The DCIT, Central Circle-1, Baroda V. M/s. Sun Pharmaceuticals Industries Ltd., Baroda

ITA 3024/AHD/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9492 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-02-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 04-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N SOPARKAR
• Assessee Lawyers: DINESH SINGH
• Keywords: Transfer pricing; Retrospective amendment
• Section: 80HHC; 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI S.K. YADAV, JUDICIAL MEMBER & SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER) ITA. NOS: 2862 & 3049/AHD/2008 (ASSESSMENT YEAR: 2003-04) SUN PHARMACEUTICAL INDUSTRIES LTD. SPARC, TANDALJA, BARODA-20 ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1, BARODA V/S V/S ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1, BARODA SUN PHARMACEUTICAL INDUSTRIES LTD. SPARC, TANDALJA, BARODA-20 (APPELLANT) (RESPONDENT) ITA. NO: 3068 & 3024/AHD/2010 (ASSESSMENT YEAR: 2004-05) SUN PHARMACEUTICAL INDUSTRIES LTD. SPARC, TANDALJA, BARODA-20 ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1, BARODA V/S V/S ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 1, BARODA SUN PHARMACEUTICAL INDUSTRIES LTD. SPARC, TANDALJA, BARODA-20 PAN: AADCS 3124K APPELLANT BY : SHRI S.N. SOPARKAR, AR RESPONDENT BY : SHRI DINESH SINGH, SR. D.R. ITA NOS. 2862 & 304 9/AHD/2008 & ITA NOS. 3068 & 3024/AHD/2010 . A.YS. 2003-04 & 200 4-05 2 ( )/ ORDER DATE OF HEARING : 11 -02-201 6 DATE OF PRONOUNCEMENT : 22 -02-2016 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NOS.2862 & 3049/AHD/2008 ARE CROSS APPEALS BY T HE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-IV, AHM EDABAD DATED 13.03.2008 PERTAINING TO A.Y. 2003-04, ITA NOS. 306 8 & 3024/AHD/2010 ARE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-IV, AHMEDABAD D ATED 13.08.2010 PERTAINING TO A.Y. 2004-05. 2. ALL THESE APPEALS RELATES TO THE PENALTY U/S. 271(1 )(C) OF THE ACT AND RELATE TO THE SAME SET OF FACTS IN QUANTUM ADDITION S/DELETIONS. THEREFORE ALL THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. WE FIRST TAKE UP REVENUES APPEAL IN ITA NO. 3049/A HD/2008 FOR A.Y. 2003-04. 4. A PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW SH OW THAT THE PENALTY WAS LEVIED BY THE A.O. ON ACCOUNT OF (1) INCLUSION OF SCRAP SALE IN TOTAL TURNOVER FOR CALCULATING DEDUCTION U/S. 80HHC OF TH E ACT (2) DISALLOWANCE OF PUBLIC ISSUE EXPENSES AND AMALGAMAT ION EXPENSES (3) CLAIM OF WEIGHTED DEDUCTION U/S. 35(2AB) OF THE ACT ON TRADE MARK REGISTRATION AND OVERSEAS PRODUCT REGISTRATION AND ON ACCOUNT OF ADDITION FOR PROVISIONS FOR DEFERRED TAX. IN SO FAR AS, THE FIRST THREE ISSUES ARE CONCERNED ALL OF THEM HAVE BEEN DECIDED IN FAVOUR OF THE ITA NOS. 2862 & 304 9/AHD/2008 & ITA NOS. 3068 & 3024/AHD/2010 . A.YS. 2003-04 & 200 4-05 3 ASSESSEE AND AGAINST THE REVENUE IN QUANTUM APPEAL BY US IN ITA NO. 1701 & 1513/AHD/2007. SINCE THE QUANTUM ADDITIONS H AVE BEEN DELETED. WE DID NOT FIND ANY REASON FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 5. IN SO FAR AS, THE ISSUE RELATING TO THE ADDITION ON ACCOUNT OF PROVISION FOR DEFERRED TAX IS CONCERNED. WE FIND THAT THE ADD ITIONS HAVE BEEN CONFIRMED DUE TO THE RETROSPECTIVE AMENDMENT OF SEC TION 115JB OF THE ACT. HOWEVER, WE FIND THAT ON THE DATE OF FILING OF THE RETURN, THE CLAIM WAS SUPPORTED BY THE PROVISIONS OF LAW AND THE ASSE SSEE CANNOT FORESEE THE FUTURE AMENDMENTS. THEREFORE, WE DO NOT FIND ANY REASON FOR LEVYING PENALTY FOR THE ADDITIONS CONFIRMED DUE TO SUBSEQUENT AMENDMENT BROUGHT IN THE PROVISIONS. WE, THEREFORE, CONFIRM THE FINDINGS OF THE LD. CIT(A) AND DISMISS REVENUES AP PEAL. 6. ITA NO. 2862/AHD/2008 ASSESSEES APPEAL FOR A.Y. 20 03-04. 7. THE SOLE REASON FOR THE LEVY OF PENALTY RELATES TO THE TRANSFER PRICING ADJUSTMENT MADE IN THE QUANTUM ASSESSMENT PROCEEDIN GS. 8. SINCE THE TRANSFER PRICING ADJUSTMENTS HAVE BEEN DE LETED BY US IN QUANTUM ASSESSMENT PROCEEDINGS VIDE A ITA NO. 1558/ AHD/2006 QUA GROUND NO. 11 OF THAT APPEAL WHICH FINDING HAS BEEN FOLLOWED IN ALL THE SUBSEQUENT ASSESSMENT YEARS. 9. SUBLATO FUNDAMENTS CREDIT OPUS - MEANING IN THE C ASE THE FOUNDATION IS REMOVED, THE SUPER STRUCTURE FALLS. S INCE THE QUANTUM ADDITIONS HAVE BEEN DELETED THE PENALTY FALLS. 10. APPEAL FILED BY THE ASSESSEE IS ACCORDINGLY ALLOWE D. ITA NOS. 2862 & 304 9/AHD/2008 & ITA NOS. 3068 & 3024/AHD/2010 . A.YS. 2003-04 & 200 4-05 4 11. ITA NO. 3024/AHD/2010 REVENUES APPEAL FOR A.Y. 200 4-05. 12. A PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW SH OW THAT THE PENALTY HAS BEEN LEVIED ON ACCOUNT OF (1) DISALLOWA NCE OF WEIGHTED DEDUCTION ON TRADE MARK REGISTRATION CHARGES AND OV ERSEAS PRODUCTION CHARGES (2) ON DISALLOWANCE OF PRICE DIFFERENCE ON ACCOUNT OF SALES TO THE SISTER CONCERN (3) ON DISALLOWANCE OUT OF EXPEN SES INCURRED ON BEHALF OF SUN PHARMACEUTICALS INDUSTRIES (4) SALE P ROCEEDS OF SCRAP INCLUDED WHILE WORKING OUT THE DEDUCTION U/S. 80HHC OF THE ACT (5) ON ACCOUNT OF ADDITION MADE ON ACCOUNT OF INCLUSION OF DEFERRED TAX FOR THE PURPOSE OF BOOK PROFIT U/S. 115JB OF THE ACT. 13. IN SO FAR AS, THE ISSUES CONSIDERED AT 1 TO 4 ABOVE , ALL THE ISSUES HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN QUAN TUM APPEAL IN ITA NOS. 1193 & 1287/AHD/2008. THEREFORE, WE DO NOT FIN D ANY REASON FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT. 14. IN SO FAR AS, THE ISSUE RELATING TO THE LEVY OF PEN ALTY ON ACCOUNT OF INCLUSION OF DEFERRED TAX. A SIMILAR ISSUE HAS B EEN CONSIDERED BY US IN REVENUES APPEAL IN ITA NO. 3049/AHD/2008 FOR A. Y. 2003-04. FOR OUR DETAILED DISCUSSION THEREIN, THIS GROUND IS DEC IDED ACCORDINGLY. 15. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. 16. ITA NO. 3068/AHD/2010 ASSESSEES APPEAL FOR A.Y. 20 04-05. 17. WE FIND THAT THE PENALTY HAS BEEN LEVIED ON TWO COU NTS. (I) ON ACCOUNT OF ADDITIONS MADE BY VIRTUE OF TRANSFER PRI CING ADJUSTMENTS ITA NOS. 2862 & 304 9/AHD/2008 & ITA NOS. 3068 & 3024/AHD/2010 . A.YS. 2003-04 & 200 4-05 5 AND (II) ON DISALLOWANCE OF PUBLIC ISSUE EXPENSES A ND AMALGAMATION EXPENSES. 18. BOTH THESE ADDITIONS/DISALLOWANCES HAVE BEEN DELETE D BY US IN QUANTUM APPEAL IN ITA NOS. 1193 & 1287/AHD/2008. 19. SUBLATO FUNDAMENTS CREDIT OPUS - MEANING IN THE C ASE THE FOUNDATION IS REMOVED, THE SUPER STRUCTURE FALLS. S INCE THE QUANTUM ADDITIONS HAVE BEEN DELETED THE PENALTY FALLS. 20. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 22 - 02 - 2016. SD/- SD/- (S. K. YADAV) (N. K. BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD