MERCK LTD, MUMBAI V. DCIT CIR 6(3), MUMBAI

ITA 2945/MUM/2009

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6560 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 02-04-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 07-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P SINGH
• Keywords: Transfer pricing; International transaction; Difference of opinion
• Section: 92C; 80HHC; 80IB

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - I BENCH. .. , ! , BEFORE S/SH.I.P.BANSAL, JUDICIAL MEMBE R & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.2945/MUM/2009, ' ' ' ' # # # # / ASSESSMENT YEAR-2003-04 MERCK LIMITED, LLOYDS CENTRE POINT, UNIT NO.21 & 22, 2 ND FLOOR, A, APPASAHEB MARATHE MARG, PRABHADEVI MUMBAI-400025 VS DCIT 6(3)(2) MITTAL COURT, NARIMAN POINT, MUMBAI. PAN: AAACE2616F ( $% / APPELLANT) ( &'$% / RESPONDENT) '() '() '() '() * * * * / ASSESSEE BY : AARTI VISSANJI + * / REVENUE BY : SHRI O.P.SINGH ' ' ' ' + ++ + ), ), ), ), / DATE OF HEARING : 02-04-2014 -.# + ), / DATE OF PRONOUNCEMENT : 07-05-2014 ' ' ' ' , 1961 + ++ + 254 )1( )/) )/) )/) )/) 0 0 0 0 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM ! ! ! ! ' ' ' ' : CHALLENGING THE ORDER DT. 27.02.2009 OF THE CIT(A)- VI,MUMBAI, ASSESSEE HAD RAISED FOLLOWING GROUNDS OF APPEAL: THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND IN LAW ERRED IN- (A).UPHOLDING THE IMPUGNED PENALTY ORDER PASSED U/S .27L(1)(C) OF THE ACT IN A SUMMARY MANNER AND WITHOUT GIVING PROPER AND SUFFICIENT OPPORTUNIT Y TO THE APPELLANT TO APPEAR BEFORE HIM AND MAKE SUBMISSIONS TO HIM; (B)UPHOLDING THE ORDER PASSED BY THE ASSESSING OFFI CER U/S.271(L)(C) OF THE ACT, LEVYING PENALTY THEREUNDER, DESPITE THE FACT THAT THE PROCEEDINGS AS CONTEMPLATED U/S.271(1)(C) OF THE ACT HAD NOT BEEN COMPLETED. (C)UPHOLDING THE ORDER PASSED BY THE ASSESSING OFFI CER U/S.271(1)(C) OF THE ACT IN RESPECT OF VARIOUS MATTERS, THOUGH HOWEVER, HE HAD NOT RECORDE D THE SATISFACTION OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME A S CONTEMPLATED U/S.27L(L)(C) OF THE ACT. (D)CONFIRMING THE PENALTY ORDER THOUGH HOWEVER, THE APPELLANT HAD NOT CONCEALED THE PARTICULARS OF INCOME NOR HAD IT FURNISHED ANY INACCURATE PARTI CULARS OF INCOME AS CONTEMPLATED UNDER THE SAID PROVISIONS OF THE ACT (E)CONFIRMING THE PENALTY, THOUGH HOWEVER, THE EXPL ANATION/S OFFERED BY THE APPELLANT WERE NOT FOUND TO BE FALSE OR EXPLANATIONS OFFERED BY THE AP PELLANT WERE SUBSTANTIATED AND PROVED TO BE BONAFIDE AND THE FACTS RELATING TO THE SAME AND MAT ERIALS TO THE COMPUTATION OF TOTAL INCOME WERE DISCLOSED BY THE APPELLANT. (F)CONFIRMING LEVY OF PENALTY FOR ALLEGED CONCEALME NT OF PARTICULARS OF INCOME IN RESPECT OF THE DISALLOWANCES AND AD-HOC BASIS AND/OR ON THE BASIS OF OF MATTERS WHERE TWO (G)CONFIRMING THE PENALTY ON ACCOUNT OF TRANSFER P RICING ADJUSTMENTS THOUGH THE APPELLANT HAD FURNISHED ALL THE PARTICULARS IN RESPECT OF THE INT ERNATIONAL TRANSACTIONS WITH THE ASSOCIATED ENTERPRISES AND SUCH PARTICULARS FURNISHED WERE NOT INACCURATE AND FURTHER, THE PRICES CHARGED OR PAID IN RESPECT OF SUCH TRANSACTIONS WERE COMPUTED IN ACCORDANCE WITH THE PROVISIONS CONTAINED IN SECTION 92C OF THE ACT AND IN THE MANNER PRESCRIBED IN THAT SECTION IN GOOD FAITH AND WITH DUE DILIGENCE. (H)CONFIRMING THE PENALTY IN RESPECT OF THE FOLLOWI NG ITEMS: DISTRIBUTION OF PHYSICIANS RS.5,32,69,000/ - SAMPLES 2 ITA NO. 2945/MUM/2009 MERCK LTD. TRANSFER PRICING (I)CONFIRMING THE IMPUGNED PENALTY ORDER PASSED BY THE ASSESSING OFFICER U/S.271(1)(C) OF THE ACT BY MERELY REJECTING THE EXPLANATIONS OFFERED BY THE APPELLANT IN RESPECT OF THE MATTERS AS REFERRED TO HEREINABOVE. 2.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT AND IN LAW OUGHT TO HAVE- (A)NOT CONFIRMED THE IMPUGNED PENALTY ORDER U/S.271 (1)(C) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLANT FOR THE REASONS AND SUBMISSIONS MADE TO HIM AND GIVING PROPER AND SUFFICIENT OPPORTUNITY TO THE DEDUCTION REDUCED U/S.80-IB OF THE ACT.RS.6,83,00L (DEPB RECEIPTS) SUBMISSIONS TO (B)NOT CONFIRMED THE PENALTY ORDER AS THE PROCEEDI NGS UNDER THE ACT HAD NOT BEEN COMPLETED IN VIEW OF THE PENDENCY OF THE APPEAL BEFORE THE HON. INCOME TAX APPELLATE TRIBUNAL; (C)NOT CONFIRMED THE PENALTY ORDER, AS THERE WERE N O SATISFACTION RECORDED IN THE ORDER THAT THE APPELLANT HAD CONCEALED THE PARTICULARS OF INCOME O R HAD SUBMITTED INACCURATE PARTICULARS OF INCOME AS CONTEMPLATED THEREIN; (D)ACCEPTED THE EXPLANATIONS OFFERED BY THE APPELLA NT AS REGARDS THE ITEMS DISALLOWED / ADDED BY THE LEARNED AO AS TRUE AND CORRECT AND GIVEN BONAFI DE AND HELD THAT THE FACTS RELATING TO THE SAME AND MATERIAL TO THE COMPUTATION OF TOTAL INCOME WER E DISCLOSED BY THE APPELLANT. (E)NOT CONFIRMED THE PENALTY ORDER IN RESPECT ( 1 F VARIOUS MATTERS AS THE APPELLANT HAD NOT CONCEALED ANY PARTICULARS OF INCOME NOR HAD SUBMITT ED ANY INACCURATE PARTICULARS OF INCOME AS CONTEMPLATED UNDER THE SAID PROVISIONS OF THE ACT. (F)NOT CONFIRMED LEVY OF PENALTY IN RESPECT OF THE DISALLOWANCES / ADDITIONS MADE ON AD-HOC BASIS AND/OR ON THE BASIS OF ASSUMPTIONS, SURMISES AND IN RESPECT OF THE MATTERS WHERE TWO VIEWS WERE POSSIBLE AND THE APPELLANT HAD ADOPTED ONE OF THEM; (G)ACCEPTED THE EXPLANATIONS OFFERED BY THE APPELLA NT AS REGARDS THE ITEMS DISALLOWED/ADDED BY THE LEARNED ASSESSING OFFICER AS TRUE AND CORRECT A ND GIVEN BONAFIDE AND HELD THAT THE FACTS RELATING TO THE SAME ARE MATERIAL TO THE COMPUTATIO N OF TOTAL INCOME WERE DISCLOSED BY THE APPELLANT. (H)NOT CONFIRMED THE PENALTY U/S.271(L)(C) OF THE A CT IN RESPECT OF THE FOLLOWING ITEMS: (A)DISTRIBUTION OF PHYSICIANS RS. 5,32,69,000/ - SAMPLES (B)TRANSFER PRICING ADJUSTMENTS RS 4,43,69,9L1/- (C)REDUCTION REDUCED U/S.80-IB OF RS.6,83,00L THE A CT-DEPB RECEIPTS (D)REDUCTION U/S.80-HHC OF THE RS.19,64,050/-ACT (I)NOT LEVIED PENALTY ON ACCOUNT OF TRANSFER PRICI NG ADJUSTMENTS, AS THE APPELLANT HAD NOT CONCEALED ANY PARTICULARS OF INCOME OR HAD NOT FURN ISHED ANY INACCURATE PARTICULARS OF INCOME AND THE APPELLANT HAD CHARGED / PAID PRICES IN RESPECT OF INTERNATIONAL TRANSACTION S WITH THE ASSOCIATED ENTERPRISES IN ACCORDANCE WITH THE PRO VISIONS CONTAINED IN SECTION 92C OF THE ACT AND IN THE MANNER PRESCRIBED THERE UNDER IN GOOD FA ITH AND WITH DUE DILIGENCE. 3.THE ABOVE GROUNDS OF APPEAL ARE DISTINCT AND SEPA RATE AND WITHOUT PREJUDICE TO EACH OTHER. 4.THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND O R WITHDRAW ALL OR ANY OF THE GROUNDS OF APPEAL HEREIN AND TO SUBMIT SUCH STATEMENTS, DOCUMENTS AND PAPERS AS MAY BE CONSIDERED NECESSARY AT ANY TIME BEFORE OR AT THE TIME OF HEARING THE APPEA L. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF MANUFAC TURING, TRADING AND MARKETING OF DRUGS, CHEMICALS FILED ITS RETURN OF INCOME ON 30/10/2003 DECLARING TOTAL INCOME AT RS.49.77 LAKHS. ASSESSING OFFICER(AO)FINALISED THE ASSESSMENT ORDER U/S.143(3) OF THE ACT,ON 27.03.2006, DETERMINING THE TOTAL INCOME AT RS.63,11,28,420/- AFTER MAKING VARIOUS ADDITIONS.PENALTY PROCEEDINGS U/S.WERE ALSO INITIATED WITH REGARD TO SOME OF THE ADDITIONS.A NOTICE U/S.274 R.W.S.271(1)(C) OF THE ACT OF THE ACT WAS ISSUED TO THE ASSESSEE. MEANWHILE,ASSESSEE-COMPANY FILED AN APPEAL BEFORE T HE FIRST APPELLATE AUTHORITY(FAA),WHO VIDE HIS ORDER,DATED 22.09.2006,UPHELD THE ACTION O F THE AO.PENALTY PROCEEDINGS PERTAINED TO DISALLOWANCE U/S.40(A)(I) OF THE ACT(RS. 57.47LAKHS )ADDITIONS ON ACCOUNT OF DISCREPANCY FOR CLOSI NG STOCK I.E. DISTRIBUTION OF PHYSICIANS SAMPLES (RS.5,32,69,000/-)TRANSFER PRICING ADJUSTMENT 3 ITA NO. 2945/MUM/2009 MERCK LTD. (TPA) (RS.4,43,69,911/-),DISALLOWANCE U/S.43(B)-(RS .99.55LAKHS),DEDUCTION U/S.80IB(REDUCED BY 6.83 LAKHS)AND 80HHC (REDUCED BY RS.19.64 LAKHS)OF THE ACT.IN RESPONSE TO THE NOTICE ISSUED BY THE AO,ASSESSEE FILED ITS EXPLANATION ALONG WITH TH E CASE LAWS RELIED UPON BY IT.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,AO LEVIED A PENALTY OF RS. 3,68,55,091/-ON ACCOUNT OF ADDITIONS MADE FOR DISCREPANCY IN CLOSING STOCK,TPA AND DEDUC TIONS U/S.80IB AND DEDUCTION U/S.80HHC 2. ASSESEE PREFERRED AN APPEAL BEFORE THE FAA.IT WAS S UBMITTED BEFORE HIM THAT AO HAD NOT RECORDED HIS SATISFACTION FOR LEVYING PENALTY,THAT THERE WAS NO CONCEALMENT OF PARTICULARS OF INCOME OF FURNISHING OF INACCURATE PARTICULARS,THAT THERE WAS DIFFERENCE OF OPINION BETWEEN THE ASSESSEE AND THE AO,THAT THE ASSESSEE HAD SUBMITTED ALL THE DOCUMENTS, RECORDS AND EVIDENCES FOR PROVING THE GENUINENESS AND BONAFIDE OF THE EXPENDI TURE INCURRED BY IT,THAT GOODS WERE IMPORTED AT ARMS LENGTH PRICE,THAT IT HAD MADE CLAIM U/S.80 IB AND 80HHC OF THE ACT ON THE BASIS OF CERTIFICATE ISSUED BY A CA.,THAT DEPB WAS ALSO CLAI MED AS PER THE CERTIFICATE ISSUED BY THE CA. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE PENALTY ORDER,FAA HELD THAT WHILE MAKING THE ADDITION IN THE ASSESSMENT ORDER,THE AO HAD RECORDED THAT PENALTY PROCEEDINGS U/S. 271(C)WERE BEING INITIATED SEPARATELY,THAT THE AO H AD TAKEN INTO CONSIDERATION ALL ADDITIONS AND DISALLOWANCES MADE IN THE ASSESSMENT ORDER BUT HAD LEVIED PENALTY ONLY IN THOSE CASES WHERE IT HAD NOT FILED ANY EXPLANATION,THAT IT HAD NOT GIVEN PROOF OF SAMPLE DISTRIBUTION TO THE DOCTORS, THAT AO WAS JUSTIFIED IN MAKING THE ADDITION, THAT AO HA D MADE FURTHER ADDITION ON THE BASIS OF FINDINGS OF THE TPO,THAT THE ORDER OF THE AO WAS CO NFIRMED BY THE THEN FAA ON MERITS,THAT FAA HAD CONFIRMED THE DISALLOWANCE U/S.80IB AND 80HHC O F THE ACT,THAT IT HAD CLAIMED DEDUCTION UNDER ABOVE REFERRED SECTIONS INCORRECTLY,THAT IT H AD NOT DERIVED INCOME FROM INDUSTRIAL UNDER - TAKING,THAT ONLY EXPORT INCOME WAS REQUIRED TO BE D EDUCTED U/S.80HHC,THAT IT HAD CLAIMED OTHER INCOME AS EXEMPT,THAT AO HAD RIGHTLY ARRIVED AT THE CONCLUSION THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME.FINALLY,HE CONFIRM ED THE ORDER OF THE AO. 3. BEFORE US,AUTHORISED REPRESENTATIVE (AR) OF THE ASS ESSEE SUBMITTED THAT DETAILS OF ISSUE OF FREE SAMPLES DISTRIBUTION TO DOCTORS HAS BEEN RESTORED B ACK TO THE FILE OF THE AO BY THE K BENCH OF ITAT,MUMBAI VIDE ITS ORDER DATED 19.07.2013 (ITA NO . 925/MUM/2007-AY 2003-04), THAT OUT OF THE THREE ADJUSTMENTS SUGGESTED BY THE TPO AND MADE BY THE AO TWO HAD BEEN DELETED BY THE TRIBUNAL,THAT ONE OF THE ISSUES WAS RESTORED BACK T O THE FILE OF THE FAA BY THE TRIBUNAL.WITH REGARD TO DEPB BENEFIT OF RS.6.83 LAKHS,AR SUBMITTE D THAT TRIBUNAL HAD CONFIRMED THE ADDITION, THAT PENALTY COULD NOT BE LEVIED FOR THE AMOUNT IN QUESTION,THAT THE CLAIM MADE BY THE ASSESSEE WAS BONAFIDE,THAT AT THE TIME OF FILING OF RETURN B Y THE ASSESSEE THERE WERE TWO VIEWS POSSIBLE ABOUT THE BENEFIT.IN HER SUPPORT,SHE RELIED UPON TH E JUDGMENTS OF ARVIND FOOTWEAR PVT. LTD.(72 DTR294-ALLAHABAD),RELIANCE PETROPRODUCTS (P) LTD.(3 22ITR158-SC),KHS MACHINERY PVT. LTD. 34CCH 198)AND BIPRA INVESTMENT & TRUSTS (P)LTD.(3SO T897).WITH REGARD TO DEDUCTION U/S.80 HHC OF THE ACT,IT WAS ARGUED THAT TRIBUNAL HAD PART LY ALLOWED THE SAID GROUND IN FAVOUR OF THE ASSESSEE-COMPANY,THAT DISALLOWANCE WAS RESTRICTED T O RS. 2.81 LAKHS ONLY, THAT PENALTY WAS NOT LEVIABLE ABOUT THE SAID AMOUNT,THAT 90% OF THE NET AMOUNT OF INTEREST AND DEPOSIT WAS UPHELD BY THE TRIBUNAL,THAT INTEREST OF DELAYED PAYMENT, INSU RANCE CLAIM AND INCOME FROM INSTRUCTION SERVICE CONTRACT,REVERSAL OF REVALUATION LOSS ASSET S WERE DELETED BY THE TRIBUNAL IN ITS ORDER DISCUSSED EARLIER,THAT ISSUE OF MISCELLANEOUS INCOM E WAS ALLOWED BY THE TRIBUNAL FOR THE STATISTICAL PURPOSES,THAT 90% OF THE NET AMOUNT UNDER THE HEAD EXPORT INCENTIVES AND INTENDING COMMISSION RECEIPT WERE UPHELD BY THE TRIBUNAL,THAT OUT OF 100 % DEDUCTION ITEMS INTEREST ON FDC BANK WAS UPHELD UP TO THE 90% OF NET AMOUNT WHEREAS INTEREST ON INCOME-TAX REFUND WAS UPHELD IN FULL.IN SUPPORT OF HER ARGUMENTS, AR RELIED UPON THE ORDERS OF FLORA EXPORTS(40 DTR 70),SARF SEASING UDHYOG(174 TAXMAN594),SHAH ORIGINALS(112TTJ754),IND IA GALATINE & CHEMI - CALSLTD.(275ITR284),RACHNA UDHYOG(35DTR 65),BALDEV WOOLEEN INTERNATIONAL (131 TTJ 338).DR SUBMITTED THAT DEPB ISSUE WAS NOT DEBATABLE ,THAT ADDITIONS WERE MADE BY THE AO AFTER RECORDING SATISFACTION FOR LEVYING PENALTY. 4 ITA NO. 2945/MUM/2009 MERCK LTD. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ISSUE OF DISTRIBUTION OF FREE SAMPLES TO THE DOCTORS(DISC REPANCY IN CLOSING STOCK)HAS BEEN RESTORED BACK TO THE FILE OF THE AO BY THE TRIBUNAL VIDE ITS ORDE R19.07.2013(SUPRA),SO,PENALTY LEVIED BY THE AO IN THIS REGARD CANNOT SURVIVE.WE DELETE THE PENALTY CONFIRMED BY THE FAA ON ACCOUNT OF DIFFERENCE IN CLOSING STOCK.AO WILL BE FREE TO LEVY OR NOT TO LEVY PENALTY ABOUT THE SAID ITEM AFTER PASSING FRESH ORDER. OUT OF THE THREE TP ADJUSTMENTS,TRIBUNAL HAS DELETE D TWO ADJUSTMENTS AND HAS RESTORED BACK ONE ISSUE.IN THESE CIRCUMSTANCES,PENALTY HAD TO BE CANC ELLED FOR ALL THE THREE ADJUSTMENTS.AFTER TAKING A DECISION ABOUT THE THIRD ADJUSTMENT,QUESTION OF L EVYING OF PENALTY CAN BE DECIDED. WE FIND THAT TRIBUNAL HAS CONFIRMED THE DISALLOWANC E MADE ON ACCOUNT OF DEPB BENEFIT,RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT DELI VERED IN THE MATTER OF LIBERTY INDIA(317 ITR 218),THAT THE ASSESSEE HAD FILED ITS RETURN OF INCO ME ON 30.10.2003,THAT HONBLE APEX COURT HAD PRONOUNCED THE JUDGMENT ON 31.08.2009,THAT AT THE T IME OF FILING OF RETURN OF INCOME DIVERGENT VIEWS WERE PREVALENT WITH REGARD TO THE DEPB BENEFI T WITH REGARD TO ITS INCLUSION IN THE CALCULATING 80IB DEDUCTION,ISSUE WAS FINALLY SETTLE D BY THE ORDER OF THE HONBLE APEX COURT. IN THESE CIRCUMSTANCES,WE ARE OF THE OPINION THAT LEVY OF PENALTY ON A DEBATABLE ISSUE IS NOT JUSTIFIED.SO, WE DELETE THE PENALTY LEVIED FOR NOT REDUCING DEPB BENEFIT WHILE CALCULATING 80IB DEDUCTION,IN LIGHT OF THE PECULIAR FACTS OF THE CAS E UNDER APPEAL. NOW,WE WOULD DISCUSS THE ISSUE OF PENALTY LEVIED U/ S.271(1)(C)OF THE ACT FOR NOT REDUCING THE INCOME,AMOUNTING TO RS.19,64,050/- WHILE CALCULATIN G THE DEDUCTION U/S.80HHC OF THE ACT.WE FIND THAT THERE ARE SEVEN ITEMS PERTAINING TO 90% R EDUCTION AND THREE ITEMS OF 100% REDUCTION, THAT THE TRIBUNAL HAD DELETED ADDITIONS PERTAINING TO INTEREST ON DELAYED PAYMENT,INSURANCE CLAIM,INCOME FROM INSTRUMENT SERVICE CONTRACT,80IB DEDUCTION REDUCED FROM 80HHC PROFITS, WHEREAS GOA WITH REGARD TO MISCELLANEOUS INCOME WAS ALLOWED FOR STATISTICAL PURPOSES BY THE TRIBUNAL.AS THE ABOVE REFERRED ADDITIONS HAD BEEN D ELETED BY THE TRIBUNAL VIDE ITS ORDER DATED (SUPRA),SO WE ARE OF THE OPINION THAT PENALTY CANNO T BE LEVIED FOR SUCH ITEMS. IT LEAVES US,WITH THE FIVE ITEMS(INTEREST ON DEPOSI T AND OTHERS,EXPORT INCENTIVES,INDENTING COMMI - SSION RECEIVED,INTEREST ON FDRS WITH BANK,INTEREST ON INCOME TAX REFUND)THAT WERE UPHELD BY THE ITAT,WHILE DECIDING THE QUANTUM APPEAL.WE FIND THAT AT THE TIME OF FILING OF RETURN OF INCOME THERE WERE NOT UNANIMITY ABOUT FOUR ITEMS OUT OF TH E FIVE ITEMS. BUT,THERE WAS AND THERE IS NO CONFUSION ABOUT INCOM E TAX REFUND-IT CANNOT BE PART OF ANY INCENTIVE SCHEME.NOT CONSIDERING THE SAME FOR DISALLOWANCE WH ILE COMPUTING THE PROFIT ELIGIBLE FOR SPECIAL DEDUCTION/INCENTIVE SCHEME CANNOT BE TREATED A BONA FIDE BELIEF OR A REASONABLE EXPLANATION.THEREFORE,CONSIDERING THE PECULIAR FACT S AND CIRCUMSTANCES OF THE CASE,WE UPHOLD THE LEVY OF PENALTY U/S.271(1)(C)OF THE ACT FOR THE SAI D AMOUNT.PENALTY LEVIED FOR OTHER FOUR ITEMS IS DELETED. EFFECTIVE GROUND OF APPEAL IS ALLOWED IN FAVOUR OF THE ASSESSEE,IN PART. AS A RESULT,APPEAL FIL ED BY THE ASSESSEE STANDS PARTLY ALLOWED. 1)2 '() + 0 3 4 + ) 56. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH MAY,2014 . 0 + -.# 7 8' 7 , 201 4 . + / 9 5 ITA NO. 2945/MUM/2009 MERCK LTD. SD/- SD/- ( .. / I.P. BANSAL) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 8' /DATE: 07.05 . 2014. SK 0 0 0 0 + ++ + &): &): &): &): ; :#) ; :#) ; :#) ; :#) / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ < = , 4. THE CONCERNED CIT / < = 5. DR I BENCH, ITAT, MUMBAI / :>/ &)' , . . . 6. GUARD FILE/ / 1 ':) ':) ':) ':) &) &)&) &) //TRUE COPY// 0' / BY ORDER, ? / 5 DY./ASST. REGISTRAR , /ITAT, MUMBAI