M/S Brooks Laboratories Ltd, V. Income Tax Officer, Panchkula

ITA 877/CHANDI/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5301 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 01-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J S KAHLON
• Assessee Lawyers: A K JINDAL
• Keywords: Business income; Capital receipt; Set aside
• Section: 80IB; 250; 80IC

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH A , CHANDIGARH , !' #! $ % , &' BEFORE: SH.SANJAY GARG, JM & SMT.ANNAPURNA GUPTA, A M ./ ITA NO.877/CHD/2016 / ASSESSMENT YEAR : 2011-12 M/S BROOKS LABORATORIES LTD., VILL. KISHANPURA, LALAGARH ROAD, BADDI, DISTT. SOLAN (H.P.) THE INCOME TAX OFFICER, WARD 4, PANCHKULA. ./PAN NO: AACCB5316P /APPELLANT /RESPONDENT /ASSESSEE BY : SHRI A.K.JINDAL, CA ! / REVENUE BY : SHRI J.S. KAHLON, SR. DR '# $ /DATE OF HEARING : 23.07.2018 %&'(# /DATE OF PRONOUNCEMENT : 18.10.2018 &( /ORDER PER ANNAPURNA GUPTA, A.M . : THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), PANCHKULA IN SHORT CIT (APPEALS) DATED 2 6.5.2016 PASSED U/S 250 (6) OF THE INCOME TAX AT, 1961 (HERE INAFTER REFERRED TO AS ACT) 2 THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT ON THE BASIS OF FACTS & CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN UPHOLDING ADDITION OF RS.8,24,841/- ON ACCOUNT OF INTEREST INCOME TREATIN G THE SAME AS INCOME FROM OTHER SOURCES WHICH IS HIGHLY UNJUSTIFIED AND UNCALLED FOR. 2. THAT ON THE BASIS OF FACTS & CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) HAS ERRED IN UPHOLDING ADDITION OF RS. 2, 39,492/- ON ACCOUNT OF EXCISE DUTY REFUND TREATING THE SAME AS 2 INCOME FROM OTHER SOURCES WHICH IS HIGHLY UNJUSTIFIED AND UNCALLED FOR. 3. THAT ON THE BASIS OF FACTS & CIRCUMSTANCES OF THE CASE, THE LD. CIT (A) HAS ERRED IN UPHOLDING ADDITION OF RS. 72,523/- ON ACCOUNT OF PRODUCT APPROVAL TREATING THE SAME AS INCOME FROM OTHER SOURCES WHICH IS HIGHLY UNJUSTIFIED AND UNCALLED FOR. 4. THAT ON THE BASIS OF FACTS & CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN NOT ALLOWING DEDUCTION U /S. 80-IC ON INTEREST INCOME, EXCISE DUTY REFUND AND PR ODUCT APPROVAL WHICH IS HIGHLY UNJUSTIFIED AND UNCALLED FOR. 5. THAT THE APPELLANT CRAVES LEAVE FOR ANY ADDITION , DELETION OR AMENDMENT IN THE GROUNDS OF APPEAL ON O R BEFORE THE DISPOSAL OF THE SAME. 3. THE ASSESSEE IN THE PRESENT APPEAL HAS CHALLENGE D THE ACTION OF THE CIT(APPEALS) IN UPHOLDING THE FOLLOWI NG ADDITIONS MADE BY THE ASSESSING OFFICER BY TREATIN G THEM AS INCOME FROM OTHER SOURCE AND THEREBY DENYING DEDUCT ION U/S 80IC ON THE SAME: 1) INTEREST INCOME RS.8,24,841/- 2) EXCISE DUTY REFUND RS.2,39,492/- 3) PRODUCT APPROVAL RS.72,523/- 4. THE FACTS RELATING TO THE CASE ARE THAT THE ASSE SSEE HAD TREATED THE ABOVE INCOME AS EXEMPT U/S 80IC OF THE ACT. THE ASSESSING OFFICER DENIED THE ASSESSEES CLAIM HOLDI NG THAT SUCH INCOME EARNED WAS NOT FROM MANUFACTURING ACTIV ITY BUT CONSTITUTED INDEPENDENT SOURCE OF INCOME BEYOND THE FIRST DEGREE NEXUS BETWEEN PROFITS AND INDUSTRIAL UNDERTA KING. HE, THEREFORE, TREATED THE SAID INCOMES AS TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCE ON WHICH DEDUCTION U/ S 80IC OF THE ACT WAS NOT ALLOWABLE AND MADE ADDITION ON T HE SAME TO THE INCOME OF THE ASSESSEE. 3 5. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD.CIT(APPEALS) WHERE THE ASSESSEE CONTENDED THAT T HE ALL INCOMES WERE DERIVED/RELATED TO THE MANUFACTURING A CTIVITY OF THE ASSESSEE AND WERE THUS ELIGIBLE FOR DEDUCTIO N U/S 80IC. THE CONTENTION OF THE ASSESSEE DID NOT FIND F AVOUR WITH THE LD.CIT(APPEALS) WHO UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER. 6. BEFORE US, LD. COUNSEL FOR ASSESSEE REITERATED T HE CONTENTIONS MADE BEFORE THE CIT(APPEALS). TAKING F IRST THE ISSUE OF INTEREST INCOME EARNED OF RS.8,24,841/-, L D. COUNSEL FOR ASSESSEE SUBMITTED THAT THE SAME WAS ON ACCOUNT OF INTEREST RECEIVED FROM THE BANK ON ACCOU NT OF MARGIN MONEY KEPT WITH THE BANK IN THE FORM OF FIXE D DEPOSIT AS SECURITY AT THE TIME OF SANCTION OF VARIOUS CRED IT FACILITIES LIKE LETTER OF CREDIT AND BANK GUARANTEE. OUR ATTEN TION WAS DRAWN IN THIS REGARD TO THE COPY OF BALANCE SHEET O F THE ASSESSEE RELATING TO THE IMPUGNED YEAR PLACED BEFOR E US IN THE PAPER BOOK AT PAGES 17 TO 48. DRAWING OUR ATTE NTION TO THE SCHEDULE-VII OF THE BALANCE SHEET CONTAINING DE TAILS OF CURRENT ASSETS AT PAGE NO.26, IT WAS POINTED OUT TH AT THE SAID DETAIL FOUND MENTION OF FDRS BEING MARGIN MONE Y OF RS.60 LACS AND FIXED DEPOSIT AGAINST BANK GUARANTEE OF RS.99 LACS. OUR ATTENTION WAS ALSO DRAWN TO THE NOTES ON ACCOUNTS FORMING PART OF THE BALANCE SHEET AT PAGE NO.43 AND TO POINT NO.6 OF THE NOTES MENTIONING THE FIXED DEPOSITS BEI NG PLEDGED AS MARGIN MONEY WITH BANK. THE SAID NOTE RE ADS AS UNDER: 4 POINT NO.6 FIXED DEPOSITS WITH BANK OF RS.60,99,000.00. PREVIOUS YEAR RS.78,42,256.00) AS PLEDGED AS MARGIN MONEY WITH BANKS. 7. LD. COUNSEL FOR THE ASSESSEE STATED THAT CLEARLY IT WAS NOT INVESTMENT OF SURPLUS MONEY BUT WAS A BUSINESS INVESTMENT AND, THEREFORE, THE INTEREST EARNED THER EON WAS DIRECTLY RELATED TO THE MANUFACTURING ACTIVITIES OF THE ASSESSEE AND THUS TAXABLE AS BUSINESS INCOME ELIGIB LE FOR DEDUCTION U/S 80IC OF THE ACT. RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS IN SUPPORT OF HIS ABOVE CONTENT IONS: 1) CIT VS. JAGDISH PRASAD M. JOSHI, 318 ITR 420 (BOM) 2) CIT & ANR. VS. HAJEE JAFFAR SHARIFF (2010) 40 DT R 81 3) CIT VS. NAGPUR ENGG. CO. LTD., 245 IUTR 806 4) DCIT VS. TRANSPOWER PVT. LTD.,80 ITD 001 8. ALTERNATIVELY, THE ASSESSEE CONTENDED THAT THE D ENIAL OF DEDUCTION U/S 80IC SHOULD IN ANY CASE BE RESTRICTED TO THE NET INTEREST INCOME EARNED AFTER SETTING OFF INTERE ST EXPENSES INCURRED ON ACCOUNT OF THE SAME. AS FAR THE CLAIM O F DEDUCTION U/S 80IC ON THE EXCISE DUTY REFUND OF RS.2,39,493/-, LD. COUNSEL FOR ASSESSEE CONTENDED T HAT THE ISSUE NOW STOOD SETTLED IN FAVOUR OF THE ASSESSEE B Y THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT,JAMMU & ANR VS M/S SHREE BALAJI ALLOYS IN CIVIL APPEAL NO.10061 OF 2001 DT.19-04-2016 ,CIT VS M/S MEGHALYA STEELS 383 ITR 217 (SC) & THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS DHARAMPAL PREMCHA ND 317 ITR 353(DEL) ,SLP AGAINST WHICH FILED BY THE DEPART MENT WAS 5 DISMISSED BY THE SUPREME COURT. IT WAS POINTED OUT THAT IT IS NOW SETTLED ,BY VIRTUE OF THE AFORESAID DECISION S, THAT THE EXCISE DUTY REFUND WAS A CAPITAL RECEIPT NOT EXIGIB LE TO TAX AND ALTERNATELY WAS TO BE TREATED AS PROFITS DERIVE D FROM BUSINESS ,THUS ELIGIBLE FOR DEDUCTION U/S 80IB OF T HE ACT. REGARDING THE CLAIM OF 80IC ON THE PRODUCT APPROVAL FEE OF RS.72,523/- RECEIVED BY THE ASSESSEE, LD. COUNSEL F OR ASSESSEE CONTENDED THAT THE ASSESSEE IS ENGAGED IN THE MANUFACTURING OF PHARMACEUTICALS AND FOR EVERY PROD UCT APPROVAL HAS TO BE OBTAINED FROM DRUG AUTHORITIES. IT WAS POINTED THAT THE IMPUGNED FEES EARNED BY THE ASSESS EE REPRESENTED EXCESS AMOUNT RECOVERED FROM PARTIES ON ACCOUNT OF GETTING THE PRODUCT APPROVED FROM DRUG AUTHORITIES. IT WAS CONTENDED THAT PRODUCT APPROVA L WAS A REGULAR REQUIREMENT BEFORE THE START OF MANUFACTURI NG OF A PRODUCT AND THUS THE FEES EARNED WAS DIRECTLY RELAT ED TO THE MANUFACTURING ACTIVITIES CARRIED OUT BY THE ASSESSE E AND THUS ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. 9. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORD ER THE CIT(APPEALS). DRAWING OUR ATTENTION TO THE FINDING OF THE CIT(APPEALS) LEADING TO THE DISALLOWANCE OF INTERES T ON THE INTEREST INCOME EARNED, IT WAS POINTED OUT THAT THE ASSESSEE HAD ITSELF NOT CLAIMED IDENTICAL DEDUCTION IN THE P RECEDING ASSESSMENT YEAR I.E. 2010-11 AND THAT INTEREST INCO ME EARNED WAS A STEP REMOVED FROM THE BUSINESS OF INDU STRIAL UNDERTAKING AND THUS COULD NOT SAID TO BE INCOME D ERIVED 6 FROM INDUSTRIAL UNDERTAKING. OUR ATTENTION WAS DRAW N TO PARA 6.2 OF THE CIT(APPEALS) ORDER AS UNDER: 6.1 REGARDING INTEREST INCOME OF RS.8,24,841/-, IT IS NOTED THAT SUCH INTEREST INCOME HAS BEEN EARNED ON FIXED DEPOSITS WITH THE BANK. SUCH INTEREST INCOME WAS EX CLUDED FROM CLAIM OF DEDUCTION BY THE APPELLANT ITSELF IN THE PRECEDING ASSESSMENT YEAR 2010-11. HOWEVER, DURING TH E YEAR DEDUCTION U/S 80IC HAS BEEN CLAIMED ON THE INT EREST INCOME. THE INTEREST INCOME IS ON ACCOUNT OF FIXED DEPOSITS WITH THE BANK WHICH IS A STEP REMOVED FROM THE BUSINESS OF THE INDUSTRIAL UNDERTAKING AS DECIDED B Y HON'BLE SUPREME COURT IN THE CASE OF PANDIAN CHEMIC ALS (SUPRA). SO, THE INTEREST EARNED ON THE FIXED DEPOS ITS MADE WITH THE BANKS IS NOT AN INCOME 'DERIVED FROM' THE INDUSTRIAL UNDERTAKING WHICH IS BASICALLY THE PROFIT 'ATTRIBUTAB LE TO' THE INDUSTRIAL UNDERTAKING. SO, THE INTEREST INCOME OF RS.8,24,841/- EARNED ON THE FIXED DEPOSITS IS THE I NCOME WHICH IS BEYOND THE FIRST DEGREE OF THE MANUFACTURIN G ACTIVITY OF THE APPELLANT. THEREFORE, THE CLAIM OF DEDUCTION U/S 80IC ON INTEREST INCOME OF RS.8,24,841/- IS NOT ALLOWED. 10. AS FOR THE EXCISE DUTY REFUND IT WAS POINTED TH AT THE SAME WAS IN THE NATURE OF INCENTIVES/REBATE ON PURC HASES AND, THEREFORE, WAS NOT IN THE NATURE OF PROFIT DER IVED FROM MANUFACTURING ACTIVITY OF THE INDUSTRIAL UNDERTAKIN G. OUR ATTENTION WAS DRAWN TO THE FINDINGS OF THE CIT(APPE ALS) TO PARA 6.3 AND 6.4 OF THE ORDER AS UNDER: REGARDING THE EXCISE DUTY REFUND OF RS.2,39.4937-, I T IS NOTED THAT THE SAME IS IN THE NATURE OF REFUND OF E XCISE DUTY PAID ON PURCHASE OF RAW MATERIAL. THIS IS IN THE NATU RE OF INCENTIVE/REBATE ON THE PURCHASES WHICH CANNOT CONS TITUTE AS PROFIT DERIVED FROM THE MANUFACTURING ACTIVITY O F THE INDUSTRIAL UNDERTAKING. I AM IN AGREEMENT WITH THE AO'S RELIANCE ON THE JUDGMENT OF HON'BLE SUPREME COURT I N THE CASE OF LIBERTY INDIA (SUPRA) FOR EXCLUSION OF EXCI SE DUTY REFUND FROM THE DEDUCTION U / S 80IC OF THE ACT. IN THE CASE OF LIBERTY INDIA (SUPRA), THE HON'BLE SUPREME COURT FOUN D THAT THE EXPORT RELATED BENEFITS IN THE FORM OF DUTY DRA WN BACK RECEIPTS DO NOT FORM PART OF THE NET PROFIT OF ELIGIB LE INDUSTRIAL UNDERTAKING FOR THE PURPOSES OF SECTION 80I/80IA/80IB OF THE ACT. SINCE, THE PROVISIONS OF SECTION 80IC ARE SIMI LAR TO THE PROVISIONS OF SECTION 80IA/80IB, THEREFORE, THE JUD GMENT OF HON'BLE SUPREME COURT IS APPLICABLE ON EXCISE DU TY REFUND AS THE SAME IS NOT INCOME DERIVED FROM THE MANUFACTURING ACTIVITY OF THE INDUSTRIAL UNDERTAKING. 7 REGARDING THE APPELLANT'S RELIANCE ON THE JUDGMENT OF HON'BLE GAUWAHTI HIGH COURT IN THE CASE OF CIT VS. MEGHALAYA STEELS LTD. 356 ITR 235, IT IS NOTED THAT THE DECISION OF HON'BLE HIGH COURT WAS ON SUBSIDIES RECEIVED BY THE ASSESSEE ON ACCOUNT OF TRANSPORT, INTEREST, POWE R AND INSURANCE WHICH WAS IN THE NATURE OF REIMBURSEMENT T O THE ASSESSEE FOR ELEMENT OF COST RELATING TO THE MANUFAC TURE AND THEREFORE, THE HON'BLE HIGH COURT HELD THAT THERE W AS DIRECT NEXUS BETWEEN THE PROFITS OF ASSESSEES BUSINESS AN D REIMBURSEMENT OF SUCH SUBSIDIES. HOWEVER, THE FACTS OF INSTANT CASE ARE DISTINGUISHABLE FROM THE FACTS OF AFORESAID CASE AS IN THE APPELLANTS CASE THE EXCISE DUTY REF UND IS NOT IN THE NATURE OF ANY REIMBURSEMENT HAVING DIREC T NEXUS WITH THE MANUFACTURING. SO, THE APPELLANT'S RELIANCE ON THE JUDGMENT IN THE CASE OF MEGHALAYA STEELS LTD. (SUPRA) IS MISPLACED. RATHER, I PLACE RELIANCE ON TH E JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT OF PU NJAB & HARYANA IN THE CASE OF CIT VS. H.M. STEELS LTD. [20 15] 62 TAXMANN.COM 252 WHEREIN THE HON'BLE HIGH COURT HELD THAT ASSESSEE WAS NOT ENTITLED TO THE BENEFIT OF SECTION 80IC IN RESPECT OF ANY REBATE OR INCENTIVE MADE AVAILABLE TO IT BY GOVERNMENT. IN THIS CASE, THE HON'BLE HIGH COURT DI D NOT ALLOW THE CLAIM OF DEDUCTION U/S 80IC IN RESPECT OF SALES T AX REBATE OBTAINED BY IT, THEREFORE, IN VIEW OF THE FACTS OF T HE INSTANT CASE AND THE JUDICIAL PRONOUNCEMENTS OF HON'BLE SUPREME CO URT AND HON'BLE PUNJAB & HARYANA HIGH COURT, I AM OF THE VIEW T HAT THE APPELLANT IS NOT ENTITLED FOR THE BENEFIT OF SE CTION 80IC IN RESPECT OF EXCISE DUTY REFUND OBTAINED FROM THE GOV ERNMENT. SO, THE CLAIM OF DEDUCTION U/S 80IC ON EXCISE DUTY REFU ND OF RS.2,39,493/- IS NOT ALLOWED. THUS, THE GROUND OF APPE AL IS PARTLY ALLOWED. 11. REGARDING THE CLAIM OF DEDUCTION U/S 80IC ON PR ODUCT APPROVAL FEES EARNED, IT WAS POINTED THAT THE ISSUE WAS COVERED AGAINST THE ASSESSEE BY THE ORDER OF THE CI T(APPEALS) IN THE CASE OF THE ASSESSEE ITSELF FOR THE PRECEDIN G ASSESSMENT YEAR WHEREIN THE CIT(APPEALS) HAD HELD S UCH INCOME TO NOT HAVE ANY DIRECT NEXUS IN THE PRODUCTI ON OR MANUFACTURE OF THE DRUGS. OUR ATTENTION WAS DRAWN T O THE RELEVANT ORDER OF THE CIT(APPEALS) AS REPRODUCED IN THE PRESENT ORDER AS UNDER: REGARDING THE PRODUCT APPROVAL FEE, IT IS NOTED TH AT THE APPELLANT APPLIES TO DRUG AUTHORITIES FOR THE NOMEN CLATURE ETC. OF A PRODUCT AS PER SPECIFIC REQUIREMENT OF THE CUSTOM ER. THE EXPENSES ARE INCURRED FOR SUCH APPROVAL AND AFTERWA RD THE AMOUNT IS CHARGED FROM THE CUSTOMER. HAD THERE BEEN CHARGE OF 8 SAME AMOUNT AS EXPENSE INCURRED FOR SUCH APPROVAL, THE SAME WOULD HAVE BEEN IN THE NATURE OF REIMBURSEMENT OF E XPENSE INCURRED FOR OBTAINING APPROVAL FROM DRUG AUTHORITI ES. HOWEVER, THE APPELLANT HAS RECEIVED MORE AMOUNTS FROM CUSTOM ERS AND CREDITED UNDER THE HEAD 'PRODUCT APPROVAL ACCOUNT'. SUCH GAIN DOES NOT HAVE ANY DIRECT NEXUS IN THE PRODUCTION OR MANUFACTURE OF THE DRUGS. THE PRODUCTION OF DRUGS UN DER GENERIC NAME AND PROFIT DERIVED WOULD BE SAME FOR AL L CUSTOMERS IRRESPECTIVE OF ANY SPECIFIC PRODUCT NAME. SO, THE CHARGE OF PRODUCT APPROVAL FEE FROM CUSTOMER IS A S TEP REMOVED FROM THE MANUFACTURING BUSINESS. THEREFORE, THE GAIN UNDER THE HEAD PRODUCT APPROVAL IS NOT PROFIT DERIVED FROM THE BUSINESS RATHER SUCH GAIN IS IN THE NATURE OF PROFIT ATTRIBUTABLE TO THE BUSINESS . 12. WE HAVE HEARD THE RIVAL CONTENTION, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND ALSO CONSIDERED THE DO CUMENTS REFERRED TO BEFORE US AS ALSO THE CASE LAWS CITED B EFORE US. WE FIND MERIT IN THE CLAIM OF THE ASSESSEE OF DEDUC TION U/S 80IC ON THE INTEREST EARNED ON FIXED DEPOSITS AND E XCISE DUTY REFUND. IT IS NOT DISPUTED THAT THE INTEREST EARNED ON FDRS RELATED TO THE FDRS KEPT AS SECURITY FOR MARGI N MONEY. THUS WE AGREE WITH THE LD COUNSEL FOR THE ASSESSEE THAT THE INVESTMENT IN THE FDRS WAS NOT MADE ON ACCOUNT OF A NY SURPLUS OF IDLE FUND AVAILABLE WITH THE ASSESSEE SO AS TO RENDER THE INTEREST INCOME EARNED FROM THEM AS NOT RELATING TO OR HAVING ANY NEXUS WITH THE BUSINESS OF THE ASS ESSEE. THE MAKING OF FDRS, BEING A BUSINESS REQUIREMENT HA VING BEEN MADE TO BE KEPT AS SECURITY FOR OBTAINING CRED IT FACILITIES FROM BANKS FOR THE PURPOSES OF ITS BUSIN ESS, THE INTEREST INCOME EARNED THEREON, THEREFORE, IS CLEAR LY DIRECTLY RELATED TO THE BUSINESS OF THE INDUSTRIAL UNDERTAKI NG AND THUS ELIGIBLE FOR DEDUCTION U/S 80IC OF THE ACT. T HE RELIANCE PLACED BY THE LD. COUNSEL FOR THE ASSESSEE IN THE C ASE OF 9 JAGDISH PRASAD (SUPRA) IS APT WHEREIN IT HAS BEEN H ELD THAT INTEREST EARNED ON FDRS WAS DERIVED FROM THE BUSIN ESS OF INDUSTRIAL UNDERTAKING AND THUS ELIGIBLE FOR DEDUCT ION U/S 80IB OF THE ACT.SINCE SECTION 80IC IS PARA MATERIA TO SECTION 80IB ,BOTH ALLOWING DEDUCTION OF PROFITS DERIVED FR OM ELIGIBLE BUSINESS OF UNDERTAKING ,THE SAID DECISION WILL APPLY IN THE PRESENT CASE ALSO.FOLLOWING THE SAME ,WE HOL D THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION OF INTEREST INCO ME EARNED FROM FDRS U/S 80IC OF THE ACT,AMOUNTING TO RS.8,24 ,841/- 13. AS FOR THE ISSUE OF CLAIM OF DEDUCTION U/S 80IC ON EXCISE DUTY REFUND, AS RIGHTLY POINTED BY THE LD CO UNSEL FOR THE ASSESSEE, THE ISSUE NOW STANDS SETTLED IN FAVOU R OF THE ASSESSEE IN VIEW OF THE DECISION OF THE HON'BLE APE X COURT IN THE CASE OF BALAJI ALLOYS(SUPRA),MEGHALAYA STEELS (SUPRA)& DHARAMPAL PREMCHAND (SUPRA) WHEREIN IT HAS BEEN CATEGORICALLY HELD THAT EXCISE DUTY REFUND SHOULD N OT BE EXCLUDED IN ARRIVING AT THE PROFIT DERIVED FROM BUS INESS FOR THE PURPOSE OF CLAIMING DEDUCTION U/S 80IB OF THE A CT. IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE IS ENT ITLED TO CLAIM DEDUCTION U/S 80IC ON INTEREST ON FDRS OF RS.8,24,841/- AND EXCISE DUTY REFUND OF RS.2,39,493 /-. THE ORDER OF THE CIT(APPEALS) VIZ-A-VIZ THESE TWO ISSUE S IS, THEREFORE, SET ASIDE AND GROUND NO.1 AND 2 RAISED BY THE ASSESSEE ARE, THEREFORE, ALLOWED. 14. AS FAR THE ASSESSEES CLAIM OF DEDUCTION ON PRO DUCT APPROVAL FEES RECEIVED, ADMITTEDLY THE SAID ISSUES HAD BEEN DECIDED AGAINST THE ASESSEEE BY THE CIT(APPEALS) IN THE 10 PRECEDING YEAR. THE LD. COUNSEL FOR ASSESSEE FAILED TO DEMONSTRATE ANY INFIRMITY IN THE FINDINGS OF THE CI T(APPEALS) IN THE PRECEDING YEAR. AS RIGHTLY NOTED BY THE CIT( APPEALS), ADMITTEDLY, THE SAID AMOUNT REPRESENTS SURPLUS RECE IVED FROM CUSTOMERS ON ACCOUNT OF PRODUCT APPROVAL EXPEN SES INCURRED BY THE ASSESSEE AND CHARGED FROM THE CUSTO MERS. THE SAME CLEARLY DOES NOT HAVE ANY NEXUS WITH THE PRODUCTION OR MANUFACTURING OF DRUGS CARRIED OUT BY THE ASSESSEE AND WE AGREE WITH THE LD.CIT(APPEALS) THAT IT IS A STEP REMOVED FROM THE MANUFACTURING BUSINESS OF THE ASSESSEE. THE DENIAL OF DEDUCTION U/S 80IC ON PROD UCT APPROVAL FEES IS, THEREFORE UPHELD. GROUND NO.3 RAI SED BY THE ASSESSEE IS, THEREFORE, DISMISSED. 15. IN EFFECT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ' #! $ % (SANJAY GARG ) (ANNAPURNA GUPTA) / JUDICIAL MEMBER &' / ACCOUNTANT MEMBER )' /DATED: 18 TH OCTOBER, 2018 * ! * &) *+,+ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. - $ / CIT 4. - $ ( )/ THE CIT(A) 5. +./ 0 , #0 , 123/4 / DR, ITAT, CHANDIGARH 6. /35' / GUARD FILE &) $ / BY ORDER, 6 ! / ASSISTANT REGISTRAR