CIPLA LTD, v. DCIT C.C.2,

MA 186/MUM/2010 | 2006-2007
Pronouncement Date: 27-08-2010 | Result: Dismissed

Appeal Details

RSA Number 18619924 RSA 2010
Assessee PAN AAACC1450B
Bench Mumbai
Appeal Number MA 186/MUM/2010
Duration Of Justice 5 month(s) 3 day(s)
Appellant CIPLA LTD,
Respondent DCIT C.C.2,
Appeal Type Miscellaneous Application
Pronouncement Date 27-08-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 27-08-2010
Assessment Year 2006-2007
Appeal Filed On 24-03-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C MUMBAI BEFORE SHRI P.M. JAGTAP (AM) AND SMT. ASHA VIJAYAR AGHAVAN (JM) M.A. NO. 186/MUM/2010 (ARISING OUT OF ITA NO.5337/MUM/2008 ASSESSMENT YEAR-2006-07 M/S. CIPLA LTD. MUMBAI CENTRAL MUMBAI-400 008 PAN - AAACC1450B VS. DCIT CENTRAL CIRCLE-2 CGO BLDG. MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI D.P. BAPAT RESPONDENT BY: SHRI O.P. SHARMA O R D E R PER SMT. ASHA VIJAYARAGHAVAN (JM) THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE READS AS UNDER:- ` THE SECOND GROUND OF APPEAL RAISED BY THE APPLIC ANT IN THE AFORESAID APPEAL WAS AS UNDER: THE CIT(A) FURTHER ERRED IN HOLDING THE PROFIT IN I NSURANCE CLAIM WOULD NOT BE ELIGIBLE FOR DEDUCTION UNDER SEC TION 80IB/80IC/10B. . THE HONOURABLE TRIBUNAL HAS DISPOSED OF THIS GROU ND IN FOLLOWING TERMS AS PER PARA 9 OF THE ORDER: RESPECTFULLY FOLLOWING THE DECISION IN THE CASE OF CIT VS KHEMKA CONTAINER PRIVATE LTD (SUPRA) WE SET ASIDE THE ASSESEES APPEAL ON THIS ISSUE TO THE FILE OF THE A O TO EXCLUDE BOTH THE INSURANCE RECEIPTS AS WELL AS THE COST OF PRODUCTION OF THE DAMAGED GOODS FOR WHICH THE INSURANCE CLAIM HAS BEEN RECEIVED AND REWORK THE RELIEF U/S.80IB. . THE AFORESAID FINDING OF HONOURABLE TRIBUNAL IS B ASED ON THE FOLLOWING FACTS AS NOTED IN PARA 8 OF THE ORDER: M.A. NO.186 /M/10 2 WE FIND THAT THE FULL AMOUNT OF CLAIM RECEIVED HAS BEEN ACCOUNTED AS OTHER INCOME IN THE BOOKS OF ACCOUNTS. WE FIND THAT THE ASSESSEE HAS SUBMITTED BEFORE THE AO THAT TOTAL INSURANCE CLAIM RECEIVED IS NOT MORE THAN THE COST OF GOODS. THE MISTAKE WITH RESPECT IS IN RECORDING OF THE A FORESAID FACT FROM THE RECORDS. THE SUBMISSION MADE TO THE AO AS PER 19 OF THE PA PER BOOK DID NOT AT ALL STATE THAT THE INSURANCE CLAIM IS N OT IN EXCESS OF THE COST OF GOODS. IN THE SAID SUBMISSION THE DET AILED BREAK- UP OF THE TOTAL INSURANCE CLAIMS ALONG WITH THE DET AILS OF COSTS WAS ENCLOSED AS PER PAGE 20 OF THE PAPER BOOK IN O RDER TO INDICATE THAT THE AMOUNT OF INSURANCE CLAIMS WAS NO T IN EXCESS OF THE SALE PRICES OF THE DAMAGED GOODS. WITH RESPECT THE CLAIM OF THE ASSESSEE FOR THE ENT ITLEMENT TO DEDUCTION UNDER SECTION 80IB/80IC / 10B OF THE ACT OF THE AMOUNT OF INSURANCE CLAIM IN EXCESS OF THE COSTS OF DAMAGED GOODS HAS NOT BEEN ADJUDICATED IN VIEW OF THE INCOR RECT RECORDING OF THE FACT IN THE ORDER. IT IS RESPECTFULLY SUBMITTED THAT THIS MISTAKE AP PARENT FROM THE RECORDS MERITS RECTIFICATION UNDER SECTION 254 (2) OF THE ACT. IT IS PRAYED THAT THE HONOURABLE TRIBUNAL BE PLEAS ED TO ADJUDICATE ON THIS MISCELLANEOUS APPLICATION AND PA SS SUCH ORDER THEREON AS WILL MEET THE ENDS OF JUSTICE. 2. IN THE IMPUGNED ORDER OF THE TRIBUNAL IT HAS BE EN HELD AS UNDER:- AGGRIEVED BY THE ORDER OF THE LD.CIT(A) ASSESSEE PREFERRED AN APPEAL BEFORE US AND CONTENDED AS FOLLOWS:- PLEASE NOTE THAT INSURANCE CLAIM INCLUDES RS.92.42 CRORES BEING THE AMOUNT SETTLED BY VARIOUS INSURANCE COMPANIES DURING THE YEAR AGAINST INSURAN CE CLAIMS RELATING TO LOSSES ON ACCOUNT OF FLOODS. T HESE CLAIMS WERE MAINLY UNDER DECLARED VALUE POLICIES IN RESPECT OF DAMAGE TO FINISHED GOODS AT THE COMPANY S BHIWANDI GODOWN CAUSED BY THE FLOODS IN JULY 2005. THE FULL AMOUNT OF CLAIMS RECEIVED HAS BEEN ACCOUNT ED AS OTHER INCOME IN THE BOOKS OF THE TOTAL INSURANCE CLAIMS RECEIVED BY US DURING THE YEAR ALONG WITH DE TAILS OF COSTS. M.A. NO.186 /M/10 3 WE FIND THAT THE FULL AMOUNT OF CLAIM RECEIVED HAS BEEN ACCOUNTED AS OTHER INCOME IN THE BOOKS OF ACCOUNT. WE FIND THAT THE ASSESSEE HAD SUBMITTED BEFORE THE AO THAT TOTAL INS URANCE CLAIM RECEIVED IS NOT MORE THAN THE COST OF THE GOODS AND THEREFORE THE ENTIRE AMOUNT OF INSURANCE CLAIM IS TO BE ALLOWED K EEPING IN VIEW THE DECISION IN THE CASE OF CIT VS KHEMKA CONTAINER PVT LTD 275 ITR 559 WHEREIN IT HAS BEEN HELD AS FOLLOWS:- WE HOWEVER MAKE IT CLEAR THAT THE AMOUNT OF RS.1 50 733 IS THE AMOUNT RECEIVED FROM THE INSURAN CE COMPANY IN RESPECT OF THE CLAIM OF RAW MATERIAL DES TROYED IN FIRE. HOWEVER WHILE COMPUTING THE PROFITS OF THE INDUSTRIAL UNDERTAKING FOR THE PURPOSES OF DEDUCTION U/S.80I WHAT HAS TO BE EXCLUDED IS NOT THE GROSS RECEIPT BUT THE INC OME ARISING OUT OF THIS RECEIPT. SUCH INCOME CAN ONLY BE COMP UTED BY DEDUCTING THE COST OF RAW MATERIAL DESTROYED IN FIR E FROM THE GROSS RECEIPT OF INSURANCE CLAIMS. THE RAW MATERIA L HAD BEEN ADMITTEDLY PURCHASED DURING THE YEAR AND UNDER CONSIDERATION AND ITS COST DEBITED IN THE PURCHASE ACCOUNT OF THE YEAR. RESPECTFULLY FOLLOWING THE DECISION IN THE CASE OF CIT VS KHEMKA CONTAINER PVT LTD (SUPRA) WE SET ASIDE THE ASSESEES APPEAL ON THIS ISSUE TO THE FILE OF THE AO TO EXCLUDE BOTH THE INSURANCE RECEIPTS AS WELL AS THE COST OF PRODUCTION OF THE D AMAGED GOODS FOR WHICH INSURANCE CLAIM HAS BEEN RECEIVED AND REWORK THE RELIEF U/S.80IB. 3. FROM THE PAPER BOOK FILED BY THE ASSESSEE IT CA N BE OBSERVED THAT THE INSURANCE RECEIPTS ARE IN EXCESS OF THE EXPENSE S INCURRED IN CONNECTION THEREWITH. TO SET THE RECORDS STRAIGHT PARAGRAPHS 8 AND 9 OF OUR ORDER SHALL BE REPLACED BY THE FOLLOWING: 8. WE FIND THAT THE FULL AMOUNT OF CLAIM RECEIVED HAS BEEN ACCOUNTED AS OTHER INCOME IN THE BOOKS OF ACCOUNT. WE FIND THAT THE ASSESSEE HAD CLAIMED THE ENTIRE AMOUNT OF INSURANCE CLAIM WHICH IS TO BE ALLOWED. THE JURISDICTIONAL HI GH COURT IN THE CASE OF CIT VS KHEMKA CONTAINER PVT LTD 275 I TR 559 HAS HELD AS FOLLOWS:- M.A. NO.186 /M/10 4 WE HOWEVER MAKE IT CLEAR THAT THE AMOUNT OF RS.1 50 733 IS THE AMOUNT RECEIVED FROM THE INSURAN CE COMPANY IN RESPECT OF THE CLAIM OF RAW MATERIAL DESTROYED IN FIRE. HOWEVER WHILE COMPUTING THE PR OFITS OF THE INDUSTRIAL UNDERTAKING FOR THE PURPOSES OF DEDUCTION U/S.80I WHAT HAS TO BE EXCLUDED IS NOT T HE GROSS RECEIPT BUT THE INCOME ARISING OUT OF THIS RE CEIPT. SUCH INCOME CAN ONLY BE COMPUTED BY DEDUCTING THE COST OF RAW MATERIAL DESTROYED IN FIRE FROM THE GRO SS RECEIPT OF INSURANCE CLAIMS. THE RAW MATERIAL HAD BEEN ADMITTEDLY PURCHASED DURING THE YEAR AND UNDER CONSIDERATION AND ITS COST DEBITED IN THE PURCHASE ACCOUNT OF THE YEAR. 9. RESPECTFULLY FOLLOWING THE DECISION IN THE CASE OF CIT VS KHEMKA CONTAINER PVT. LTD (SUPRA) WE SET ASIDE THE ASSESSEES APPEAL ON THIS ISSUE TO THE FILE OF THE AO TO EXCLU DE BOTH THE INSURANCE RECEIPTS AS WELL AS THE COST OF PRODUCTIO N OF THE DAMAGED GOODS FOR WHICH INSURANCE CLAIM HAS BEEN RE CEIVED AND REWORK THE RELIEF U/S.80IB. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED 4. IN THE RESULT SUBJECT TO THE ABOVE CORRECTIONS THE MA FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS DAY OF AUGUST 2010 (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED .. AUGUST 2010 RJ M.A. NO.186 /M/10 5 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR C BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR I.T.A.T MUMBAI DATE INITIALS 1 DRAFT DICTATED ON: 5.8.2010 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 6.8.2010 ______ SR. PS/ PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/ PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: _________ ______ 9. DATE OF DISPATCH OF ORDER: _________ ______