M/s. Wings Pharaceuticals Pvt. Ltd., New Delhi V. DCIT, New Delhi

CO 49/DEL/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 0237 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 06-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 05-01-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 11-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKAR
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : H : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI A.T. VARKEY, JM ITA NO.5078/DEL/2013 ASSESSMENT YEAR : 2010-11 DCIT, CIRCLE-18(1), NEW DELHI. VS. WINGS PHARMACEUTICALS PVT. LTD., J-13, UDYOG VIHAR, INDUSTRIAL AREA, NEW DELHI. PAN : AAACW0963B CO NO.49/DEL/2014 (ITA NO.5078/DEL/2013) ASSESSMENT YEAR : 2010-11 WINGS PHARMACEUTICALS PVT. LTD., J-13, UDYOG VIHAR, INDUSTRIAL AREA, NEW DELHI. PAN : AAACW0963B VS. DCIT, CIRCLE-18(1), NEW DELHI. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI ANIL KUMAR JAIN, FCA DEPARTMENT BY : S HRI J.P. CHANDRAKAR, SR.DR ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE CIT(A ) ON 29.5.13 IN RELATION TO THE ASSESSMENT YEAR 2010-11. ITA NO.5078/DEL/2013 CO NO.49/DEL/2014 2 2. THE ONLY GROUND RAISED BY THE REVENUE IN ITS APPEAL IS AGAINST ALLOWING DEDUCTION OF `8,08,04,360/- U/S 80 IC OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RESPECT OF INCOME FROM UNIT AT BADDI. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE ALSO CLAIMED DEDUCTION U/S 80IC ON ITS JOB WORK INC OME. ON BEING CALLED UPON TO EXPLAIN AS TO HOW JOB WORK INCOME CO ULD BE TREATED AS INCOME DERIVED FROM MANUFACTURING ACTIVITY, THE ASSESSEE GAVE EXPLANATION WHICH DID NOT FIND FAVOUR WITH THE AO. FOLLOWING HIS VIEW TAKEN FOR THE AYS 2006-07, 2007-08 AND 200 8-09, THE AO REJECTED SUCH CLAIM OF DEDUCTION U/S 80IC. THE LD. CIT(A) OVERTURNED THE ASSESSMENT ORDER ON THIS POINT BY RE LYING ON HIS ORDERS FOR EARLIER YEARS. 4. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, IT IS NOTICED THAT THE AO AS WELL AS THE LD. CIT(A) HAVE RELIED ON THEIR RESPECTIVE OPIN IONS FOR THE EARLIER YEARS IN MAKING AND DELETING THE DISALLOWAN CE. SUCH ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN AS SESSEES CASE FOR THE AYS 2006-07 TO 2009-10. VIDE ITS SEPARATE ORDERS DATED ITA NO.5078/DEL/2013 CO NO.49/DEL/2014 3 7.2.2014 AND 29.5.14, THE TRIBUNAL HAS UPHELD THE D ECISION OF THE LD. CIT(A) IN ALLOWING DEDUCTION U/S 80IC IN RESPEC T OF THIS INCOME. NO DISTINGUISHING FEATURE OF THE INSTANT YEAR VIS-A -VIS THE PRECEDING YEARS HAS BEEN BROUGHT TO OUR NOTICE BY T HE LD. DR. RESPECTFULLY FOLLOWING THE PRECEDENTS, WE UPHOLD TH E IMPUGNED ORDER IN DELETING THIS DISALLOWANCE. 5. THE ONLY ISSUE RAISED BY THE ASSESSEE IN ITS CRO SS OBJECTION IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF `7,3 6,403/- MADE U/S 14A OF THE ACT. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE EARNED CERTAIN EXEMPT INCOME AND OFFERED D ISALLOWANCE U/S 14A FOR A SUM OF `18,13,730/-. THE AO, WHILE C ALCULATING DISALLOWANCE AS PER RULE 8D, MADE A FURTHER DISALLO WANCE OF `8,37,168/-. THE LD. CIT(A) RESTRICTED THE DISALLO WANCE TO A SUM OF `7,36,403/-. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE FIRST COMPONENT OF THIS DISALLOWANCE IS A SUM OF `39,221/- TOWARDS INT EREST. IN THIS REGARD, IT IS NOTED THAT THE LD. CIT(A) REDUCED THE DISALLOWANCE BY EXCLUDING THE INTEREST ON FBT AND TDS, FOR WHICH SE PARATE ITA NO.5078/DEL/2013 CO NO.49/DEL/2014 4 DISALLOWANCE WAS MADE. NO MATERIAL HAS BEEN PLACED ON RECORD TO CONTROVERT THE FINDING RECORDED BY THE LD. CIT(A ) IN SUSTAINING THE DISALLOWANCE TO THIS EXTENT. THE SECOND COMPON ENT OF THE DISALLOWANCE IS A SUM OF `6,97,182/- WHICH REPRESEN TS % OF THE AVERAGE VALUE OF INVESTMENT AS PER RULE 8D(III). T HE MANDATE OF RULE 8D IS APPLICABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATION IN VIEW OF THE JUDGMENT OF THE HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF MAXOPP INVESTMENTS LTD. VS. CIT (2012) 347 ITR 272 (DEL). RESPECTFULLY FOLLOWING THE PRECEDENT, WE UP HOLD THE DISALLOWANCE SUSTAINED IN THE FIRST APPEAL ON THIS ISSUE. 7. IN THE RESULT, THE REVENUES APPEAL AS WELL AS T HE ASSESSEES CO ARE DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 06.01.201 5. SD/- SD/- [ A.T. VARKEY ] [ R.S. SYAL ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 06 TH JANUARY, 2015. DK ITA NO.5078/DEL/2013 CO NO.49/DEL/2014 5 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.