH THE WEIGHTED DEDUCTION @ 15 0% WORKED OUT TO RS.8 95 31 769. THEREAFTER HE PROCEEDED TO CONSIDER WHETHER THE ASSESSEE HAS FULFILLED THE CONDITIONS L AID DOWN IN SECTION 35(2AB) OF THE ACT. AS REGARDS THE APPROVAL OF THE PRESCRIBED AUTHORITY IN RESPECT OF QUALIFYING EXPEN DITURE TO BE CERTIFIED IN FORM NO.3CL IS CONCERNED HE OBSERVED T HAT FORM 3CM PRODUCED BY THE ASSESSEE ONLY RELATES TO BONTH APALLY VILLAGE AND THEREFORE HE ALLOWED THE CLAIM @ 100% OF THE E XPENDITURE RELATING TO BONTHAPALLY VILLAGE ONLY WHICH WORKED O UT TO RS.6 37 77 345. AS REGARDS ASSESSEES CLAIM OF DEDU CTION U/S ITA NOS 359 420 361 AND 421 OF 2013 NEW LAND LAB LT D HYDERABAD PAGE 6 OF 10 35(2AB) RELATING TO PASHAMYLARAM VILLAGE HE DISALL OWED THE SAME I.E. A SUM OF RS.31 41 33 877 AND BROUGHT IT TO TAX . 7. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE T HE CIT (A) WHO PARTLY ALLOWED THE SAME. AGAINST THE RELIE F GRANTED BY THE CIT (A) THE REVENUE IS IN APPEAL BEFORE US WHILE THE ASSESSEE IS IN APPEAL AGAINST THE DENIAL OF THE CLAIM BY THE CI T (A). THE CIT (A) AFTER CONSIDERING THE ASSESSEES CONTENTIONS HA S CONFIRMED THE DISALLOWANCE OF THE SALES COMMISSION U/S 40(A)(IA) OF THE ACT FOR MAKING THE PAYMENT WITHOUT TDS. AS REGARDS THE DISA LLOWANCE U/S 40(A)(IA) OF THE CONSULTANCY CHARGES TO M/S AM PAPPAS & ASSOCIATES LLC WITHOUT MAKING TDS ALSO HE CONFIRME D THE ORDER OF THE AO. HOWEVER AS REGARDS THE ASSESSEES CLAI M OF DEDUCTION U/S 35(2AB) OF THE ACT IS CONCERNED HE HAS TAKEN I NTO CONSIDERATION THE CERTIFICATES PRODUCED BY THE ASSE SSEE I.E. FORM 3CM AND 3CL CERTIFICATES AND HAS ALLOWED THE CLAIM OF THE ASSESSEE. AGAINST THE DISALLOWANCES CONFIRMED U/S 4 0(A)(IA) THE ASSESSEE IS IN APPEAL BEFORE US WHILE AGAINST GRAN TING OF RELIEF U/S 35(2AB) OF THE ACT THE REVENUE IS IN APPEAL BEFORE US. 8. IT IS THE CASE OF THE REVENUE THAT THE CIT (A) H AS IGNORED THE FINDINGS OF THE AO THAT FORM NO.3CM MEN TIONS ONLY ONE UNIT WHEREAS THE CIT (A) HAS GRANTED RELIEF WI TH REGARD TO BOTH THE UNITS. THE LEARNED DR SUPPORTED THE ORDERS OF THE AO WHILE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTE D THE ORDERS OF THE CIT (A) AND HAS ALSO DRAWN OUR ATTENTION TO THE WRITTEN SUBMISSIONS FILED BEFORE THE CIT (A) AND ALSO THE D OCUMENTS I.E. FORMS 3CM AND 3CL FILED BEFORE THE CIT (A). AS SEEN FROM THESE TWO CERTIFICATES WE FIND THAT THE CERTIFICATES HAV E BEEN OBTAINED SUBSEQUENTLY I.E. DATED 31.10.2012 WHEREIN BOTH THE UNITS ARE ITA NOS 359 420 361 AND 421 OF 2013 NEW LAND LAB LT D HYDERABAD PAGE 7 OF 10 MENTIONED IN THE CERTIFICATE AND ALSO THE EXPENDITU RE ON LAND AND BUILDING AS WELL AS THE REVENUE EXPENDITURE HAS ALS O APPROVED BY THE PRESCRIBED AUTHORITY. WE FIND THAT THE CIT (A) HAS ACCEPTED THE CERTIFICATES WITHOUT ANY VERIFICATION OF THE SA ME. IN VIEW OF THE SAME WE DEEM IT FIT AND PROPER TO REMIT THE ISSUE TO THE FILE OF THE AO ONLY TO VERIFY THE VERACITY OF THESE FORMS AND T O ALLOW THE DEDUCTION U/S 35(2AB) OF THE ACT ACCORDINGLY. THUS THE REVENUES GROUNDS OF APPEAL AGAINST ALLOWING OF DED UCTION U/S 35(2AB) IN RESPECT OF BOTH THE UNITS AND ALSO THE R EVENUE EXPENDITURE ARE REMITTED TO THE FILE OF THE AO AND THE REVENUES APPEALS FOR BOTH THE YEARS ARE TREATED AS ALLOWED F OR STATISTICAL PURPOSES. 9. AS REGARDS ASSESSEES APPEALS ARE CONCERNED WE FIND THAT THEY ARE AGAINST THE DISALLOWANCE U/S 40(A)(IA ) OF THE ACT OF THE FOLLOWING TWO ITEMS FOR THE A.Y 2008-09: I) SALES COMMISSION OF RS.11 77 368 II) CONSULTANCY CHARGES PAID TO M/S AM PAPPAS & ASSOCIATES LLC FOR A SUM OF RS.1 57 45 951. 10. AS FAR AS THE SALES COMMISSION IS CONCERNED TH E ASSESSEE HAD SUBMITTED BEFORE THE CIT (A) THAT THE AMOUNT IS THE SUM PAID TO THE DIRECTORS AND IS NOT SALES COMMISSI ON BUT HIS SALARY AND AS SALARY INCLUDES COMMISSION AS PER SEC TION 17 THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT APPLICABLE. WE FIND THAT EXCEPT MAKING A CLAIM THE ASSESSEE HAS NOT FURNISH ED ANY FURTHER INFORMATION/EVIDENCE BEFORE THE CIT (A) AND ALSO BEFORE US. IN VIEW OF THE SAME WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT (A). THUS ASSESSEES GRO UND OF APPEAL NO.1 IS REJECTED. ITA NOS 359 420 361 AND 421 OF 2013 NEW LAND LAB LT D HYDERABAD PAGE 8 OF 10 11. AS REGARDS 2 ND ITEM DISALLOWED U/S 40(A)(IA) THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH M/S. AM PAPPAS & ASSOCIATES LLC FOR RENDERING OF CERTAIN SERVICES TO THE ASSESSEE VIDE MASTER AGR EEMENT DATED 1.11.2003. THE AO HAS HELD IT TO BE THE FEES FOR T ECHNICAL SERVICES AND THE CIT (A) HAS CONFIRMED THE SAME. B EFORE US THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD MADE DETAILED SUBMISSIONS BEFORE THE CIT (A) SUBMIT TING THAT ALL THE SERVICES UNDER THE AGREEMENT ARE RENDERED OUTSI DE INDIA AND ALSO THE PAYMENTS WERE MADE OUTSIDE INDIA AND THERE FORE PROVISIONS OF SECTION 195 OF THE ACT ARE NOT APPLIC ABLE TO SUCH PAYMENTS. HE FURTHER SUBMITTED THAT THE ASSESSEE HA D CLEARLY SUBMITTED THAT THE SAID COMPANY IS IN THE BUSINESS OF DEVELOPMENT OF COMPANIES PRODUCTS AND VENTURE AND C HARGES PAID TO THE SAID COMPANY IS ITS BUSINESS INCOME AND SINC E THE RECIPIENT COMPANY IS NOT HAVE A PE IN INDIA THE BUSINESS INC OME IS NOT TAXABLE IN INDIA UNDER ARTICLE VII OF DTAA BETWEEN INDIA AND USA. THUS ACCORDING TO HIM THE SAID PAYMENT IS NOT COV ERED BY THE PROVISIONS OF SECTION 195 OF THE ACT AND DISALLOWAN CE U/S 40(A)(IA) IS NOT CALLED FOR. THE LEARNED COUNSEL HAS FILED TH E COPIES OF THE WRITTEN SUBMISSION FILED BEFORE THE CIT (A). ON GOI NG THROUGH THE SAID SUBMISSIONS WE FIND THAT THE ASSESSEE HAS MAD E DETAILED SUBMISSIONS AS TO WHY THE PAYMENT IS NOT TAXABLE IN INDIA AND ALSO AS TO WHY THE TDS PROVISIONS ARE NOT APPLICABL E TO THE SAID PAYMENT AND WE ALSO FIND THAT THE CIT (A) THOUGH HAS REPRODUCED THE ASSESSEES CONTENTIONS IN BRIEF AT P ARA 6.2 OF HIS ORDER HAS NOT GIVEN ANY REASON AS TO WHY HE IS NOT ACCEPTING THE ASSESSEES CONTENTIONS. WHEN THE ASSESSEE MAKES SUB MISSIONS ON THE NATURE OF THE SERVICES AND ALSO AS TO WHETHER T HE SERVICES HAVE ITA NOS 359 420 361 AND 421 OF 2013 NEW LAND LAB LT D HYDERABAD PAGE 9 OF 10 BEEN RENDERED IN INDIA WE ARE OF THE OPINION THAT IT IS THE DUTY OF THE AUTHORITY TO CONSIDER AND VERIFY THE VERACITY O F THE SAME BEFORE COMING TO ANY CONCLUSION AS TO TAXABILITY OF THE SAME IN INDIA. BEFORE BRINGING TO TAX ANY INCOME THE NATUR E OF THE INCOME HAS TO BE DETERMINED AND ONLY ON THE BASIS OF SUCH CONCLUSION CAN THE INCOME BE BROUGHT TO TAX IN INDIA. IF THE P AYMENT OF CONSULTANCY CHARGES ARE IN THE NATURE OF FEES FOR TECHNICAL SERVICES OR ROYALTY THEN IT WOULD BE TAXABLE IN INDIA IRRESPECTIVE OF THE SITUS OF THE SERVICES. BUT IF IT IS BUSINESS INCOME OF THE RECIPIENT THEN EVEN IF IT IS EARNED IN INDIA IT W OULD BE TAXABLE ONLY IF THE RECIPIENT HAS A PE IN INDIA. IT IS ALSO TO BE SEEN THAT WHERE THE PROVISIONS OF DTAA ARE APPLICABLE TO AN A SSESSEE THEN I.E. INCOME TAX PROVISIONS OR THE DTAA WHICHEVER AR E BENEFICIAL TO THE ASSESSEE ARE TO BE MADE APPLICABLE. WE FIND THA T NONE OF THE AUTHORITIES BELOW HAVE GONE INTO THE EXACT NATURE O F THE SERVICES AND ALSO AS TO WHETHER THE SERVICES HAS BEEN RENDER ED INSIDE OR OUTSIDE INDIA. WITHOUT DETERMINING THE NATURE OF TH E SERVICES WE ARE OF THE OPINION THAT THE SAME CANNOT BE BROUGHT TO TAX IN INDIA AND THE TDS PROVISIONS U/S 195 OF THE ACT CAN BE MA DE APPLICABLE. IN VIEW OF THE SAME WE DEEM IT FIT AND PROPER TO SET ASIDE THE FINDINGS OF THE AO AND TO REMAND THE ISSU E TO THE AO FOR DE NOVO CONSIDERATION IN ACCORDANCE WITH LAW AND RE CONSIDERATION AS ABOVE. 12. IN THE RESULT ASSESSEES APPEAL IS PARTLY ALLO WED AND THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PUR POSES. 13. FOR THE A.Y 2009-10 THE ASSESSEE IS IN APPEAL AG AINST THE CONFIRMATION OF THE DISALLOWANCE MADE BY THE AO OF RS.1 48 48 290 U/S 40(A)(IA) OF THE ACT FOR NON DED UCTION OF TAX AT ITA NOS 359 420 361 AND 421 OF 2013 NEW LAND LAB LT D HYDERABAD PAGE 10 OF 10 SOURCE FROM THE PAYMENTS MADE TO M/S AM PAPPAS & AS SOCIATES LLC. WE HAVE ALREADY ADJUDICATED THIS GROUND OF APP EAL FOR THE A.Y 2008-09 AND FOR THE REASONS GIVEN THEREIN THIS APPEAL IS ALSO SET ASIDE TO THE FILE OF THE AO FOR DE NOVO CONSIDE RATION IN ACCORDANCE WITH THE ABOVE DIRECTION. 14. IN THE REVENUES APPEAL WE FIND THAT THE ONLY GROUND IS AGAINST ALLOWING OF DEDUCTION U/S 35(2AB) OF THE ACT AND FOR THE DETAILED REASONS GIVEN IN THE REVENUES APPEAL FOR A.Y 2008-09 THE REVENUES APPEAL IS SET ASIDE TO THE FILE OF TH E AO FOR VERIFICATION OF THE CERTIFICATES/FORMS 3CM AND 3CL F ILED BY THE ASSESSEE AND TO ALLOW THE DEDUCTION U/S 35(2AB) OF THE ACT IN ACCORDANCE WITH LAW. 15. IN THE RESULT BOTH THE ASSESSEES AND REVENUE S APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH OCTOBER 2016. SD/- SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD DATED 5 TH OCTOBER 2016. VINODAN/SPS COPY TO: 1 DY. COMMISSIONER OF INCOME TAX CIRCLE 16(1) ROO M NO.612 6 TH FLOOR AAYAKAR BHAVAN BASHEERBAGH HYDERABAD 2 M/S. NEULAND LABORATORIES LTD 6-3-853/1 FLAT NO .204 MERIDIAN PLAZA AMEERPET HYDERABAD 3 CIT (A)-V HYDERABAD 4 CIT IV HYDERABAD 5 THE DR ITAT HYDERABAD 6 GUARD FILE BY ORDER