DCIT CEN CIR 2, MUMBAI V. MEDIORALA LABORATORIES P.LTD, MUMBAI

ITA 2981/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55001 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 09-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 15-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE SHRI D R JAIN
• Keywords: Block assessment
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F,MUMBAI BEFORE SHRI T.R. SOOD (AM) & SHRI V. DURGA RAO (J M) I.T.A.NO.2981/MUM/2010 (A.Y. 2007-08) DY.COMMR. OF INCOME-TAX, CENT. CIR.2, OLD CGO BLDG. ANNEXE, 9 TH FLOOR, M.K.RD., MUMBAI-20. VS. M/S. MEDIORALS LABORATORIES P.LTD., 12, GUNBOW STREET, HORNBY VIEW BLDG., FORT, MUMBAI-400 001. PAN: AAACA5145M APPELLANT RESPONDENT APPELLANT BY SHRI SHANTAM BOSE. RESPONDENT BY SHRI D .R. JAIN. DATE OF HEARING 11-08-2011 DATE OF PRONOUNCEMENT 24-08-2011 O R D E R PER T.R. SOOD, AM : IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLOW ING GROUNDS : I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT TH E ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCTION U/S.80I B ON THE PROFITS DERIVED FROM THE WORK/MANUFACTURING GOT DONE THROUGH LEASE AND LICENSE MANUFACTURERS (LLMS) . II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN NOTICING THAT T HERE WERE CERTAIN ADDITIONAL FACTS MARSHELLED IN ASSESSE ES CASE WHICH WERE OVER AND ABOVE THE FACTS AND LEGAL PROVISIONS ENVISAGED IN THE ORDER FOR AY 2006-07. 2. AT THE OUTSET, THE LD. COUNSEL OF THE ASSESSEE S UBMITTED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE EARLIER OR DERS OF THE TRIBUNAL AND, IN THIS ITA NO.2981/M/10 MEDIORALA LABS P.LTD. 2 REGARD, HE FILED COPIES OF ORDERS OF THE TRIBUNAL F OR ASSTT. YEARS 2005-06 AND 2006-07. 3. ON THE OTHER HAND, THE LD. D.R. SUBMITTED THAT I N THIS YEAR THE AO HAS BROUGHT SOME NEW FACTS ON RECORD AND HE PARTICULARL Y REFERRED TO PARAS 4.5 AND 4.6 OF THE ASSESSMENT ORDER WHEREIN IT IS STATED TH AT THE ASSESSEE HAS NOT UNDERTAKEN ANY MANUFACTURING ACTIVITY ITSELF. IT H AS BEEN FURTHER BROUGHT OUT BY PARA 4.6 OF THE ASSESSMENT ORDER, RELYING ON VARIOU S DECISIONS WHEREIN IT HAS BEEN OBSERVED THAT WHEN THE LANGUAGE OF A PROVISION IS CLEAR, THEN THE SAME COULD NOT BE SUBSTANTIATED. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIN D THAT THE AO SIMPLY MENTIONED ABOUT THE VARIOUS THEORIES OF INTERPRETAT ION AND FURTHER STATED THAT THE ASSESSEE IS NOT DOING ANY MANUFACTURING ACTIVITY AT ALL. HOWEVER, IT IS NOT POINTED OUT HOW THE FACTS IN THE PRESENT CASE ARE DIFFERENT FROM THE EARLIER YEAR. WE FURTHER FIND THAT IN ASSTT. YEAR 2006-07 THE TRIBUN AL, IN THE ASSESSEES OWN CASE VIDE ORDER DATED 27-05-2011 IN ITA NO.5383/MUM/2009 , ADJUDICATED THE ISSUE BY PARA 3, WHICH IS AS UNDER : 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT IDE NTICAL ISSUES CAME BEFORE THE TRIBUNAL FOR A.Y. 2005-06 IN ITA NOS.5913 & 3915/MUM/2007 AS WELL AS CROSS OBJECTION S. BOTH THE ISSUES HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE PARAS 5, 6 & 7, WHICH ARE AS UNDER : 5. HAVING GONE THROUGH THE ORDER OF THE LOWER AUTHORITIES AND THE ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2001- 02 TO 2003-04, WE FIND THAT THE IMPUGNED ISSUE HAS BEEN WRECKED UP IN ASSESSMENT YEAR 2001-02 AND TRIBUNAL HAD ADJUDICATED THE ISSUE IN DETAIL AND HA S GIVEN A FINDING THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80IB OF THE ACT. THIS ORDER OF THE TRIBUNAL WAS FOLLOWED IN SUBSEQUENT YEARS I.E. ASSESSMENT YEARS 2002-03 AND 2003-04 AND DEDUCTION UNDER SECTION 80IB IN RESPECT OF THE INCO ME DERIVED FROM MANUFACTURING ACTIVITIES GOT CARRIED O UT THROUGH LLM WAS ALLOWED. THE RELEVANT OBSERVATION O F ITA NO.2981/M/10 MEDIORALA LABS P.LTD. 3 THE TRIBUNAL IN THE ASSESSMENT YEAR 2001-02 ARE AS UNDER : 13. WE HAVE HEARD BOTH THE PARTIES AND HAVE CONSIDERED THE SUBMISSION. AFTER CONSIDERING THE SUBMISSIONS AND VARIOUS OTHER MATERIAL ON RECORD, W E FOUND THAT THE ORDER OF THE LEARNED CIT(A) IS LIABLE TO B E SUSTAINED. WE NOTED THAT SIMILAR DISALLOWANCE WAS M ADE BY THE ASSESSING OFFICER WHILE MAKING BLOCK ASSESSMENT ORDER FOR 1-4-92 TO 19-9-2000. THE ASSESSING OFFICER REDU CED DEDUCTION U/S.80IB ON ACCOUNT OF INCOME GENERATED T HROUGH MANUFACTURING GOT FROM LLM. THE MATTER REACHED TO T HE TRIBUNAL AND THE TRIBUNAL BY FINDING OUT THE FACT I N CASE OF GROUP CASE VIZ., OKASA PVT.LTD. AND OKASA PHARMA PV T. LTD. DECIDED IN II(SS)A NO.259/MUM/2003 IN FAVOUR OF THE ASSESSEE. IN THIS ORDER, IT WAS HELD THAT THE BENEF IT OF DEDUCTION U/S.80IA WAS AVAILABLE TO THE ASSESSEE O N THE INCOME DERIVED THOUGH LLM. FOLLOWING THIS ORDER OF THE TRIBUNAL IN THE CASE OF OKASA PVT. LTD. AND OKASA P HARMA PVT.LTD. THE APPEAL OF THE ASSESSEE FOR BLOCK PERIO D WAS ALSO ALLOWED BY THE TRIBUNAL IN IT(SS)A NO.644/MUM/2003 VIDE ORDER DATED 21-11-2006. A COPY OF THE ORDER OF THE TRIBUNAL IS PLACED ON RECORD. 6. SINCE THE TRIBUNAL HAS TAKEN A PARTICULAR VIEW I N EARLIER YEARS, WE FIND NO REASON TO TAKE A CONTRARY VIEW IN THESE APPEALS. WE, ACCORDINGLY, DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. WE, THEREFORE, FIN D NO INFIRMITY IN THE ORDER OF THE CIT(A) WHO HAS DECIDE D THE ISSUE IN CONSONANCE WITH THE ORDER OF THE TRIBU NAL. 7. IN CROSS OBJECTIONS, THE COMMON ISSUE IS RAISED WITH REGARD TO THE DISALLOWANCE OF CLAIM OF DEDUCTI ON UNDER SECTION 80IB ON SALE OF SCRAPS. THE ISSUE WAS ALSO EXAMINED BY THE TRIBUNAL IN EARLIER YEARS AND IT WAS HELD THAT DEDUCTION UNDER SECTION 80IB WILL BE ALLOWED ON THE SALE OF SCRAP. WE, THEREFORE, FOLLOW ING THE ORDER OF THE TRIBUNAL FOR EARLIER YEARS, DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY, THE O RDER OF THE CIT(A) IS SET ASIDE IN THIS REGARD AND ASSES SING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE ASSES SEE. FOLLOWING THE ORDER WE DECIDE BOTH THE ISSUES AGAIN ST REVENUE. THEREFORE, FOLLOWING THE ABOVE, WE DECIDE THIS ISSU E AGAINST THE REVENUE. 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ITA NO.2981/M/10 MEDIORALA LABS P.LTD. 4 ORDER PRONOUNCED ON THE 24TH DAY OF AUGUST , 2 011. SD/- SD/- (V. DURGA RAO) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 24TH AUGUST, 2011. NG: COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-36,MUMBAI. 4 CIT (CENTRAL)-I,MUMBAI. 5.DR,F BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NO.2981/M/10 MEDIORALA LABS P.LTD. 5 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 11-08-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 12-08-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER