ALEMBIC PHARMACEUTICALS LIMITED,VADODARA V. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 1(1)(1) , VADODARA

MA 118/AHD/2025

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Alembic Pharmaceuticals Ltd. filed a Miscellaneous Application under section 254(2) of the Income Tax Act, 1961, seeking rectification of the Tribunal's order dated 25.11.2025 concerning the Assessment Year 2021-22. The application addressed two main issues: the treatment of Corporate Guarantee Fees and the characterization of export incentives received under MEIS Scrips. The Tribunal had previously settled these issues based on Co-ordinate Benches' decisions and CIT(A)'s orders. However, Alembic argued that the Corporate Guarantee Fees were accepted at arm's length by the TPO/AO in previous years without any change in facts, and the export incentives should be recognized as capital receipts based on broader judicial precedents. The Tribunal acknowledged these points and modified its earlier findings accordingly.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 840305 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 22 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2021-2022
• Appeal Filed On: 03-12-2025
• Other Referred Cases: M/s Excel Industries Ltd. [2013] 38 taxmann.com 100(SC), Shree Balaji Alloys v. Commissioner of Income-Tax, CIT v Ponni Sugars and Chemicals Ltd. (2008)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rule of consistency; Capital receipt
• Section: 133(6); 115JB; 92C

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT MS. SUCHITRA R. KAMBLE, JUDICIAL MEMBER MA No. 118/Ahd/2025 (In ITA No. 436/Ahd/2025) Assessment Year: 2021-22 Alembic Pharmaceuticals Ltd., 5th Floor, Alembic Admin Building, Alembic Road, Vadodara-390009 [PAN : AAICA 5591 M] Vs. Deputy Commissioner of Income-Tax, Circle 1(1)(1), Vadodara (Applicant) .. (Respondent) Applicant represented by : Shri S.N. Soparkar, Sr. Advocate Respondent represented by: Shri Abhijit, Sr. DR Date of Hearing 12.12.2025 Date of Pronouncement 25.02.2026 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- This Miscellaneous Application has been filed by the assessee under section 254(2) of the Income Tax Act, 1961 (hereinafter referred to as the “the Act”) seeking rectification of the order dated 25.11.2025, passed by the Tribunal in ITA No. 436/Ahd/2025, pertaining to the Assessment Year 2021-22. 2. The assessee in the miscellaneous application has submitted as under:- “1. The Applicant above named files the present application against order dated 25.11.2025 passed by this Hon'ble Tribunal. It is respectfully submitted that in the said order the following errors are apparent on the record. 2. Applicant respectfully submits that revenue challenged the deletion by ld. CIT (A) of upward adjustment of Rs. 2, 55, 68, 000/- made by TPO vide ground no. i) & ii) reproduced hereunder: Ground No. i): \"Whether on the facts and in the circumstances of the case, the Ld. CIT (A) has erred in deleting the upward adjustment of Rs. 2,55,68,000/-on account of guarantee feel commission charged for the Printed from counselvise.com MA No. 118/Ahd/2025 Alembic Pharmaceuticals Ltd Vs. DCIT Asst. Years : 2021-22 - 2– guarantee given by the assessee to its AEs as per provisions of 92C of the Income Tax Act, 1961 for the guarantee given by the assessee to its AEs? Ground No. ii): Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that there is absence of change in any facts of the Appellant for A Y 2021-22 ignoring the fact that the benchmarking arrived by the TPO of the year under consideration on the basis of reliable data obtained from various banks u/s 133(6) of the Income tax Act and hence the decision relied upon by Ld. CIT(A) of M/s Excel Industries Ltd. [2013] 38 taxmann.com 100(SC) is not applicable in the present case of the assessee?\" 3. Ld. CIT (A) in Para 8.3.3 of his order reproduced by Hon'ble ITAT on page 4 of the order has deleted the adjustment holding as under - \"8.3.3 After going through the facts of the matter as elaborated by the TPO and enumerated by the AR in various grounds I am of considerable view that said transaction of provision of corporate guarantee was already accepted at arm's length by the Ld. TPO and AO during pervious Assessment years namely A. Y 15-16, Α.Υ. 16-17, Α.Υ.18-10. As such there are no material changes in the facts pertaining to the transaction for the current period. Hence, following the 'Principle of Consistency' which requires that when the facts & circumstances continue to remain the same, then there should not be any variation in the treatment from earlier years and relying on the judgment of Apex Court in the matter of M/s Excel Industries Ltd. [2013] 38 taxmann.com 100 (SC)held that...\" 4. Hon'ble ITAT adjudicated above grounds on page 22 para 6 as under - \"We have heard the rival contentions and perused the material available on record. We find that the issue of Corporate Guarantee Fee stands settled by the orders of the Co-ordinate Benches of the Tribunal for AY 2015-16, AY2016-17, AY 2018-19 & 2015-16 in assessee's own case. In the absence of any change in the factual matrix and legal proposition, we decline to interfere with the order of the Ld. CIT (A).\" 5. Applicant submits that Ld. CIT(A) while adjudicating this issue in appellate order has recorded express finding that the provision of Corporate Guarantee Fee was already accepted to be at arm's length by ld. TPO and AO during previous years not making any addition. 6. It is respectfully submitted that the finding of Hon'ble Bench requires to be suitably modified to the extent that the issue of Corporate Guarantee Fee stands settled by orders of TPO/ AO for the earlier years and not by the orders Printed from counselvise.com MA No. 118/Ahd/2025 Alembic Pharmaceuticals Ltd Vs. DCIT Asst. Years : 2021-22 - 3– of the Co-ordinate Benches of Tribunal since this issue was never in challenge by Revenue before Hon'ble Bench in previous years. 7. Applicant submits that revenue challenged issue of MEIS as under - \"(vi) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in allowing the additional claim of MEIS receipts without revising the ITR?\" (vii) Whether on the facts and the circumstances of the case and in law, the Ld. CIT(A) was justified in holding the additional claim of MEIS receipts as capital in nature, without appreciating the fact that the same were received in lieu of export sales?\" 8. Applicant submits that ld. CIT (A) observed in the appellate order that the same issue came up for adjudication for the appeals filed by the assessee in its own case for AY 2018-19 and 2020-21 with different quantum of export incentives. For the AY 2021-22, the quantum of exports incentives under MEIS Scrips received is Rs. 59,79,85,415/-, Hence, the decision taken by my predecessors in CIT (A) proceedings on this very issue for the AY 2018-19 & AY 2020-21 is squarely applicable on the ground raised in this appeal on characterization of export receipts. The discussion for the AY 2018-19 is reproduced below for ready reference \"14.01 During the assessment proceedings, the assessee made an................... ……………………… ……………………… 8.4.5 As per the above discussion and relying upon decision of Chennai, Delhi and Mumbai ITAT and (CIT(A)'s order for AY 18-19 & AY 20-21 in appellant's own case, the AO is directed to grant relief to the appellant on the issue of export incentives received under MEIS Scrips of Rs. 59,79,85,415/- as capital receipts and reduce the amount of such incentives in computing the total income under normal computation and also while determining the book profits u/s 115JB of the Act. Accordingly the ground no 5 raised in the appeal is allowed. 9. Hon'ble Bench in Para 7 on page 22 of the order has adjudicated the issue \"7. With regard to MEIS, we find that issue stands adjudicated by the orders of Co-Ordinate Benches of the Tribunal for AY 18-19 & AY 20-21 in assessee's own case. Further reliance is being placed on the following judgments of the Hon'ble Apex Court:- a). Shree Balaji Alloys v. Commissioner of Income-Tax; Printed from counselvise.com MA No. 118/Ahd/2025 Alembic Pharmaceuticals Ltd Vs. DCIT Asst. Years : 2021-22 - 4– b) CIT v Ponni Sugars and Chemicals Ltd. (2008); In the absence of any change in the factual matrix and legal preposition, we decline to interfere with the order of the Ld. CIT(A). 10. Applicant submits that Ld. CIT (A) held export incentives received under MEIS Scrips as capital receipts following appellate order of AY 2018-19 & 2020-21, appeals against these orders are pending for hearing before the Hon'ble Benches of ITAT. Secondly Id. AR of the applicant relied upon judicial decisions submitted on this point in paper book of case laws (Pages 1 to 129) that were extensively argued during the hearing. 11. It is respectfully submitted that the finding of Hon'ble Bench requires to be suitably modified to the extent that the issue of export incentives received under MEIS Scrips as capital receipt is covered by decisions of various judicial authorities submitted during the hearing and not by the orders of the Co- ordinate Benches of Tribunal for AY 2018-19 & AY 2020-21.” 3. In a nutshell, the assessee submitted that certain mistakes apparent on record have crept into the Tribunal’s order while adjudicating the issues relating to (i) Corporate Guarantee Fee and (ii) characterization of export incentives received under MEIS Scrips. 4. We have heard both the parties and perused the material available on record. (i) Corporate Guarantee Fee 4.1 In para 6 of the Tribunal’s order, it was observed that the issue of Corporate Guarantee Fee stood settled by orders of the Co-ordinate Benches for earlier years. The assessee submits that in earlier years the transaction was accepted to be at arm’s length by the TPO/AO and the issue was not adjudicated by the Tribunal. 4.2 On verification of the record, we find that the ld. CIT(A) granted relief on the basis that the transaction was accepted by the TPO/AO in earlier years and there was no change in facts. Accordingly, paragraph 6 of the Tribunal’s order is Printed from counselvise.com MA No. 118/Ahd/2025 Alembic Pharmaceuticals Ltd Vs. DCIT Asst. Years : 2021-22 - 5– modified to clarify that the transaction of Corporate Guarantee was accepted at arm’s length by the TPO/AO in earlier years and, in the absence of any change in facts, no interference was warranted. The remaining findings remain unchanged. (ii) MEIS – Export Incentives 5. The order of the Ld. CIT(A) reads as under:- “8.4.5 As per the above discussion and relying upon decision of Chennai, Delhi and Mumbai ITAT and CIT(A)'s order for AY 18-19 & AY 20-21 in appellant's own case, the AO is directed to grant relief to the appellant on the issue of export incentives received under MEIS Scrips of Rs.59,79,85,415/- as capital receipts and reduce the amount of such incentives in computing the total income under normal computation and also while determining the book profits u/s 115JB of the Act. Accordingly, the ground no 5 raised in the appeal is allowed.” In paragraph No. 7, ITAT affirmed the order of the Ld. CIT(A) and held “….Co-ordinate Benches for A.Ys. 2018-19 & 2020-21 in assessee’s own case”. These words stand replaced as “…. decision of Chennai, Delhi and Mumbai ITAT and CIT(A)'s order”. 6. In the result, the Miscellaneous Application is allowed. The order is pronounced in the open Court on 25.02.2026 Sd/- Sd/- (SUCHITRA R. KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 25.02.2026 btk Printed from counselvise.com MA No. 118/Ahd/2025 Alembic Pharmaceuticals Ltd Vs. DCIT Asst. Years : 2021-22 - 6– आदेश की \bितिलिप अ\u000eेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, , , , अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation …16.02.2026…… 2. Date on which the typed draft is placed before the Dictating Member ……23.02.2026…… 3. Other Member ……...24.02.2026……………. 4. Date on which the approved draft comes to the Sr.P.S./P.S ……….24.02.2026…………… 5. Date on which the fair order is placed before the Dictating Member for pronouncement ……….25.02.2026……… 6. Date on which the fair order comes back to the Sr.P.S./P.S ……….25.02.2026…………… 7. Date on which the file goes to the Bench ………25.02.2026 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… Printed from counselvise.com "