DCIT 5(2), MUMBAI V. MISSION PHARMACEUTICALS LTD, MUMBAI

ITA 3210/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8016 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 07-03-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 14-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K SINGH SR
• Assessee Lawyers: S K TULSIAN
• Keywords: Business income
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI T.R.SOOD, ACCOUNTANT MEMBER & SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER. I.T.A.NOS.3210 & 3211/MUM/2009 A.YRS.1998-99 & 2000-01 DY. COMMISSIONER OF INCOME TAX, RANGE 5 (2), MUMBAI. VS. M/S. MISSION PHARMACEUTICALS LTD., 54B, DRUG HOUSE, PROCTER ROAD, MUMBAI 400 007. PAN: AAACM 2929 F AND C.O.NOS.105 & 106/MUM/2010 (ARISING OUT OF I.T.A.NOS.3210 & 3211/MUM/2009) A.YRS.1998-99 & 2000-01 M/S. MISSION PHARMACEUTICALS LTD., 54B, DRUG HOUSE, PROCTER ROAD, MUMBAI 400 007. VS. DY. COMMISSIONER OF INCOME TAX, RANGE 5 (2), MUMBAI. (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : SHRI S. K. SINGH, SR.AR ASSESSEE BY : S/SHRI S.K.TULSIAN & SHASHI TULSIAN. O R D E R PER T.R.SOOD, AM: IN BOTH THESE APPEALS BY THE REVENUE, IDENTICAL GR OUND HAS BEEN RAISED AGAINST THE ORDER OF THE CIT(A) OBJECTI ON TO THE DELETION OF ADDITION AMOUNTING TO RS.47,26,112/- AND RS.53,59,5 56/- BY HOLDING THAT EXPORT SALES MADE TO RUSSIA WERE GENUINE AND A LLOWABLE FOR DEDUCTION U/S.80HHC . 2. AFTER HEARING BOTH THE PARTIES, WE FIND THAT AO HAD RECEIVED INFORMATION FROM INVESTIGATION WING THAT ASSESSEE H AD MISUSED DEDUCTION U/S.80HHC BY EXPORTING GOODS TO DUBAI, WH EREAS THE SAME 2 SHOULD HAVE BEEN EXPORTED TO RUSSIA. THIS INFORMATI ON WAS BASED ON INFORMATION AND EVIDENCE GATHERED BY DIRECTORATE OF REVENUE INTELLIGENCE (DRI) MUMBAI AND ENFORCEMENT DIRECTORA TE (ED), MUMBAI. ACCORDINGLY, ASSESSMENTS WERE REOPENED. 3. BASED ON THE ABOVE INFORMATION, AO OBSERVED THAT ON MONEY WAS SENT TO DUBAI THROUGH HAWALA CHANNEL WHERE IT W AS CONVERTED INTO US DOLLARS AND HAS ROUTED TO RUSSIA THROUGH BA NKING CHANNEL. IN RUSSIA THESE AMOUNTS WERE USED FOR PURCHASING CLEA RING INDIAN RUPEES WHICH REPRESENTED THE DEBT OF GOVERNMENT OF INDIA TO THE ERSTWHILE USSR. IN TERMS OF THE AGREEMENT BETWEEN G OVERNMENT OF INDIA AND RUSSIA THIS DEBT COULD BE USED ONLY FOR P AYMENT OF EXPORTS FROM INDIA TO RUSSIA. THE US DOLLARS TRANSFERRED TO RUSSIA BY THE BORROWER WERE USED FOR ESTABLISHING THE LETTERS OF CREDIT ON INDIAN EXPORTERS WITH FOB INDIA TERMS OF SHIPMENT. AS TH E ACTUAL OBJECTIVE OF THESE IMPORTERS WAS NOT TO IMPORT THESE GOODS FO R CONSUMPTION IN RUSSIA BUT MERELY TO CIRCULATE THE MONEY, THEY COLL UDED WITH CERTAIN INDIAN EXPORTERS WILLING TO PART OF THE SCHEME FOR THEIR OWN GAINS. THESE EXPORTERS INFLATED THE VALUE OF THEIR GOODS E IGHT TO TEN TIMES OF THEIR PROCUREMENT PROCESS, SO THAT THE COST OF THEI R PROCUREMENT IS TAKEN CARE OF BY THE DUTY DRAW BACK/DEPB CREDIT ON THE EXPORTS. THE GOODS HAVING BEEN SHIPPED ON FOB INDIA TERMS COME U NDER THE CONTROL OF THE RUSSIAN IMPORTERS IMMEDIATELY AFTER LEAVING INDIAN SHORES. AS THE LETTER OF CREDIT WAS FULLY PAID FOR, THE RUSSIA N IMPORTER COULD OBTAIN THE ORIGINAL COPY OF BILL OF LADING FROM THE RUSSIA N BANK AND THEY OR THEIR AUTHORIZED AGENT COULD TAKE DELIVERY OF THE G OODS IN DUBAI ITSELF 3 WHERE THESE WOULD BE DISPOSED OF AND THE PROCEEDS T RANSMITTED TO INDIA EXPORTERS THROUGH HAWALA CHANNEL. THE REMITTA NCE RECEIVED THROUGH THE LETTERS OF CREDIT WOULD BE PASSED ON BY THE EXPORTER TO THE INDIAN AGENTS OF THE RUSSIAN IMPORTER THROUGH FACTI OUS BILLS PURPORTEDLY RAISED ON THEM FOR SUPPLY OF THE EXPORTS GOODS BY C ERTAIN FRONT COMPANIES OPERATED BY THE SAID AGENTS. THE INDIAN AGENTS OF THE OPERATORS WOULD THEN ONCE AGAIN RECYCLE THE MONEY I NTO THE CIRCUIT AS ABOVE. 4. IN VIEW OF THE ABOVE FACTS, AO ASKED THE ASSESSE E TO SUBMIT THE PROOF THAT GOODS HAVE BEEN EXPORTED TO RUSSIA AND R EACHED THE DESTINATION. IN RESPONSE, A COPIES OF SALE INVOICE, SHIPPING BILLS GR, EXPORT PROMOTION COPY OF SHIPPING BILL, BILL OF LAD ING, BANK REALIZATION CERTIFICATE AND GOODS LANDING CERTIFICATE BY THE RU SSIAN PARTY, WERE FILED AND IT WAS STATED THAT THESE DOCUMENTS CLEARL Y PROVE THAT GOODS HAVE BEEN ACTUALLY EXPORTED TO RUSSIA AND HAVE REAC HED DESTINATION I.E. RUSSIA. 5. AFTER CONSIDERING THE ABOVE SUBMISSIONS, AO OBSE RVED THAT THE GOODS LANDING CERTIFICATE BY THE RUSSIAN PARTY, IT IS NOTICED THAT IN THE CERTIFICATE IT IS NO WHERE MENTIONED THAT GOODS WER E RECEIVED IN RUSSIA. ON BEING ASKED FOR ANY RUSSIAN GOVT. AGENCY CERTIFI CATED FOR LANDING THE GOODS IN RUSSIA, NO REPLY HAS BEEN GIVEN. IN VI EW OF THE FACTS I HAVE DOUBT THAT GOODS HAD NOT REACHED TO THE DESTIN ATION I.E. RUSSIA, ACCORDINGLY, I HOLD THAT GOODS HAS NOT REACHED TO R USSIA AND MONEY HAS CIRCULATED THROUGH HAWALA CHANNEL, THEREFORE TH E REMITTANCE RECEIVED THROUGH THESE EXPORTS HAS BEEN TREATED AS NOTHING BUT 4 RECEIVED THE MONEY FOR THE MONEY SEND THROUGH THE H AWALA CHANNEL. THEREFORE TAXED AS INCOME FROM OTHER SOURCES AND DE PB RECEIVED ON ACCOUNT OF THESE EXPORT HAS ALSO BEEN TREATED AS IN COME FROM OTHER SOURCES AND NO DEDUCTION U/S.80HHC HAS BEEN ALLOWED ON THIS RECEIPT. 6. BEFORE THE CIT(A) IT WAS MAINLY SUBMITTED THAT F ULLY DETAILS OF EXPORTS TO RUSSIA WERE FILED BEFORE THE AO. THE ORD ERS WERE PROCURED FROM RUSSIAN PARTY UNDER THE POLICIES OF GOVERNMENT OF INDIA TO PROMOTE TRADE WITH RUSSIA UNDER RUPEE TRADE AGREEM ENT. THE ASSESSEE RECEIVED A LETTER OF CREDIT OPENED BY A BA NK OWNED BY RUSSIA AND THAT FACT HAS BEEN CONFIRMED BY THE RESERVE BAN K OF INDIA. THE GOODS WERE TRANSPORTED TO THE PORT AND HANDED OVER TO THE SHIPPING COMPANY. THE MOVEMENT OF THE GOODS WAS CONTROLLED B Y VARIOUS GOVERNMENT AGENCIES I.E. DURING THE COURSE OF MANUF ACTURING, TRANSPORTATION AND LOADING THE SAME ON THE CARRIER FOR FINAL SHIPMENT. IT WAS POINTED OUT THAT ADMINISTRATIVE DRUG CONTROL LER (ADC FOR SHORT) IS THE AUTHORITY APPOINTED BY THE CENTRAL GOVERNMEN T WHOSE ROLE IS TO EXAMINE AND CERTIFY THE MATERIAL TO BE SHIPPED OUTS IDE INDIA AND ASSESSEE HAD RECEIVED A NOC FROM ADC. IT WAS ALSO P OINTED OUT THAT GOODS ARE NOT ALLOWED TO BE REMOVED FROM THE FACTOR Y UNLESS EXCISE DUTY IS PAID. THEREFORE, SUCH SHIPMENTS WERE CLEARE D EVEN BY THE EXCISE DEPARTMENT. THE EXPORT IS SUBJECTED TO VERIF ICATION BY CUSTOMS DEPARTMENT AT PORT, AND THE CUSTOMS DEPARTMENT EVEN TAKE SAMPLES OF MATERIAL AND GET THEM TESTED AND EXPORT IS ALLOW ED ONLY AFTER APPROVAL OF SUCH SAMPLES. THE FACT THAT SHIPPING CO MPANY ISSUED AN EXPORT PROMOTIONAL BILL OF LADING ONLY AFTER THE GO ODS WERE ACTUALLY 5 RECEIVED BY SUCH SHIPPING COMPANY ALSO PROVES THE E XPORT. THE DIRECTOR GENERAL FOREIGN TRADE KEEPS A STRICT VIGIL ON SUCH EXPORT BENEFITS. THE VARIOUS DOCUMENTS WHICH WERE FILED BE FORE THE AO WERE ALSO FILED BEFORE THE CIT(A), AND RELIANCE WAS ALSO PLACED ON VARIOUS CASE LAWS. IT WAS ALSO ARGUED THAT ASSESSEE HAD ALS O EXPORTED GOODS TO OTHER COUNTRIES WHICH HAD NOT BEEN DOUBTED AND, THE REFORE, AO SHOULD HAVE ALLOWED DEDUCTION U/S.80HHC. IN ANY CASE, ENFO RCEMENT DIRECTOR WHO HAD STARTED THE PROCEEDINGS AGAINST THE ASSESSE E ALONG WITH OTHERS ON THE BASIS OF WHICH ASSESSMENTS WERE REOPE NED, HAD ALREADY DROPPED THE PROCEEDINGS AND COPY OF THE SAID ORDER OF SPECIAL DIRECTORATE OF ENFORCEMENT, GOVERNMENT OF INDIA, MI NISTRY OF FINANCE, DEPARTMENT OF REVENUE, WAS ALSO FILED. 7. THE LD. CIT(A), AFTER EXAMINING THE SUBMISSIONS AGREED THAT THERE WAS PLETHORA OF EVIDENCE TO PROVE THAT ASSESS EE HAS ACTUALLY EXPORTED THE GOODS. HE ALSO NOTED THAT IN ANY CASE INQUIRIES INITIATED BY ENFORCEMENT DIRECTOR HAD ALREADY BEEN DROPPED. H E, THEREFORE, HELD THAT GOODS HAVE BEEN REALLY EXPORTED TO RUSSIA AND THEREFORE ENTIRE RECEIPTS COULD NOT BE TREATED AS INCOME FROM OTHER SOURCES. HOWEVER, HE EXAMINED THE DETAILS OF PRICES AT WHICH THE GOODS WERE EXPORTED TO RUSSIA AND FOUND THAT THE SAME HAVE BEE N INFLATED AND ULTIMATELY CONFIRMED PARTIAL DISALLOWANCE VIDE PARA 2.11 WHICH READS AS UNDER: 2.11 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPE LLANT AND FOUND THE SAME NOT ACCEPTABLE. I FIND THAT IN THE CASE OF VITAGYL TABLETS THE APPELLANT HAS CHARGED RATE OF RS.133.42 PER PACK ON EXPORTS MADE TO RUSSIAN PARTIES WHEREAS THE SAME WAS CHARGED AT RS. 108.63 PER PACK FROM GERMAN PARTY. SIMILAR IS THE CASE OF VITAMEB T ABLETS. IN CASE 6 OF VITAMEB TABLETS THE APPELLANT CHARGED 50.04% LES S PRICES ON SALE MADE TO UK PARTIES WHEN COMPARED TO THE RATES CHARG ED BY THE APPELLANT FROM RUSSIAN PARTIES. THE APPELLANT HAS N OT GIVEN ANY COMPARATIVE INSTANCES OF SALE OF VITAMFULWIN TABLET S. ONLY IN THE CASE OF VITALS TETRA 250 TABLETS, THE APPELLANT HA S CHARGED LESS RATE IN RESPECT OF SALE MADE IN UK. THUS, THE FACT OF OV ER PRICING IN THE CASE OF EXPORT TO RUSSIA DOES EXIST. THOUGH APPELLANT HA S CHARGED 50% EXCESS P-RICE THE CASE OF VITAMEB TABLETS BUT THE E XPORT OF THIS ITEM TO RUSSIA IS ONLY RS.39,755/-. MAJOR EXPORT OF PROD UCTS IS OF VITAGYL TABLETS IN WHICH THERE IS OVER INVOICING TO THE EXTENT OF 18.59%. ON THE BASIS OF THESE FACTS, IT IS HELD THA T THE APPELLANT HAS CHARGED 20% EXCESS PRICE FROM RUSSIAN PARTY. THESE PAYMENT RECEIVED BY THE APPELLANT ARE NOT PART OF THE GENUINE EXPORT MADE BY THE APPELLANT BUT THESE ARE ON ACCOUNT OF INFLATION OF SALE PRICE. ACCORDINGLY, IT IS HELD THAT THE RECEIPT OF RS.11,6 6,940/-, WHICH IS 19% OF THE SALE MADE BY THE APPELLANT TO RUSSIAN PARTIE S, ARE NOT ACCOUNT OF GENUINE EXPORTS OF GOODS TO RUSSIA. THESE RECEIPTS ARE ON ACCOUNT OF OVER INVOICING. ACCORDINGLY, RECEIPTS OF RS.11,66,9 4-/- ARE LIABLE TO TAX AS INCOME FROM OTHER SOURCES AND IS NOT BUSINESS INCOME OF THE APPELLANT BY THIS AMOUNT AND TREAT THE SAME AS INCO ME OF THE APPELLANT UNDER THE HEAD INCOME FROM OTHER SOURCES AND IS N OT BUSINESS INCOME OF THE APPELLANT. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECT TO ADJUST TO BUSINESS INCOME OF THE APPELLANT BY THIS AMOUNT AND TREAT THE SAME AS INCOME OF THE APPELLANT UNDER THE HEAD INC OME FROM OTHER SOURCES. THE ASSESSING OFFICER IS ALSO DIRECTED TO REDUCE EXPORT TURNOVER OF THE APPELLANT BY AN AMOUNT OF RS.11,08, 593/- AND ADJUST THE CLAIM OF THE APPELLANT FOR DEDUCTION UNDER SE 80HHC OF THE INCOME TAX ACT. 8. BEFORE US LD.DR RELIED ON THE ORDER OF THE AO. 9. ON THE OTHER HAND, LD.COUNSEL OF THE ASSESSEE SU BMITTED THAT ALL THE DOCUMENTS IN RESPECT OF EXPORTS WERE FILED BEFO RE THE AO AS WELL AS THE CIT(A) TO PROVE THAT ACTUAL EXPORTS HAVE TAK EN PLACE. IN ANY CASE, THE SPECIAL DIRECTORATE OF ENFORCEMENT, GOVER NMENT OF INDIA, MINISTRY OF FINANCE, DEPARTMENT OF REVENUE, ON THE BASIS OF WHICH ASSESSEES CASE WAS REOPENED, HAD ALREADY DROPPED T HE PROCEEDINGS VIDE ORDER DATED 28-2-2008 AND A COPY OF THE SAME W AS FILED. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND THAT EXPORTS MADE BY THE ASSESSEE TO RUSSIA WERE DOUBTED ON THE BASIS OF THE INFORMATION RECEIVED FROM INVESTIGATION WING, W HICH IN TURN BASED 7 ON THE ENQUIRIES INITIATED BY DIRECTORATE OF REVENU E INTELLIGENCE. THE ENFORCEMENT DIRECTORATE (ED), MUMBAI HAS PASSED ORD ER ON 28-2-2008 IN THE NAME OF THE ASSESSEE AND SOME OTHER PARTIES AND ULTIMATELY VIDE PARAS 25 & 26 HELD AS UNDER: 25. I ALSO FIND SUBSTANCE IN THE SUBMISSIONS OF TH E NOTICE THAT THE IMPORTS WERE ON FOB BASIS AND THEY HAD NO TITLE TO THE GOODS ONCE GOODS WERE PUT ON BOARD AND THE TITLE OVER THE GOOD S PASSES TO THE BUYERS. AS SUCH THE SELLER HAD NO CONTROL OVER THE GOODS WHICH WERE SHIPPED ON FOB BASIS. 26. THE DOCUMENTS RELIED UPON BY THE DEPARTMENT AT BEST MAY CREATE A DOUBT ABOUT THE CAPACITY OF IMPORTER TO IM PORT GOODS INTO RUSSIA. EVEN THE DOCUMENT RELIED UPON BY THE DEPART MENT HAS NOT CATEGORICALLY DENIED THE EXISTENCE OF THE SAID COMP ANIES IN RUSSIA. IT HAS INFORMED A MERE OPINION OF THE NATURE OF SUCH C OMPANIES IN GENERAL. BEYOND THAT, NO EVIDENCE WHATSOEVER HAS BE EN BROUGHT ON RECORD TO PROVE THE ALLEGATIONS CONTAINED IN THE SH OW CAUSE NOTICE. RELIANCE IS PLACED ON THE RATIO OF THE SUPREME COUR T IN THE CASE OF SHANTI PRASAD JAIN V/S. DIRECTOR OF ENFORCEMENT MEN TIONED SUPRA. IN THE LIGHT OF THE ABOVE FACTS AND LEGAL POSITIONS, T HE CHARGES U/S.8(1), 48, 49 AND 73(3) OF THE FOREIGN EXCHANGE REGULATIONS AC T, 1973 MADE IN THE SHOW CAUSE NOTICE AGAINST THE NOTICE COMPANY M/ S MISSION PHARMACEUTICALS AND ITS DIRECTORS DOES NOT SURVIVE. THE ABOVE CLEARLY SHOWS THAT PROCEEDINGS BY THE ENF ORCEMENT DIRECTOR HAVE ALREADY BEEN DROPPED AND, THEREFORE, CASE OF T HE REVENUE DOES NOT SURVIVE. FURTHER, ALL THE RELEVANT DOCUMENTS WE RE FILED BEFORE THE AO AND THE LD. CIT(A) TO PROVE THE EXPORTS AND THE LD. CIT(A) HAS UPHELD THE GENUINENESS OF THE EXPORTS ON THE BASIS OF THESE DOCUMENTS. THEREFORE, WE FIND NOTHING WRONG WITH TH E ORDER OF THE LD. CIT(A) AND CONFIRM THE SAME. 11. IN THE RESULT, BOTH THE REVENUES APPEALS ARE D ISMISSED. 12. C.O.NOS.105 & 106/M/10 : BOTH THE CROSS OBJECTIONS ARE LATE BY 124 DAYS AND AN APPLICATION FOR CONDONATION OF DELA Y HAS BEEN FILED. IN THE APPLICATION THE LD.COUNSEL OF THE ASSESSEE STAT ED THAT ORDERS OF THE CIT(A) WERE RECEIVED AND WERE SHOWN TO THE LEGAL TA X ADVISER BY THE 8 ASSESSEE WHO ADVISED THAT THERE WAS NO NEED TO FILE THE CROSS OBJECTION. HOWEVER, LATER ON ASSESSEE APPOINTED M/S S.K.TULSIAN & CO., ADVOCATES OF KOLKATTA WHO ADVISED THE ASSESSEE TO F ILE THE CROSS OBJECTIONS. THEREFORE, CROSS OBJECTIONS WERE LATE B Y 124 DAYS. SINCE THE ISSUE INVOLVED IN CROSS OBJECTIONS IS ALSO INVO LVED IN THE REVENUES APPEALS, THEREFORE, DELAY SHOULD BE CONDONED. 13. ON THE OTHER HAND, LD.DR OPPOSED THE SUBMISSION S. 14. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE ARE SATISFIED THAT THE ASSESSEE HAS SUFFICIENT CAUSE FOR FILING THE CROSS OBJECTIONS LATE AND, THEREFORE, THE DELAY IS CONDONED. 15. IN BOTH THE CROSS OBJECTIONS ASSESSEE HAS RAISE D SOME ADDITIONAL GROUNDS BUT THE SAME WERE NOT PRESSED AND, THEREFOR E, SAME ARE BEING DISMISSED AS NOT PRESSED. 16. IN BOTH THE CROSS OBJECTIONS THE ISSUE REGARDIN G REOPENING OF THE ASSESSMENT WAS RAISED WHICH IS ALSO NOT PRESSED AND, THEREFORE, GROUNDS RELATING TO THE REOPENING OF THE ASSESSMENT S ARE ALSO DISMISSED AS NOT PRESSED. 17. THE ONLY GROUND IDENTICAL IN BOTH THE CROSS OBJ ECTIONS RAISED IS AS UNDER: 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LEARNED CIT(A) ERRED IN HOLDING THAT 19% OF THE SALES MADE BY THE ASSESSEE TO RUSSIAN PARTIES I.E. RS.11,66,940 FOR A.Y 1998-99 A ND RS.3,73,284 FOR A.Y 2000-01 ARE ON ACCOUNT OF GENUINE EXPORTS OF GO ODS TO RUSSIA AND ARE, ON THE OTHER HAND, ON ACCOUNT OF OVER-INVOICIN G AND IN THAT VIEW, IN DIRECTING THE AO TO TREAT THIS AMOUNT NOT AS BU SINESS INCOME BUT AS INCOME FROM OTHER SOURCES AND ALSO IN DENYING DED UCTION U/S.80HHC OF THE ACT, ON THIS AMOUNT. 18. BEFORE US LD.COUNSEL OF THE ASSESSEE SUBMITTED THAT PRICES AT WHICH GOODS ARE TO BE SOLD IS A MATTER OF NEGOTIATI ONS. HE SUBMITTED 9 THAT, NO DOUBT, VITAGYL TABLETS WERE SOLD TO RUSSIA N PARTIES AT RS.133.42 PER PACK WHICH IS SIMILAR TO THE PRODUCT METROMED WHICH WAS EXPORTED TO GERMANY AT RS.108.63 PER PACK. HE A RGUED THAT LD. CIT(A) HAS MADE ONLY THIS COMPARISON, WHEREAS THE S AME VITAGYL TABLETS WERE EXPORTED TO NIGERIA @ RS.123.64 PER PA CK. THE PRICES DEPEND ON VARIOUS FACTORS LIKE HOW MUCH PRICE THE C USTOMER WOULD BE ABLE TO FETCH IN THE LOCAL MARKET AND IT ALSO DEPEN DS UNDER WHICH BRAND SUCH PRODUCTS ARE TO BE SOLD. HE ARGUED THAT IT IS A UNIVERSAL KNOWLEDGE THAT CERTAIN PATENTED DRUGS ARE SOLD AT E VEN 5/10 TIMES MORE PRICE BECAUSE OF THE BRAND IN COMPARISON TO GE NERIC DRUG. FURTHER, THERE WAS NO EVIDENCE THAT ASSESSEE HAS RE ALLY INFLATED THE PRICES PARTICULARLY AFTER THE ENQUIRIES MADE BY THE ENFORCEMENT DIRECTOR HAD ALREADY BEEN DROPPED. 19. ON THE OTHER HAND, LD.DR STRONGLY SUPPORTED THE ORDER OF THE AO AND THE CIT(A). 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND FORCE IN THE SUBMISSIONS OF THE LD.COUNSEL OF THE A SSESSEE. FIRST OF ALL THE ENQUIRIES AND OBJECTIONS RAISED BY THE ENFORCEM ENT DIRECTOR HAVE ALREADY BEEN DROPPED AS NOTED BY US WHILE ADJUDICAT ING REVENUES APPEALS ABOVE. THE EXPORTS HAVE BEEN ACCEPTED TO BE GENUINE AND, THEREFORE, IN THE ABSENCE OF ANY MATERIAL ON RECORD , IT IS NOT CORRECT TO DISBELIEVE A PARTICULAR PRICE. MOREOVER, IT IS A KN OWN FACT THAT BILLING PRICES OBTAINED BY THE ASSESSEE WOULD DEPEND UPON T HE PRICES WHICH CUSTOMER CAN FETCH IN THEIR RESPECTIVE COUNTRY AND UNDER WHAT BRAND NAME SUCH DRUGS ARE SOLD. FURTHER, THE LD. CIT(A) H AS IGNORED THE FACT 10 THAT TABLETS VITAGYL WHICH WERE SOLD AT RS.133.42 P ER PACK TO RUSSIAN PARTIES WERE SOLD AT RS.123.63 PER PACK TO NIGERIAN PARTIES AND THE DIFFERENT IS VERY NOMINAL. THIS DIFFERENCE COULD NO T HAVE BEEN TAKEN AS INFLATION OF PRICES IN THE ABSENCE OF ANY EVIDENCE FOR THE SAME. THEREFORE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND DELETE THE ADDITION OF RS.11,66,940 FOR A.Y 1998-99 AND RS.3,7 3,284 FOR A.Y 2000-01. THE CROSS OBJECTIONS ARE PARTLY ALLOWED. 22. IN THE RESULT, REVENUES APPEALS ARE DISMISSED AND CROSS OBJECTIONS BY THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 3/3/2011. SD/- SD/- (ASHA VIJAYARAGHAVAN) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 23/3/2011. P/-*