Hetero Healthcare Ltd., Hyderabad V. DCIT, Central Circle-4, Hyd, Hyderabad

ITA 655/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6095 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 06-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: S RAMA RAO
• Section: 11

Judgement Text

ITA NO 655 OF 2016 HETERO HEALTHCARE LTD HYDERABA D PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.655/HYD/2016 (ASSESSMENT YEAR: 2009-10) M/S. HETERO HEALTHCARE LTD HYDERABAD PAN: AABCH 6890 D VS DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 4 HYDERABAD FOR ASSESSEE : SHRI S. RAMA RAO FOR REVENUE : SMT. SUMAN MALIK, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT (A)-1 2, HYDERABAD, DATED 20.01.2016 DISMISSING THE ASSESSEES APPEAL F OR WANT OF PERSUASION BY THE ASSESSEE AS NONE APPEARED BEFORE THE CIT (A). THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DECIDING THE APPEAL WITHOUT PROVIDING PROPER OPPORTUNITY TO THE APPELLANT. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THAT ALL THE NECESSARY INFORMATION AND EXPLANATIONS WERE FILED AND, THEREFORE, THE APPEAL SHOULD HAVE DATE OF HEARING : 07.03.2017 DATE OF PRONOUNCEMENT : 15.03.2017 ITA NO 655 OF 2016 HETERO HEALTHCARE LTD HYDERABA D PAGE 2 OF 4 BEEN DECIDED BASED ON THE INFORMATION SUBMITTED BEFORE HIM. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN CHARGING TAX AT THE RATE OF 20% OF THE FRINGE BENEFIT VALUE AS AGAINST 5% ADOPTED BY THE APPELLANT. 5. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE APPELLANT IS ENGAGED IN THE BUSINESS OF BRANDED FORMULATIONS AND IS INVOLVED IN MANUFACTURE OF PHARMACEUTICALS AND THAT, THEREFORE, THE TAX LEVIABLE IS ONLY 5% AND NOT 20%. 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 2. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS NOT INTERES TED TO PURSUE GROUNDS OF APPEAL NOS. 2 & 3, THEY ARE ACCORDINGLY REJECTED. 3. AS REGARDS GROUNDS OF APPEAL NO. 4 & 5, BRIEF FA CTS ARE THAT THE ASSESSEE COMPANY, FILED ITS FRINGE BENEFIT TAX RETURN FOR THE A.Y 2009-10 ON 30.09.2009 ADMITTING VALUE OF FRI NGE BENEFITS OF RS.1,23,81,991 ON WHICH FRINGE BENEFIT TAX OF RS .42,08,639 WAS PAID. THE RETURN WAS ACCEPTED BY THE AO. 4. LATER IT WAS FOUND THAT THE VALUE OF FRINGE BENE FIT HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 11 5WG OF THEM I.T. ACT, AS ACCORDING TO THE AO, THE ASSESSEE IS IN THE BUSINESS OF ONLY TRADING IN DRUGS AND PHARMACEUTICA LS AND NOT MANUFACTURING OF DRUGS AND THEREFORE, THE VALUE OF THE FRINGE ITA NO 655 OF 2016 HETERO HEALTHCARE LTD HYDERABA D PAGE 3 OF 4 BENEFIT IS TO BE TAKEN AT 20% OF THE EXPENSES AS AGA INST 5% TAKEN BY THE ASSESSEE. IN REPLY TO THE SHOW CAUSE LETTER ISSUED BY THE ASSESSEE, IT WAS SUBMITTED THAT IT WAS INTO MANUFAC TURING OF PHARMACEUTICALS AND THEREFORE, THE VALUE OF THE FBT @ 5% ONLY SHOULD BE CONSIDERED. AO HOWEVER, OBSERVED THAT THE ASSESSEE IS NOT INVOLVED DIRECTLY IN MANUFACTURING OF PHARMACEU TICALS AND THEREFORE, THE FRINGE BENEFIT VALUE AT 20% IS TO BE CONSIDERED AND COMPUTED THE TAX ACCORDINGLY. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A) ALONG WITH EVIDENCE IN SUPPORT OF ITS C ONTENTION THAT IT IS GRANTED LICENSE TO MANUFACTURE, SALE AND DISTRIB UTE DRUGS. HOWEVER, NONE APPEARED BEFORE THE CIT (A) AND THE C IT (A) AFTER CONSIDERING THE FACT THAT THE ASSESSEE HAS NOT APPE ARED INSPITE OF SEVERAL OPPORTUNITIES GIVEN, HAS DISMISSED THE APPE AL. ON GOING THROUGH THE ORDER OF THE CIT (A), WE FIND THAT THE CIT (A) HAS NOT DISPOSED OF THE APPEAL ON MERITS. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE WAS GRANTED LICENSE TO MANUFACTURE AND TRADE IN PHARMACEUTICALS AND THAT THIS FACT IS ESSENTIAL FOR ADJUDICATION OF THE ISSUE ON MERITS. 6. THE LEARNED DR ALSO HEARD. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD AS WELL AS THE SUBMISSIONS OF THE ASSESSE E, WE ARE OF THE VIEW THAT THE CIT (A) OUGHT TO HAVE DISPOSED OF THE APPEAL ON MERIT. IN VIEW OF THE SAME, WE DEEM IT FIT AND PROP ER TO REMIT THE ISSUE TO THE FILE OF THE CIT (A) FOR RECONSIDERATIO N IN ACCORDANCE ITA NO 655 OF 2016 HETERO HEALTHCARE LTD HYDERABA D PAGE 4 OF 4 WITH THE LAW AND THE ASSESSEE IS DIRECTED TO APPEAR AND COOPERATE WITH THE CIT (A) FOR EARLY DISPOSAL OF ITS APPEAL. 8. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 15 TH MARCH, 2017. VINODAN/SPS COPY TO: 1 M/S. HETERO HEALTHCARE LTD, 7-2-A2, HETERO CORPOR ATE INDUSTRIAL ESTATE, SANATHNAGAR, HYDERABAD 500018 2 DCIT, CENTRAL CIRCLE 4 PONISETT BHAVAN, RAMKOTI H YDERABAD 3 CIT (A)-12 HYDERABAD 4 PR. CIT (CENTRAL) HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER