DCIT CEN CIR-2, MUMBAI V. MEDIORALS LABORATORIES P. LTD, MUMBAI

ITA 5383/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48984 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-12-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 24-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI SHRI D R JAIN
• Keywords: Block assessment
• Section: 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI R.V. EASWAR, PRESIDENT AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 5383/MUM/2009 (ASSESSMENT YEAR: 2006-07) DCIT, CENTRAL CIRCLE 2 M/S. MEDIORALS LABORATORIES P. LTD. OLD CGO BLDG. ANNEXE 12, GUNBOW STREET, HORNBY VIEW 9TH FLOOR, M.K. ROAD VS. BLDG. FORT, MUMBAI 400001 MUMBAI 400020 PAN - AAACA 5145 M APPELLANT RESPONDENT APPELLANT BY: SHRI V.V. SHASTRI RESPONDENT BY: SHRI D.R. JAIN O R D E R PER T.R. SOOD, A.M. THIS APPEAL FILED BY REVENUE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A), CENTRAL I, MUMBAI DATED 2605.2009. 2. REVENUE HAS RAISED THE FOLLOWING GROUNDS: - I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS EL IGIBLE FOR CLAIMING DEDUCTION U/S. 80IB ON THE PROFITS DERIVED FROM THE WORK/MANUFACTURING GOT DONE THROUGH LEASE AND LICEN CE MANUFACTURERS (LLMS). II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT SALE O F SCRAP IS ELIGIBLE FOR COMPUTATION OF PROFITS FOR THE PURPOSE OF CLAIM ING DEDUCTION U/S. 80IB. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT IDENTIC AL ISSUES CAME BEFORE THE TRIBUNAL FOR A.Y. 2005-06 IN ITA NOS. 59 13 &3915 /MUM/2007 AS WELL AS CROSS OBJECTIONS. BOTH THE ISSUES HAVE B EEN DECIDED IN FAVOUR OF THE ASSESSEE VIDE PARAS 5, 6 & 7, WHICH ARE AS UNDE R: - 5. HAVING GONE THROUGH THE ORDER OF THE LOWER AUTH ORITIES AND THE ORDERS OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR T HE ASSESSMENT YEARS 2001-2002 TO 2003-2004, WE FIND THAT THE IMPU GNED ISSUE ITA NO. 5383/MUM/2009 M/S. MEDIORALS LABORATORIES P. LTD. 2 HAS BEEN WRECKED UP IN ASSESSMENT YEAR 2001-2002 AN D TRIBUNAL HAS ADJUDICATED THE ISSUE IN DETAIL AND HAS GIVEN A FINDING THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80 IB OF THE ACT. THIS ORDER OF THE TRIBUNAL WS FOLLOWED IN SUBSEQUEN T YEARS I.E., ASSESSMENT YEARS 2002-2003 AND 2003-2004 AND DEDUCT ION UNDER SECTION 80IB IN RESPECT OF THE INCOME DERIVED FROM MANUFACTURING ACTIVITIES GOT CARRIED OUT THROUGH LLM WAS ALLOWED. THE RELEVANT OBSERVATION OF THE TRIBUNAL IN THE ASSESSMENT YEAR 2001-2002 ARE AS UNDER: 13 WE HAVE HEARD BOTH THE PARTIES AND HAVE CONSIDE RED THE RIVAL SUBMISSION. AFTER CONSIDERING THE SUBMISSIONS AND VARIOUS OTHER MATERIAL ON RECORD, WE FOUND THAT THE ORDER OF THE LEARNED CIT(A) IS LIABLE TO B E SUSTAINED. WE NOTED THAT SIMILAR DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER WHIL E MAKING BLOCK ASSESSMENT ORDER FOR 1-4-92 TO 19-9-2000. THE ASSESSING OFFICE R REDUCED DEDUCTION U/S. 80IB ON ACCOUNT OF INCOME GENERATED THROUGH MANUFACTURIN G ACTIVITY GOT FROM LLM. THE MATTER REACHED TO THE TRIBUNAL AND THE TRIBUNAL BY FINDING OUT THE FACT IN CASE OF GROUP CASE VIZ., OKASA PVT. LTD. AND OKASA PHARMA P VT. LTD. DECIDED IN IT(SS)A. NO. 259/MUM/2003 IN FAVOUR OF THE ASSESSEE. IN THIS ORDER, IT WAS HELD THAT THE BENEFIT OF DEDUCTION U/S. 80IA WAS AVAILABLE TO THE ASSESSEE ON THE INCOME DERIVED THROUGH LLM. FOLLOWING THIS ORDER OF THE TR IBUNAL IN THE CASE OF OKASA PVT. LTD. AND OKASA PHARMA PVT. LTD. THE APPEAL OF THE ASSESSEE FOR BLOCK PERIOD WAS ALSO ALLOWED BY THE TRIBUNAL IN IT(SS)A. NO.644 /MUM/ 2003 VIDE ORDER DATED 21-11-06. A COPY OF THE ORDER OF THE TRIBUNAL IS PLACED ON RECORD. 6. SINCE THE TRIBUNAL HA TAKEN A PARTICULAR VIEW IN EARLIER YEARS, WE FIND NO REASON TO TAKE A CONTRARY VIEW IN THESE APPEALS. WE, ACCORDINGLY, DECIDE THIS ISSUE IN FAVOUR OF THE ASS ESSEE. WE, THEREFORE, FIND NO INFIRMITY IN THE ORDER OF THE CI T(A) WHO HAS DECIDED THE ISSUE IN CONSONANCE WITH THE ORDER OF T HE TRIBUNAL. 7. IN CROSS OBJECTIONS, THE COMMON ISSUE IS RAISED WITH REGARD TO THE DISALLOWANCE OF CLAIM OF DEDUCTION UNDER SECTIO N 80IB ON SALE OF SCRAPS. THE ISSUE WAS ALSO EXAMINED BY THE TRIBUNAL I EARLIER YEARS AND IT WAS HELD THAT DEDUCTION UNDER SECTION 80IB W ILL BE ALLOWED ON THE SALE OF SCRAP. WE, THEREFORE, FOLLOWING THE ORDER OF THE TRIBUNAL FOR EARLIER YEARS, DECIDE THIS ISSUE IN FA VOUR OF THE ASSESSEE. ACCORDINGLY, THE ORDER OF THE CIT(A) IS S ET ASIDE IN THIS REGARD AND ASSESSING OFFICER IS DIRECTED TO ALLOW T HE CLAIM OF THE ASSESSEE. FOLLOWING THE ORDER WE DECIDE BOTH THE ISSUES AGAIN ST REVENUE. 4. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH MAY 2011. SD/- SD/- (R.V. EASWAR) (T.R. SOOD) PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 27 TH MAY 2011 ITA NO. 5383/MUM/2009 M/S. MEDIORALS LABORATORIES P. LTD. 3 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A), CENTRAL - I, MUMBAI 4. THE CIT, CENTRAL - I, MUMBAI CITY 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.