DCIT, Circle-2(1)(1), Vadodara V. M/s Sun Pharmaceuticals Industries Limited ( Earlier Known as M/S. Ranbaxy Lab. Ltd.), Vadodara

ITA 2504/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8601 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-04-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 13-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA A GARWAL
• Keywords: Validity of assessment; Set aside
• Section: 263

Judgement Text

DCIT-2(1)(2) BARODA V. SUN PHARMACEUTICAL INDUSTRIE S /I.T.A. NO. 2504/AHD/2017/A.Y.09-10 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABD BENCHES A BENCH AHMEDABAD BEFORE SHRIO. P. MEENA, ACCOUNTANT MEMBER AND MRS. MADUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 2504/AHD/2017:ASSESSMENT YEAR: 2009-10 DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 2(1)(2) VADODARA VS. M/S. SUN PHARMACEUTICAL INDUSTRIES LTD. ( EARLY KNOWN AS RANBAXY LABORATORIES LTD.) SPARC, TANDALJA, VADODARA 390020 PAN: AAACR 0127N APPELLANT RESPONDENT ASSESSEE BY SHRIBANDISHSOPARKAR, ADVOCATE, AR REVENUE BY SMT. APARNAAGARWAL, CIT(D.R.) DATE OF HEARING 10.04.2019 DATE OF PRONOUNCEMENT 10.04.2019 ORDER PER O. P. MEENA, AM 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-2, VADODARA (IN SHORT THE CIT (A)) DATED 30.08.2017PERTAINING TO ASSESSMENT YEAR 2009-10, WHICH IN TURN HAS ARISE N FROM THE ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) READ WITH SECTION 263 DATED 0 8.12.2016 OF INCOME TAX ACT,1961 (IN SHORT THE ACT) BY THE DEPUTY COMMISSIONER OF INCO ME-TAX, CIRCLE 2(1)(2) VADODARA (IN SHORT THE AO). 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER: 1.1 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, AN D IN LAW, LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE ASSESSEE WEIGHTED DEDUCTION U/S. 3 5(2AB) EVEN THOUGH THE REQUIRED CONDITIONS ARE NOT FULFILLED. 1.2 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, AN D IN LAW, LD. CIT(A) ERRED IN DIRECTING THEAO TO ALLOW THE ASSESSEE WEIGHTED DEDUCTION U/S. 35(2AB) ON THE BASIS OF THE ORDER DATED. 22.12.2016 OF THE HONBLE ITAT, WITHOUT CONSIDERING THAT THIS ORDER HAD BEEN SET ASIDE TO A LIMITED EXTENT BY THE HONBLE HIGH COURT, VIDE THEI R ORDER DATED 14.08.2017. 1.3 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, AN D IN LAW, LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE ASSESSEE WEIGHTED DEDUCTION U/S. 35 (2AB) WITHOUT CONSIDERING THAT FORM DCIT-2(1)(2) BARODA V. SUN PHARMACEUTICAL INDUSTRIE S /I.T.A. NO. 2504/AHD/2017/A.Y.09-10 PAGE 2 OF 5 3CL HAD NOT BEEN SUBMITTED THEREFORE, THE CONDITION S LAID DOWN IN SECTION 35(2AB)(4) READ WITH RULE 6(7A) HAD NOT BEEN FULFILLED. 1.4 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, AN D IN LAW, LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE ASSESSEE WEIGHTED DEDUCTION U/S. 35 (2AB) WITHOUT CONSIDERING THAT FORM NO. 3CM WAS ISSUED BY THE SECRETARY, D.S.I.R., ONLY ON 11.06.2009 AND WAS NOT IN EXISTENCE DURING THE PREVIOUS YEAR RELEVANT TO A.Y. 2009-10, AND THEREFORE, THE CONDITIONS LAID DOWN IN SECTION 35(2AB) READ WITH RULE 6(7A) HAD NOT BEEN F ULFILLED. 1.5 THE ALTERNATIVELY AND WITHOUT PREJUDICE, IN THE FAC TS AND CIRCUMSTANCES OF THE CASE, AND IN LAW, LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE ASSESSEE WEIGHTED DEDUCTION U/S. 35(2AB) WITHOUT VERIFYING THE ACTUAL EXPENDITURE BY THE ASSESSEE IN TERMS OF THE HONBLE HIGH COURTS ORDER DATED 14.08.2017, AND WITHOUT GI VING THE AO AN OPPORTUNITY TO VERIFY THIS. 3. BRIEF FACTS ARE THE ASSESSEE HAS FILED RETURN OF IN COME ON 27.09.2009 DECLARING LOSS OF RS. 1414.11 CRORES WHICH WAS ASSESSED UNDER NORM AL PROVISIONS AND BOOK PROFIT OF RS. 29.47 CRORES UNDER SECTION 115JB. THE ASSESSMENT WA S COMPLETED UNDER SECTION 143 READ WITH SECTION 144C ON 30.01.2014. SUBSEQUENTLY, PR. CIT -2 VADODARA PASSED AN ORDER UNDER SECTION 263 DTD. 28.03.2016 AND SET-ASIDE THE AFORESAID ASSESSMENT HOLDING THAT WEIGHTED DEDUCTION OF RS. 237,77,05,310 WAS WRONGLY ALLOWED. CONSEQUENTLY, ASSESSMENT WAS MADE ON 08.12.2016 BY DISALLOWING TH E ABOVE CLAIM MADE UNDER SECTION 35(2A) IN ASSESSMENT ORDER UNDER SECTION 143 (3) RE AD WITH SECTION 263 OF THE ACT. 4. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFOR E THE LD. CIT (A). BEFORE WHOM THE ASSESSEE HAS FILED AN ORDER OF TRIBUNAL IN I.T. A.NO. 1390/AHD/2016 A.Y. 2009-10 DATED 22.12.2016 BY WHICH DISALLOWANCE PROPOSED BY THE PR. CIT -2 VADODARA WAS ALLOWED. THE CIT (A) HELD THAT SINCE THE ORDER UNDE R SECTION 263 WAS NOT QUASHED BY THE TRIBUNAL HENCE, GROUND NO. RELATING TO VALIDITY OF ASSESSMENT ORDER PASSED UNDER SECTION 143 (3) READ WITH SECTION 263 WAS BAD-IN-LAW WAS NO T ACCEPTED AND THIS GROUNDS OF APPEAL WAS DISMISSED. HOWEVER, WITH REGARD TO GROU ND RELATING TO DISALLOWANCE OF DCIT-2(1)(2) BARODA V. SUN PHARMACEUTICAL INDUSTRIE S /I.T.A. NO. 2504/AHD/2017/A.Y.09-10 PAGE 3 OF 5 WEIGHTED DEDUCTION UNDER SECTION 35(2AB) TO THE TUN E OF RS. 237,77,05,310 BEING COVERED BY THE ABOVE DECISION OF TRIBUNAL WERE DIRE CTED TO BE ALLOWED. 5. BEING AGGRIEVED, THE REVENUE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL. THE LD. CIT (DR) RELIED ON THE ORDER OF THE AO. 6. AU CONTRAIRE, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE OF DISALLOWANCE OF WEIGHTED DEDUCTION UNDER SECTION 35 (2AB) HAS BEEN ALLOWED BY THE TRIBUNAL IN APPEAL AGAINST THE ORDER UNDER SECTION 263 OF THE ACT DATED 28.03.2016. THE CIT (A) HAS FOLLOWED THE SAME AND ALLOWED THE DEDUC TION OF WEIGHTED DEDUCTION CLAIMED AND ALLOWED BY THE AO IN ORIGINAL ASSESSMENT. THE R EVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF TRIBUNAL AGAINST I.T.A.NO. 1390/AHD/20 16 DTD. 22.12.2016 PASSED IN RESPECT ORDER UNDER SECTION 263 ALLOWING THE APPEAL. HOWEVE R, THE HONBLE GUJARAT HIGH COURT HAS DISMISSED THE REVENUE APPEAL VIDE TAX APPEAL NO . 541 OF 2017 DTD. 14.08.2017(PB- 11 TO 14) BY UPHOLDING THE ORDER OF ITAT DTD. 22.1 2.2016. THE SLP FILED BY THE REVENUE ALSO STANDS DISMISSED BY THE HON`BLE SUPREME COURT IN SLP NP. 18273/2018 DATED 20.07.2018. HENCE, THE ISSUE STANDS SETTLED AND IS DULY COVERED BY THE AFORESAID DECISIONS OF TRIBUNAL, HON`BLE HIGH COURT AND HON`BLE SUPREME COURT. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ISSUE OF DISALLOWANCE OF WEIGHTED DEDUCTION AMOUNTING TO RS. 237,77,05,310 STANDS ALLOWED BY THE LD. CIT (A) , T RIBUNAL , HONBLE HIGH COURT AND HON`BLE SUPREME COURT IN ABOVE MENTIONED CITATION B Y HOLDING THAT MERELY BECAUSE THE PRESCRIBED AUTHORITY FAILED TO SEND INTIMATION IN F ORM NO. 3CL, WOULD NOT BE REASON ENOUGH TO DEPRIVE THE ASSESSEE`S CLAIM OF DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. IN DCIT-2(1)(2) BARODA V. SUN PHARMACEUTICAL INDUSTRIE S /I.T.A. NO. 2504/AHD/2017/A.Y.09-10 PAGE 4 OF 5 VIEW OF THIS MATTER, RESPECTIVELY FOLLOWING THE ORD ER OF ABOVE MENTIONED AUTHORITIES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT (A), ACCORDINGLY, SAME IS UPHELD. EX- CONSEQUENTI, THE GROUND NO. 1.1 TO 1.5 OF THE REVEN UE ARE THEREFORE, DISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. 9. THE ORDER PRONOUNCED IN THE OPEN COURT ON 10.04.20 19 SD/- SD/- (MADHUMITA ROY) ( O.P.MEENA) JUDICIAL MEMBER ACCOUNTA NT MEMBER TRUE COPY AHMEDABAD: DATED: 10 TH APRIL, 2019/OPM COPY OF ORDER SENT TO- ASSESSEE/AO/PR. CIT/ CIT (A) / ITAT (DR)/GUARD FILE OF ITAT. BY ORDER ASSISTANT REGISTRAR, AHMEDABAD