Zeon Lifesciences Ltd., New Delhi V. ITO, New Delhi

ITA 6060/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7287 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 20-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 06-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ATIQ AHMED SENIOR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH D DD D : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT G.D. AGRAWAL, VICE PRESIDENT AND AND AND AND SHRI I.C. SUDHIR SHRI I.C. SUDHIR SHRI I.C. SUDHIR SHRI I.C. SUDHIR, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO S SS S . .. . 6060/DEL/2012 & 6061/DEL/2012 6060/DEL/2012 & 6061/DEL/2012 6060/DEL/2012 & 6061/DEL/2012 6060/DEL/2012 & 6061/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR S SS S : : : : 2008 2008 2008 2008 - -- - 09 & 2009 09 & 2009 09 & 2009 09 & 2009 - -- - 10 1010 10 M/S ZEON LIFESCIENCES M/S ZEON LIFESCIENCES M/S ZEON LIFESCIENCES M/S ZEON LIFESCIENCES LIMITED LIMITED LIMITED LIMITED, ,, , 346, JOSHI ROAD, 346, JOSHI ROAD, 346, JOSHI ROAD, 346, JOSHI ROAD, KAROL BAGH, KAROL BAGH, KAROL BAGH, KAROL BAGH, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 005. 110 005. 110 005. 110 005. PAN : AAACH0860L. PAN : AAACH0860L. PAN : AAACH0860L. PAN : AAACH0860L. VS. VS. VS. VS. INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -18(4), 18(4), 18(4), 18(4), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DINESH GUPTA, CA. RESPONDENT BY : SHRI ATIQ AHMED, SENIOR DR. DATE OF HEARING : 20.06.2016 20.06.2016 20.06.2016 20.06.2016 DATE OF PRONOUNCEMENT : 28.06.2016 28.06.2016 28.06.2016 28.06.2016 ORDER ORDER ORDER ORDER PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP PER G.D. AGRAWAL, VP : :: :- -- - THESE APPEALS BY THE ASSESSEE FOR THE ASSESSMENT Y EAR 2008-09 & 2009-10 ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-XXI, NEW DELHI DATED 18 TH OCTOBER, 2012. 2. THE ONLY GROUND RAISED IN THESE TWO APPEALS BY T HE ASSESSEE IS AGAINST THE DENIAL OF DEDUCTION U/S 80IC OF THE INC OME-TAX ACT, 1961. THE ASSESSING OFFICER HAD DISALLOWED THE DEDUCTION ON THE ONLY GROUND THAT THE RECEIPT IS MAINLY FROM JOB WORK CHARGES WH ICH CANNOT BE CONSIDERED TO BE MANUFACTURING ACTIVITY. 3. AT THE TIME OF HEARING BEFORE US, IT WAS POINTED OUT BY THE LEARNED COUNSEL THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 200 6-07 WHEREIN THE DEDUCTION U/S 80IC WAS DISALLOWED ON THE IDENTICAL GROUND. WE FIND ITA-6060 & 6061/DEL/2012 2 THAT IN ASSESSMENT YEAR 2006-07, VIDE ITA NO.1650/D EL/2010, ORDER DATED 27 TH MARCH, 2015, THE ITAT DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE WITH THE FOLLOWING FINDING :- 7.4 WE FIND FORCE IN THE SUBMISSION OF THE LD AR T HAT EXPLANATION AFTER SECTION 80IA(13) IS NOT APPLICABL E TO SECTION 80IC. THIS EXPLANATION WHICH RELATED TO APPLICABILITY OF SECTION 80IA TO A WORKS CONTRACT, WAS INSERTED BY FINANCE ACT, 2007 W.E.F. 01.04.2000 AND HAS BEEN AMENDED BY FINANCE ACT (NO.2), 2009. WHILE PROVISIONS OF SECTION 80IA(5) AND 80IA(7) TO (12) A RE APPLICABLE TO SECTION 80IC, THE SAID EXPLANATION HA S NOT BEEN MADE APPLICABLE TO SECTION 80IC. THE LEGISLAT URES INTENTION ON APPLICABILITY OF SECTION 80IC TO JOB W ORK CHARGES IS THUS CLEAR. WE FIND THAT IN THE AUDIT R EPORT AS PER THE STATUTE READ WITH SECTION 80IA(7) (FORM NO. 10CCB) W.R.T. THE UNIT/UNDERTAKING NAMELY M/S MAHAAN HEALT HCARE, THE CHARTERED ACCOUNTANTS HAS CLEARLY MENTIONED THA T HE HAS EXAMINED THE BALANCE SHEET, PROFIT AND LOSS ACC OUNT OF THE INDUSTRIAL UNDERTAKING WHICH WERE IN AGREEMENT WITH THE BOOKS OF ACCOUNT MAINTAINED. AS SUCH SEPARATE BOOKS OF ACCOUNT OF THE UNDERTAKING HAVE BEEN MAINTAINED BY THE ASSESSEE COMPANY. UNIT WISE BALANCE SHEET AND PROF IT ACCOUNT WERE FILED VIDE LETTER DATED 15.12.2004 OF THE ASSESSEE. THERE IS NO REQUIREMENT UNDER LAW FOR MAINTAINING SEPARATE BOOKS OF ACCOUNT FOR MANUFACTU RING AND NON-MANUFACTURING ACTIVITIES OF AN UNDERTAKING. WHERE ASSESSEE COMPANY CARRIES ON BOTH MANUFACTURIN G AND NON-MANUFACTURING ACTIVITY IN ITS UNDERTAKING T HE ASSESSING OFFICER OUGHT TO HAVE ALLOWED DEDUCTION U NDER SECTION 80IC OF THE ACT ON SOME LOGICAL, RATIONAL A ND SCIENTIFIC BASIS AS ALL THE APPLICABLE CONDITIONS F OR ALLOWABILITY OF DEDUCTION UNDER SECTION 80IC OF THE ACT HAVE BEEN MET BY THE SAID UNIT OF THE ASSESSEE COMPANY. 7.5 IN VIEW OF THE ABOVE, WE FIND THAT LD.CIT(A) HA S RIGHTLY HELD THAT THE ASSESSEE JOB WORK CHARGES HAV E TO BE TREATED AS MANUFACTURING ACTIVITY, AND IT IS NOT EN VISAGED U/S 80-IC TO MAINTAIN SEPARATE BOOKS OF ACCOUNT FOR MANUFACTURING ON HIS OWN ACCOUNT AND FOR JOB WORK. WHILE AN EXPLANATION HAS BEEN ADDED AFTER SECTION 80-IA(1 3) WHICH STATES THAT NOTHING CONTAINED IN THIS SECTION , I.E., SECTION 80-IA SHALL APPLY IN RELATION TO BUSINESS W HICH IS IN THE NATURE OF WORK CONTRACT ETC. SECTION 80-IC(7) O NLY TALKS ABOUT THE APPLICATION OF SUB-SECTION (5) AND SUB-SE CTION (7) TO (12) OF 80-IA. THUS, IT APPEARS THAT THERE IS N O DENIAL OF ITA-6060 & 6061/DEL/2012 3 DEDUCTION U/S 80-IC IN CASE OF MANUFACTURING ACTIVI TIES IN THE NATURE OF JOB WORKS, WORK CONTRACT ETC. IN THE BACKGROUND OF THE AFORESAID DETAILED DISCUSSIONS AN D PRECEDENTS RELIED UPON BY THE LD.CIT(A) IN HIS ORDE R AS WELL AS BY THE ASSESSEE, AS AFORESAID, WE ARE OF THE VIE W THAT NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD.CIT(A). HENCE, WE UPHOLD THE SAME BY REJECTING THE GROUNDS NO.1, 2 & 3 FILED BY THE REVE NUE IN ITS APPEAL. 4. SINCE THE ISSUE DECIDED BY THE ITAT IN ASSESSEE S OWN CASE IN THE EARLIER YEAR AND FACTS ARE ADMITTEDLY IDENTICAL, WE , RESPECTFULLY FOLLOWING THE ABOVE DECISION OF ITAT IN ASSESSEES OWN CASE, DIRECT THE ASSESSING OFFICER TO ALLOW DEDUCTION U/S 80IC TO TH E ASSESSEE. 5. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 28.06.2016 . SD/- SD/- (I.C. SUDHIR (I.C. SUDHIR (I.C. SUDHIR (I.C. SUDHIR ) )) ) ( (( ( G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL G.D. AGRAWAL ) )) ) JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VK. COPY FORWARDED TO: - 1. APPELLANT : M/S ZEON LIFESCIENCES LIMITED, M/S ZEON LIFESCIENCES LIMITED, M/S ZEON LIFESCIENCES LIMITED, M/S ZEON LIFESCIENCES LIMITED, 346, JOSHI ROAD, KAROL BAGH, NEW DELHI 346, JOSHI ROAD, KAROL BAGH, NEW DELHI 346, JOSHI ROAD, KAROL BAGH, NEW DELHI 346, JOSHI ROAD, KAROL BAGH, NEW DELHI 110 005. 110 005. 110 005. 110 005. 2. RESPONDENT : INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD INCOME TAX OFFICER, WARD- -- -18(4), NEW DELHI. 18(4), NEW DELHI. 18(4), NEW DELHI. 18(4), NEW DELHI. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR