Lifecell International Pvt.Ltd., CHENNAI V. ACIT, CHENNAI

CO 72/CHNY/2012

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 3156 (ITAT-CHENNAI)
• Duration Of Justice: 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 18-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N VIJAY KUMAR
• Assessee Lawyers: B MURALIKUMAR IRS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH , CHENNAI BEFORE DR. O.K.NARAYANAN, VICE PRESIDENT AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO.342/MDS/2012 ASSESSMENT YEAR: 2008-09 AND C.O.NO.72/MDS/2012 THE ASSISTANT COMMISSIONER VS. M/S. LIFECELL INT ERNATIONAL OF INCOME-TAX, PVT. LTD., COMPANY CIRCLE-II(4), NO.26, VANDALUR CHENNAI-34. KELAMBAKKAM MAIN ROAD, KEELAKOTTAIYUR VILLAGE, CHENNAI 600 048. PAN AAECA 7997 B (APPELLANT) (RESPONDENT/CROSS-OBJECTOR) APPELLANT BY : SHRI B. MURALI KU MAR, IRS, CIT RESPONDENT BY : SHRI N. VIJAY KUMAR, CA DATE OF HEARING : 3 RD MAY, 2012 DATE OF PRONOUNCEMENT : 3 RD MAY, 2012 O R D E R PER DR.O.K.NARAYANAN, VICE-PRESIDENT: THE APPEAL IS FILED BY THE REVENUE. THE CROSS OBJ ECTION IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEA R IS 2008-09. THE APPEAL AND THE CROSS OBJECTION ARE DIRECTED AGA INST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS)-IV AT CHENNAI - - ITA 342 & CO 72/12 2 DATED 2.11.2011 AND ARISE OUT OF THE ASSESSMENT ORD ER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE IS CARRYING ON THE BUSINESS OF COLL ECTION, PROCESSING, PRESERVING AND STORING BLOOD STEM CELLS FROM UMBILICAL CORD AT THE TIME OF DELIVERY OF THE CHILD . THE ASSESSEE IS PRESERVING AND STORING THE BLOOD STEM CELLS COLL ECTED FROM NEW BORN BABIES FOR A PERIOD OF 21 YEARS. PARENTS COME FORWARD TO USE THE FACILITY PROVIDED BY THE ASSESSEE TO PRESER VE AND STORE THE BLOOD STEM CELLS OF THEIR WARDS SO THAT THE CEL LS COLLECTED CAN BE USED TO COMBAT AGAINST MAJOR DISEASES TILL THEIR WARDS ATTAIN THE AGE OF 21 YEARS. THIS IS THE BENEFIT OF MODERN TECHNOLOGY. THE ASSESSEE IS CARRYING ON BUSINESS IN THAT LINE. THE ASSESSEE IS MAKING THREE TYPES OF COLLECTIONS FROM ITS CLIEN TS. THE THREE CATEGORIES OF COLLECTIONS ARE ENROLMENT FEE, PROCES SING FEE AND STORAGE FEE. THE COLLECTIONS MADE UNDER ENROLMENT FEE AND PROCESSING FEE ARE ACCOUNTED BY THE ASSESSEE AS INC OME OF THE YEAR OF RECEIPT AND OFFERING FOR TAXATION IN THE RE LEVANT ASSESSMENT YEAR. IN OTHER WORDS, THOSE TWO TYPES A RE TREATED AS REVENUE RECEIPTS. IN RESPECT OF THE THIRD CATEGORY OF COLLECTION TOWARDS STORAGE FEE, THE ASSESSEE HAS GIVEN AN OPTI ON TO THE - - ITA 342 & CO 72/12 3 PARENTS. EITHER THE PARENTS MAY MAKE A LUMP SUM PA YMENT FOR 21 YEARS, IN WHICH CASE THE ASSESSEE WILL GIVE A DI SCOUNT IN THE TOTAL STORAGE FEE, OR THE PARENTS MAY CHOOSE FOR AN NUAL PAYMENTS OF STORAGE FEE. WHEREVER THE PARENTS HAVE OPTED FOR ANNUAL PAYMENTS OF STORAGE FEE, SUCH COLLECTIONS AR E ACCOUNTED BY THE ASSESSEE AS REVENUE RECEIPTS OF THE CONCERNE D PREVIOUS YEAR AND OFFERS FOR TAXATION IN THE RELEVANT ASSESS MENT YEAR. 3. BUT, WHERE THE PARENTS OPT FOR LUMP SUM PAYMENT FOR THE ENTIRE PERIOD OF 21 YEARS OF STORAGE, THE ASSESSEE IS NOT TREATING THE ENTIRE COLLECTION AS REVENUE RECEIPT OF THAT YE AR. THE LUMP SUM COLLECTION IS TREATED BY THE ASSESSEE AS COLLEC TION FOR 21 YEARS AS A WHOLE AND THE STORAGE FEE ATTRIBUTABLE T O ONE PREVIOUS YEAR ALONE SHOULD BE TREATED AS REVENUE RECEIPT OF THAT PREVIOUS YEAR AND OFFERED FOR TAXATION IN THAT RELEVANT ASSE SSMENT YEAR. THE BALANCE PORTION OF THE STORAGE COLLECTION FOR T HE REMAINING PERIOD OF YEARS WILL BE ACCOUNTED AS LIABILITY IN T HE ACCOUNTS OF THE ASSESSEE COMPANY. IN THE ENSUING YEAR AGAIN TH E YEARLY PORTION WILL BE TRANSFERRED FROM THE LIABILITY TOWA RDS THE COLLECTION OF THAT PREVIOUS YEAR AND OFFERED FOR TAXATION IN T HAT RELEVANT ASSESSMENT YEAR. - - ITA 342 & CO 72/12 4 4. IN THE ABOVE CIRCUMSTANCES, THE DISPUTE WAS WITH REFERENCE TO THE STORAGE FEE COLLECTED BY THE ASSES SEE IN LUMP SUM, IN WHICH CASE THE REVENUE TREATED THE ENTIRE S UCH COLLECTION AS INCOME OF THE YEAR OF RECEIPT, WHEREA S THE ASSESSEE ARGUED FOR TREATING ONLY THE FEE FOR THAT PARTICULAR YEAR AS INCOME OF THAT YEAR AND THE BALANCE TO BE CARRIE D FORWARD TILL THE COMPLETION OF 21 YEARS BY OFFERING THE PRO RATA COLLECTION FOR ASSESSMENT ON AN YEARLY BASIS. 5. IT IS IN THIS BACKGROUND THAT THE REVENUE HAS FI LED THE APPEAL BEFORE US. ACCORDING TO THE REVENUE, THE CO MMISSIONER OF INCOME-TAX(APPEALS) HAS ERRED IN DELETING THE AD DITION MADE TOWARDS STORAGE FEE RECEIVED IN ADVANCE FOR A PERIO D OF 21 YEARS AS INCOME OF THE YEAR IN WHICH THE ADVANCE AMOUNT W AS RECEIVED. THIS ISSUE WAS CONSIDERED BY THE TRIBUNA L IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 IN ITA NO.851/MDS/2011 THROUGH ITS ORDER DATED 13 TH JULY, 2011. THE COMMISSIONER OF INCOME-TAX(APPEALS) IN HIS ORDER RE LIED ON THE - - ITA 342 & CO 72/12 5 ABOVE ORDER OF THE TRIBUNAL AND HELD THE MATTER IN FAVOUR OF THE ASSESSEE. IT IS AGAINST THE ABOVE THAT THE REVENUE HAS COME IN APPEAL BEFORE US. THE GROUND OF THE REVENUE IS THA T THE ORDER OF THE TRIBUNAL PASSED IN ASSESSEES OWN CASE FOR ASSE SSMENT YEAR 2006-07 HAS NOT BECOME FINAL, AS IT HAS PREFER RED AN APPEAL BEFORE THE HONBLE HIGH COURT OF MADRAS. 6. ANYHOW, THE MATTER AS ON DATE STANDS COVERED BY THE ORDER OF THE TRIBUNAL PASSED IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2006-07, THE COMMISSIONER OF INCOME - TAX(APPEALS) HAS RIGHTLY FOLLOWED THE SAID ORDER AN D ALLOWED THE CONTENTIONS RAISED BY THE ASSESSEE. 7. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE RE VENUE IS LIABLE TO BE DISMISSED. 8. IN THE CROSS OBJECTION, THE PRAYER OF THE ASSES SEE IS THAT IF THE APPEAL OF THE REVENUE IS DECIDED IN ITS FAVO UR, THE TRIBUNAL MAY BE PLEASED TO REDUCE PROPORTIONATE RECEIPT OF E ARLIER YEARS INCLUDED IN THE INCOME OF THE YEAR UNDER APPEAL. S INCE, WE HAVE DECIDED THE MATTER AGAINST THE REVENUE, THE ABOVE I SSUE DOES - - ITA 342 & CO 72/12 6 NOT ARISE. THE CROSS OBJECTION FILED BY THE ASSESS EE IS TO BE DISMISSED AS INFRUCTUOUS. ORDERS PRONOUNCED IN THE OPEN COURT AT THE TIME O F HEARING ON THURSDAY, THE 3 RD OF MAY, 2012 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) ( DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 3 RD OF MAY, 2012 MPO* COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT (4) CIT(A) (5) D.R. (6) G.F.