M/s. Ranbaxy Laboratories Ltd., New Delhi V. The Additional Commissioner of Income Tax, Range-15, New Delhi

ITA 3338/DEL/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8193 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 14-09-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 01-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Earning of tax free income; Bad and doubtful debts; Revised return
• Section: 143(3); 14A; 144

Judgement Text

ITA NO, 3338 AND 3654/DEL/13 ASSESSMENT YEAR: 2007-08 PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD A BENCH, AHMEDABAD [CORAM: PRAMOD KUMAR AM AND RAJPAL YADAV JM] ITA NO.3338/DEL/13 ASSESSMENT YEAR: 2007-08 RANBAXY LABORATORIES LIMITED ........... APPELLANT (NOW MERGED WITH SUN PHARMACEUTICAL INDUSTRIES LIMI TED SPARCL, TANDALJA, VADODARA 390 020 [PAN: AAACRO127N] VS ADDITIONAL COMMISSIONER OF INCOME TAX RANGE 15, NEW DELHI ..........RESPON DENT ITA NO. 3654/DEL/13 ASSESSMENT YEAR: 2007-08 DEPUTY COMMISSIONER OF INCOME TAX RANGE 15 (1), NEW DELHI .........APP ELLANT VS RANBAXY LABORATORIES LIMITED ..........R ESPONDENT (NOW MERGED WITH SUN PHARMACEUTICAL INDUSTRIES LIMI TED SPARCL, TANDALJA, VADODARA 390 020 [PAN: AAACRO127N] APPEARANCES BY S N SOPARKAR FOR THE ASSESSEE APARNA AGRAWAL FOR THE ASSESSING OFFICER DATES OF HEARING : MARCH 13, 2018 DATE OF PRONOUNCEMENT : JUNE 8, 2018 O R D E R PER PRAMOD KUMAR, AM: 1. THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORD ER DATED 18 TH MARCH 2013 PASSED BY THE CIT(A) IN THE MATTER OF ASSESSMENT UNDER SECTIO N 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 2007-08. AS THESE APPEALS PERTA IN TO THE SAME ASSESSEE, INVOLVE SOME INTERCONNECTED ISSUES AND WERE HEARD TOGETHER, THES E TWO APPEALS ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. 2. WE WILL FIRST TAKE UP THE APPEAL FILED BY THE AS SESSEE. ITA NO, 3338 AND 3654/DEL/13 ASSESSMENT YEAR: 2007-08 PAGE 2 OF 3 3. GROUND NO. 1 IS GENERAL IN NATURE AND DOES NOT C ALL FOR ANY SPECIFIC ADJUDICATION BY US. IT IS, ACCORDINGLY, DISMISSED AS SUCH. 4. IN THE SECOND GROUND OF APPEAL, THE ASSESSEE HAS RAISED GRIEVANCE AGAINST LEARNED CIT(A)S SUSTAINING THE DISALLOWANCE OF RS 2,59,01 ,854 UNDER SECTION 14A READ WITH RULE 8D. 5. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THE AC TUAL TAX EXEMPT INCOME IN THIS CASE IS ONLY RS 8,395 AND, IN THE LIGHT OF HONBLE DELHI HI GH COURTS JUDGMENT IN THE CASE OF JOINT INVESTMENTS PVT LTD VS CIT [(2015) 372 ITR 694 (DEL )], THE DISALLOWANCE UNDER SECTION 14A CANNOT EXCEED THE TAX EXEMPT INCOME ITSELF. LEARNED DEPARTMENTAL REPRESENTATIVE, NEVERTHELESS, RELIED UPON THE ORDERS OF THE AUTHORI TIES BELOW. 6. RESPECTFULLY FOLLOWING THE VIEWS EXPRESSED BY HO NBLE DELHI HIGH COURT, IN THE CASE OF JOINT INVESTMENTS (SUPRA), AND HAVING NOTED THAT THERE ARE NO DECISIONS CONTRARY THERETO BY HONBLE JURISDICTIONAL HIGH COURT, WE RESTRICT THE DISALLOWANCE UNDER SECTION 14A TO THE AMOUNT OF ACTUAL INCOME I.E. RS 8,395. LEARNED COUN SEL FOR THE ASSESSEE FAIRLY SUBMITS THAT LOOKING TO THE SMALLNESS OF THIS AMOUNT, HE WOULD N OT PRESS HIS GRIEVANCE FURTHER AND OTHER LEGAL OBJECTIONS TO THE AFORESAID DISALLOWANCE ARE NOT, THEREFORE, REQUIRED TO BE ADJUDICATED UPON BY US. 7. GROUND NO. 2 IS THUS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. 8. IN GROUND NO. 3, THE ASSESSEE HAS RAISED GRIEVAN CE AGAINST LEARNED CIT(A) UPHOLDING THE DISALLOWANCE OF RS 2,77,56,788 IN RESPECT OF RA ISING LOAN AMOUNT TO US $ 440,000,000 THROUGH ISSUE OF ZERO COUPON FOREIGN CURRENCY OPTIO NALLY CONVERTIBLE BONDS. 9. LEARNED COUNSEL SUBMITS THAT, IN VIEW OF THE REL IEF GRANTED BY A COORDINATE BENCH OF THIS TRIBUNAL IN THE ASSESSMENT YEAR 2007-07 ON THE SAME ISSUE, HE DOES NOT WISH TO PRESS THIS GRIEVANCE. 10. GROUND NO. 3 IS THUS DISMISSED AS NOT PRESSED. 11. IN GROUND NO. 4, THE ASSESSEE IS AGGRIEVED OF T HE LEARNED CIT(A) UPHOLDING THE DISALLOWANCE OF RS 2,73,29,462 BEING DEFERRED EMPLO YEES COMPENSATION DEBITED TO THE PROFIT AND LOSS ACCOUNT PURSUANT TO COMPANYS EMPLOYEE STO CK OPTION SCHEME (ESOP). 12. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THIS ISSUE IS NOW SQUARELY COVERED, BY A DECISION OF THE COORDINATE BENCH IN ASSESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, WHEREIN, FOLLOWING THE SPECIAL BEN CH DECISION IN THE CASE OF BIOCON LTD VS DCIT [(2004) 144 ITD SB 21] AND HONBLE MADRAS HIGH COURT DECISION IN THE CASE OF CIT VS PVP VENTURES LIMITED [(2012) 23 TAXMANN.COM 268 (MAD)], SIMILAR DISALLOWANCE WAS DELETED. WE SEE NO REASONS TO TAKE ANY OTHER VIEW O F THE MATTER THAN THE VIEW SO TAKEN BY THE COORDINATE BENCH. RESPECTFULLY FOLLOWING THE SAME, WE DELETE THIS DISALLOWANCE AS WELL. 13. GROUND NO. 4 IS THUS ALLOWED. 14. IN GROUND NOS, 5,6,7 AND 8, GRIEVANCE OF THE AS SESSEE IS THAT THE CIT(A) DECLINED TO ADMIT THE GRIEVANCES, WITH RESPECT TO EXCHANGE FLUC TUATION GAINS ON ECB AMOUNTING TO RS ITA NO, 3338 AND 3654/DEL/13 ASSESSMENT YEAR: 2007-08 PAGE 3 OF 3 13,01,52,868 AND GAINS OF RS 5,08,56,719 ON HEDGING CONTRACTS BEING TREATED AS INCOME AND IN NOT REDUCING THE SUM OF RS 33,00,00,000 WITHDRAW N FROM PROVISION FOR BAD AND DOUBTFUL DEBTS FOR COMPUTING BOOK PROFIT UNDER SECTION 115J B, ON THE GROUND THAT THE ASSESSEE HAD NOT MADE THESE CLAIMS BY WAY OF REVISED RETURNS. 15. LEARNED REPRESENTATIVES FAIRLY AGREED THAT THIS TRIBUNAL HAD POWERS TO ADMIT THESE GRIEVANCES AND DIRECT THE CIT(A) TO DECIDE THE SAME ON MERITS, AND THAT IT IS A FIT CASE TO DO SO. WITH THE CONSENT OF THE PARTIES, THEREFORE, THE SE GRIEVANCES ARE REMITTED TO THE FILE OF THE CIT(A) FOR ADJUDICATION ON MERITS, IN ACCORDANCE WI TH THE LAW, AFTER GIVING ONE MORE OPPORTUNITY OF HEARING AND BY WAY OF A SPEAKING ORD ER. ORDERED, ACCORDINGLY. 16. GROUND NOS. 5,6,7 AND 8 ARE THUS ALLOWED FOR ST ATISTICAL PURPOSES. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED IN THE TERMS INDICATED ABOVE. 18. IN THE APPEAL FILED BY THE ASSESSING OFFICER, O NLY EFFECTIVE GRIEVANCE IS AGAINST LEARNED CIT(A)S DELETING THE DISALLOWANCE OF RS 35 LAKHS ON ACCOUNT OF CONTRIBUTION TO RANBAXY COMMUNITY HEALTHCARE SOCIETY AND OF RS 20 L AKHS TO RANBAXY SCIENCE FOUNDATION. 19. LEARNED REPRESENTATIVES FAIRLY AGREE THAT THIS ISSUE IS ALSO COVERED BY THE DECISIONS OF THE COORDINATE BENCHES IN THE ASSESSMENT YEARS 2005 -06 AND 2006-07 IN ASSESSEES OWN CASE. THE COPIES OF THESE DECISIONS WERE ALSO PLACED BEFO RE US. NO REASONS ARE POINTED OUT TO US FOR MAKING ANY DEVIATION FROM THESE JUDICIAL PRECEDENTS . RESPECTFULLY FOLLOWING THE SAME, WE UPHOLD THE RELIEF GRANTED BY THE CIT(A) AND DECLINE TO INTERFERE IN THE MATTER. 20. IN THE RESULT, THE APPEAL FILED BY THE ASSESSIN G OFFICER IS DISMISSED. 21. TO SUM UP, WHILE THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE, THE APPEAL OF THE ASSESSING OFFICER IS DISMI SSED. PRONOUNCED IN THE OPEN COURT TODAY ON THE 8 TH DAY OF JUNE, 2018. SD/- SD/- RAJPAL YADAV PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD, DATED THE 8 TH DAY OF JUNE, 2018 COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) CIT (4) CIT(A) (5) DR (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD