ACIT 10(1), MUMBAI V. ETHYPHARMA LL P.LTD, MUMBAI

ITA 3497/MUM/2010

• Counselvise Citation: 349719914 RSA 2010
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2012
• Appeal Filed By: Department
• Bench Allotted: J
• Next Hearing Date: 28-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 04-05-2010
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: VISHWAS V MEHENDALE
• Keywords: Business income; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J,MUMBAI BEFORE SHRI P.M. JAGTAP (AM) & SHRI S.S. GODAR A (JM) I.T.A. NO. 3497/MUM/2010 (A.Y. 2006-07) ASST. COMMR. OF INCOME-TAX-10(1), R. NO. 455, AAYKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. VS. M/S. ATHENA DRUG DELIVERY SOLUTIONS PVT. LTD. (FORMERLY KNOWN AS ETHYPHARMA LL PVT. LTD.), FORTUNE-2000, C-1, 2 ND FLOOR, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 051. PAN: AAACE9894R. APPELLANT RESPONDENT APPELLANT BY SHRI D.S. SUNDER SINGH. RESPONDENT BY SHRI VISHWAS V. MEHENDALE. DATE OF HEARING 28-02-2012 DATE OF PRONOUNCEMENT 4 -04-2012 O R D E R PER S.S. GODARA, JM : THE INSTANT APPEAL HAS BEEN PREFERRED BY THE REVENU E AGAINST THE ORDER DATED 19-2-2010 PASSED BY THE LD. CIT(A). 2. IN THE INSTANT APPEAL, THE REVENUE HAS RAISED TH E FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AS WE LL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN ADMITTING ADDITIONAL EV IDENCE IN RESPECT OF THE CLINICAL AND INVESTIGATION PAYMENTS IN VIOLATION OF RULE 46A. 2. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AS WEL L AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN DELETING THE DISALLOWAN CE OF CLINICAL AND INVESTIGATION PAYMENTS OF RS.69,40,613/- U/S.40 (A)(IA) WITHOUT APPRECIATING THAT THE DETAILS OF THE SAID E XPENSES AND THE TDS THEREON WAS NEVER SUBMITTED DURING THE COUR SE OF ASSESSMENT PROCEEDINGS INSPITE OF SPECIFIC QUERY RA ISED IN THIS REGARD. 3. ON THE FACTS AND CIRCUMSTANCE OF THE CASE AS WEL L AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN DIRECTING TO TREAT THE INCOME RS.1,93,976/- U/S.2(24)(X) AS INCOME FROM BUSINESS WITHOUT ITA NO3497/M/2010 ATHENA DRUG DELIVERY SOLUTIONS P.LTD. 2 APPRECIATING THAT THE SAID INCOME WAS RIGHTLY TREAT ED AS INCOME FROM OTHER SOURCES AS THE SAME WAS NOT DERIVED FROM THE BUSINESS ACTIVITY. SINCE GROUND NOS. 4 & 5 ARE GENERAL IN NATURE, THEY ARE NOT ADJUDICATED UPON. BEFORE PROCEEDING FURTHER, IT IS RELEVANT TO MENTIO N HERE THAT THE NAME OF THE ASSESSEE HEREIN STANDS CHANGED TO M/S. ATHENA DRUG DELIVERY SOLUTIONS PVT. LTD. IN THIS REGARD, THE ASSESSEE HAS ALSO FILED AMENDED FORM NO.36 BEFORE U S. WE ADMIT THE SAME. SINCE GROUND NOS. 1 & 2 ARE INTERCONNECTED, THEY AR E DECIDED TOGETHER. GROUND NOS.1 & 2: 3. BRIEF FACTS OF THE CASE THAT IN THE RETURN FILED BY THE ASSESSEE BEFORE THE AO FOR THE ASSESSMENT YEAR 2006-07, AN AMOUNT OF RS.69,40,613/ - WAS CLAIMED AS CLINICAL INVESTIGATION INCURRED ON ACCOUNT OF OUTSOURCING OF CLINICAL STU DY BY THE ASSESSEE. HOWEVER, THE SAID AMOUNT WAS NOT ALLOWED BY THE AO ON THE GROUND THAT PERIOD WISE DETAILS REGARDING THE PAYMENTS MADE AFTER DEDUCTING TDS WERE NOT FILED. THE AO PASSED T HE SAID ORDER ON 4-12-2008. 4. AGGRIEVED BY THE SAID ORDER, THE ASSESSEE PREFER RED AN APPEAL BEFORE THE LD. CIT(A). THE ASSESSEE ALSO FILED AN APPLICATION UNDER RULE 46 OF THE I.T. RULES PRAYING FOR LEADING ADDITIONAL DOCUMENTARY EVIDENCE IN SUPPORT OF THE SAID CLAIM. IN APPEAL, THE LD. CIT(A) HAS ALLOWED THE SAID APPLICATION ACCEPTING THE PRAYER FOR ADMISSION OF A DDITIONAL EVIDENCE. THEREFORE, THE LD. CIT(A) CAME TO THE CONCLUSION THAT THE ASSESSEE HAD FILED RELEVANT DETAILS/LEDGER ACCOUNTS SHOWING COMPLIANCE OF TDS PROVISIONS. THE LD. CIT(A) PASSED THE SAID ORDER ON 25-2-2010. IT IS AGAINST THIS ORDER THAT THE REVENUE HAS FILED THE INSTANT APPEAL CHALLENGING THE ADMISSION OF ADDITIONAL EVIDENCE AS WELL AS THE SUB STANTIVE RELIEF OF ACCEPTING THE CLAIM IN GROUND NOS.1 & 2 RESPECTIVELY IN THE INSTANT APPEAL . IN SUPPORT OF THE APPEAL, THE LD. DR VEHEMENTLY AR GUED THAT IT WAS FOR WANT OF DETAILS THAT THE AO DISALLOWED THE CLAIM MADE BY THE ASSESSEE. AMPLE OPPORTUNITIES WERE GRANTED BY THE AO. STILL, NO CLARIFICATION ETC. HAD BEEN OFFERED BY TH E ASSESSEE. HOWEVER, THE LD. CIT(A) HAD ACCEPTED THE ADDITIONAL EVIDENCE APPLICATION WITHOUT FOLLOWI NG THE DUE PROCEDURE ENSHRINED IN THE RULES. IF AT ALL, THE LD. CIT(A) HAD TO ACCEPT THE PLEA FO R ADMISSION OF ADDITIONAL EVIDENCE, HE SHOULD HAVE ITA NO3497/M/2010 ATHENA DRUG DELIVERY SOLUTIONS P.LTD. 3 REMITTED THE MATTER BACK TO THE AO. THEREFORE, HE P RAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE. MATTER BE REMITTED TO THE AO FOR VERIFICATION OF CO MPLIANCE OF TDS PROVISIONS. ON THE OTHER HAND, THE LD. AR, IN SUPPORT OF THE C LAIM OF THE ASSESSEE, HAS ARGUED THAT RECORD OF THE PAPER BOOK PARTICULARLY PAGES 6-18 DU LY PROVES HAT THE TDS PROVISIONS HAD BEEN DULY COMPLIED WITH BY THE ASSESSEE. FURTHER, HE ALS O REFERRED TO PAGES 33-40 TO CONTEND THAT IT WAS ONLY THIS RECORD THAT HAD BEEN LED IN ADDITIONA L EVIDENCE WHICH WAS AS PER RULE 46A OF THE RULES. ACCORDINGLY, HE PRAYED THAT THE INSTANT GROU NDS BE REJECTED AS THE LD. CIT(A) PASSED THE IMPUGNED ORDER STRICTLY IN CONFORMITY WITH LAW. 5. WE HAVE HEARD BOTH THE LD. REPRESENTATIVES. ALSO GONE THROUGH THE RECORD. WE FIND THAT ALTHOUGH THE LD. CIT(A) HAS ACCEPTED THE ADDITIONAL EVIDENCE APPLICATION KEEPING IN MIND THE RELEVANT LAW BUT, IN OUR OPINION, ENDS OF JUSTICE W OULD BE MET IF THE PRAYER OF THE LD. DR IS ACCEPTED BY REMITTING THE MATTER BACK TO THE AO SO AS TO VERIFY THE ASSESSEE HAD IN FACT COMPLIED WITH THE TDS PROVISIONS OF THE I.T. ACT, 1961. AC CORDINGLY, TO THIS EXTENT ONLY, WE SET ASIDE THE IMPUGNED ORDER OF LD. CIT(A). DIRECT THE AO, PARTI CULARLY IN VIEW OF THE FACT THAT THE LD. CIT(A) BEFORE ACCEPTING THE ADDITIONAL EVIDENCE APPLICATIO N DID NOT REMAND THE MATTER BACK TO THE AO FOR VERIFICATION OF THE PAYMENTS MADE UNDER THE TDS PROVISIONS, TO CHECK OUT WHETHER ACTUAL PAYMENTS UNDER THE TDS PROVISIONS HAVE BEEN MADE O R NOT. IF IT IS PROVED BY THE ASSESSEE THAT COMPLIANCE HAS BEEN MADE, THE CLAIM WOULD STAND ACC EPTED. GROUND NO.3: 6. THE NECESSITY FOR THE REVENUE TO RAISE THE INSTA NT GROUND IS THAT BEFORE THE AO, THE ASSESSEE HAD FAILED TO CONTRIBUTE TOWARDS PROVIDENT FUND FOR THE MONTHS OF JULY AND OCTOBER CONCERNED. SINCE THE SAME HAD BEEN PAID AFTER THE D UE DATE PRESCRIBED, THEREFORE, THE AO TREATED THE SAID AMOUNT OF RS.1,93,976/- AS INCOME FROM OT HER SOURCES. HOWEVER, THE LD. CIT(A) ACCEPTED THE PLEA OF THE A SSESSEE ON THE GROUND THAT SINCE THE DEDUCTION OF THE AMOUNT PAID [TREATED AS INCOME U/S .2(24)(X)], IT HAD TO BE ALLOWED UNDER THE HEAD BUSINESS U/S. 36(1))(VA). HENCE LIABLE TO BE ASSESSED UNDER THE HEAD BUSINESS INCOME. THE LD. DR IN SUPPORT OF THE GROUND HAS CONTENDED THAT SINCE THE AMOUNT WAS PAYABLE ON BEHALF OF THE ASSESSEE, THEREFORE, IN THE ABSENCE O F ANY PAYMENT, IT HAD TO BE TREATED AS INCOME FROM OTHER SOURCES. THEREFORE, THE ORDER OF THE LD . CIT(A) TO THIS EFFECT BE SET ASIDE. ON THE OTHER HAND, THE LD. AR FOR THE ASSESSEE HAS SUBMITTED THAT THE SAID AMOUNT STOOD PAID WITHIN THE TIME LIMIT PRESCRIBED UNDER THE GR ACE PERIOD CLAUSE. MEANING THEREBY THAT THE ITA NO3497/M/2010 ATHENA DRUG DELIVERY SOLUTIONS P.LTD. 4 SAID PAYMENT ON BEHALF OF THE ASSESSEE HAD TO BE TR EATED WELL WITHIN TIME. IF THAT IS SO, IN THE OPINION OF THE LD. AR, IT COULD NOT BE TREATED AS INCOME FROM OTHER SOURCES. 7. AFTER HEARING BOTH THE LD. REPRESENTATIVES AND I N VIEW OF THE STATEMENT OF THE AR TO THE EFFECT THAT THE SAID PAYMENT OF PF DUES HAD BEEN MA DE WELL WITHIN TIME OF THE GRACE PERIOD, WE DIRECT THE AO TO AGAIN VERIFY THE SAID FACTUM. IT I S WELL SETTLED LAW THAT PAYMENT WITHIN GRACE PERIOD IS ALWAYS TREATED AS VALID PAYMENT OF PF DUE S. ACCORDINGLY, THE AO SHALL VERIFY THE SAID FACTUM. IF IT COMES OUT THAT THE ASSESSEE HAD MADE BEFORE THE EXPIRY OF THE GRACE PERIOD CONCERNED, THE ORDER OF LD. CIT(A) IN THIS REGARD W OULD STAND UPHELD. 8. IN THE RESULT, THE INSTANT APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 4 TH DAY OF APRIL, 2012. SD/- SD/- (P.M. JAGTAP) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER MUMBAI: 4 TH APRIL , 2012. COPY TO : 1. DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-21,MUMBAI. 4 CIT, MC-X,MUMBAI. 5.DR,J BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST. REGISTRAR, ITAT, MUMBAI. PS