Dy. Commissioner of Income Tax, Circle-1(1), Hyderabad V. M/s. Anu's Laboratories Ltd., Hyderabad

ITA 462/HYD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66093 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 27-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIVEDITA BISWAS
• Assessee Lawyers: C P RAMASWAMY

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO. 462/HYD/2012 ASSESSMENT YEAR: 2006-07 DY. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE 1(1), HYDERABAD VS. M/S ANUS LABORATORIES LTD., RESPONDENT HYDERABAD. (GIR/PAN NO. A-152/AACCA0071G) APPELLANT BY : SMT. NIVEDITA BISWAS RESPONDENT BY : SHRI C.P. RAMA SWAMY DATE OF HEARING : 09/07/2012 DATE OF PRONOUNCEMENT : ORDER PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A)-II, HYDERABAD, DATED 10/01/2012 FOR THE ASSESSMENT YEAR 2006-07. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE AO IN T HE ASSESSMENT ORDER EXCLUDED AN AMOUNT OF RS.1,55,65,290/- CREDITED TO THE PROFIT & LOSS ACCOUNT UNDER THE HEAD OTHER INCOME FOR THE PURPO SE OF DEDUCTION U/S 80-IB AND ALLOWED DEDUCTION U/S.80 IB AT RS.1,06,77 ,088/- AS AGAINST THE AMOUNT OF DEDUCTION OF RS.1,46,06,913/- CLAIMED BY THE ASSESSEE. THE SUM EXCLUDED OF RS.1,55,65,290/- COMPRISES OF : I) EXPORT INCENTIVES - RS.88.40.776/- II) R&D CONSULTANCY - RS.12,22,771/- III)INTEREST RECEIPTS - RS. 2,13,421/- ITA NO. 462/HYD/2012 M/S ANUS LABORATORIES LTD. , 2 IV) AMOUNT RECEIVED FROM INSURANCE COMPANY AGAINST CLAIM FOR LOSS ON MATERIAL - RS.52,88,322/- 3. REGARDING THE FIRST 3 ITEMS VIZ. EXPORT INCENTIV ES, R&D CONSULTANCY & INTEREST RECEIPTS, THE ASSESSEE WITHDREW HIS CLAI M AS THE ISSUE IS AGAINST THE ASSESSEE. 4. REGARDING THE ISSUE OF AMOUNT RECEIVED FROM INSU RANCE COMPANY AGAINST CLAIM FOR LOSS ON MATERIAL, IT WAS SUBMITT ED BEFORE THE CIT(A)THAT DURING THE RELEVANT ASSESSMENT ORDER THE CLAIM FOR THE LOSS OF MATERIAL HAS CRYSTALLIZED AND THE COMPENSATION RECE IVED FROM THE INSURANCE COMPANY HAS BEEN SHOWN AS INCOME. IT WAS ALSO SUBMITTED BEFORE THE CIT(A) THAT SINCE THE LOSS AND CLAIM AGA INST SUCH LOSSES ARE DIRECTLY RELATED TO MANUFACTURING ACTIVITIES OF IND USTRIAL UNDERTAKING THE AMOUNT OF THE SAID CLAIM FORMS PART OF THE PROFIT & GAINS OF THE UNDERTAKING ELIGIBLE U/S.80 IB OF THE ACT. 5. THE CIT(A) FOLLOWING THE DECISION OF THE HONBLE HIGH COURT IN THE CASE OF CIT VS. SPORTKING INDIA LIMITED 324 ITR 283 DELHI HELD THAT THE AMOUNT RECEIVED FROM INSURANCE COMPANY AGAINST CLAI M FOR LOSS OF MATERIAL SHOULD BE TAKEN INTO ACCOUNT WHILE DETERMI NING THE PROFIT & GAINS OF THE UNDERTAKING FOR DEDUCTION U/S.80 IB. 6. AGGRIEVED DEPARTMENT IS ON APPEAL BEFORE US RAIS ING THE FOLLOWING GROUNDS OF APPEAL:- 1. THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS IN LAW. 2. THE LEARNED CIT(A) ERRED IN LAW HOLDING THAT REC EIPT ON ACCOUNT OF INSURANCE CLAIM ON LOSS OF MATERIAL IS DERIVED F ROM INDUSTRIAL UNDERTAKING WHEREAS THE SAID SUM IS NOT DERIVED FOR M THE INDUSTRIAL UNDERTAKING. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERUSED THE RECORD AS WELL AS GONE THROUGH THE ORDERS OF THE AU THORITIES BELOW. WE ARE OF THE OPINION THAT SINCE THE PROVISIONS OF 80 IA & 80 IB ARE ANALOGOUS ITA NO. 462/HYD/2012 M/S ANUS LABORATORIES LTD. , 3 PROVISIONS, THE DECISION GIVEN IN RESPECT OF DEDUCT ION U/S 80IA WOULD APPLY TO THE CLAIM U/S.80IB. WE CONFIRM THE ORDER OF CIT(A) WHEREIN HE HAS FOLLOWED THE DECISION OF THE HONBLE DELHI HIGH COURT 324 ITR 283 DELHI. WE FIND THAT THE ISSUE IS COVERED BY THE DE CISION OF 324 ITR 283 DELHI WHEREIN IT HAS BEEN HELD AS FOLLOWS: MOREOVER, THE SAID RECEIPTS ON ACCOUNT OF INSURANC E CLAIM, IN OUR OPINION, ARE IN THE NATURE OF REIMBURSEMENT OF LOSS ACTUALLY INCURRED BY THE ASSESSEE AS A RESULT OF GOODS DAMAGED BY FIR E AND THERE BEING NO ELEMENT OF PROFIT INVOLVED THEREIN, THE SA ME CANNOT BE TREATED AS ANY INCOME SEPARATELY EARNED BY THE ASSE SSEE SO AS TO EXCLUDE THEM FOR THE PURPOSE OF COMPUTING DEDUCTION UNDER SECTION 80-IA. AS RIGHTLY CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE, ALTHOUGH THE EXPENDITURE INCURRED ON THE COST OF GOODS DAMAGED BY FIRE IS DEBITED IN THE P&L ACCOUNT BY TH E ASSESSEE AND THE INSURANCE CLAIM RECEIVED ON ACCOUNT OF SUCH GOO DS LOST IN FIRE IS CREDITED IN THE P&L A/C AS PER THE GUIDELINE FOR PR OPER PRESENTATION AND DISCLOSURE, THE NET EFFECT IS THAT BOTH THESE T RANSACTIONS GET NULLIFIED HAVING NO BEARING ULTIMATELY ON THE PROFI T SHOWN IN THE P&L ACCOUNT. IN OUR OPINION THE EXCLUSION OF THE AMOUN T OF INSURANCE CLAIM RECEIVED BY THE ASSESSEE AND CREDITED IN THE P&L ACCOUNT FOR COMPUTING DEDUCTION UNDER SECTION 80-IA THUS IS NOT JUSTIFIABLE FROM THIS ANGLE ALSO. 8. IN OUR OPINION, THERE IS NO REASON WHY AMOUNT RE CEIVED FROM THE INSURANCE COMPANY BY THE ASSESSEE COMPANY SHOULD NO T BE TAKEN INTO ACCOUNT IN DETERMINING THE PROFITS AND GAINS OF AN INDUSTRIAL UNDERTAKING OF THE TYPES SPECIFIED UNDER SECTION 80-IA. THEREF ORE, WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS OF APPE AL RAISED BY THE REVENUE. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON (D. KARUNAKARA RAO) (ASHA VIJAYARAGH AVAN) ACCOUNTANT MEMBER JUDICIAL MEM BER ITA NO. 462/HYD/2012 M/S ANUS LABORATORIES LTD. , 4 HYDERABAD, DATED: AUGUST, 2012. KV COPY TO:- 1) DCIT, CIRCLE 1(1), 4 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 2) M/S ANUS LABORATORIES LTD., A-49, MADHURANAGAR, HYDERABAD. 3) THE CIT (A)-II, HYDERABAD 4) THE CIT-1, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD. S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 29/07/12 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/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.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER