M/s Apotex Pharmachem India Private Limited , Bangalore V. Deputy Commissioner of Income Tax Circle-11(1), Bangalore

ITTPA 249/BANG/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8333 (ITAT-BANGALORE)
• Duration Of Justice: 5 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 17-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 01-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return
• Section: 10B; 43; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ABENCH : BANGALORE BEFORE SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER IT(TP)A NO. 249 /BANG/201 4 ASSESSMENT YEAR: 2009 10 IT(TP)A NO . 2200 /BANG/201 6 ASSESSMENT YEAR: 2011 12 APPELLANT RESPONDENT M/S. APOTEX PHARMACHEM INDIA, PLOT NO 1A, 4 TH PHASE BOMMASANDRA INDUSTRIAL AREA, BANGALORE 560 099. PAN NO : AACCB1658E VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(1), BANGALORE. RESPONDENT APPELLANT THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-11(1) BANGALORE. VS. M/S. APOTEX PHARMACHEM INDIA PVT. LTD, PLOT NO 1A,4 TH PHASE BOMMASANDRA INDUSTRIAL AREA, BANGALORE 560 099. PAN NO : AACCB1658E IT(TP)A NO.249/B/2014 A.Y:2009-10 IT(TP)A NO. 2200/B/20 16 A.Y:2011-12 2 APPELLANT BY : S H RI ALIASGAR RAMPURWALA, CA RESPONDENT BY : MS. NEERA MALH O TRA , CIT DR DATE OF HEARING : 07 . 01 .20 20 DATE OF PRONOUNCEMENT : 17.01.2020 O R D E R PER BEENA PILLAI, JUDICIAL MEMBER: PRESENT APPEALS ARISES OUT OF ORDER DATE D 28/11/19 PASSED IN MP.NOS. 108 & 109/BANG/2019. THIS TRIBUNAL VIDE ORDER DATED 28/11/19 RECALLED ORDER DATED 08/02/19 PASSED IN IT A NO. 156/B/2014 AND TO 20/B/2016 FOR ASSESSMENT YEAR 200 9-10 AND 2011-12 ONLY TO THE EXTENT FOR ADJUDICATING GROUND NO. 5.4 IN ASSESSEES APPEAL FOR ASSESSMENT YEAR 2009-10 AND I SSUE ALLEGED BY REVENUE IN THEIR APPEAL FOR ASSESSMENT YEAR 2011-12 REGARDING ALLOWABILITY OF DEDUCTION UNDER SECTION 10 B FOR MA NUFACTURING ACTIVITY. BRIEF FACTS ARE AS UNDER: 2. THIS TRIBUNAL IN ORDER DATED 28/11/19 PASSED IN THE MISCELLANEOUS PETITION HAS OBSERVED THAT, GROUND NO . 5.4 HAS NOT BEEN DECIDED, THOUGH, TO A VIEW IN FAVOUR OF ASSESS EE HAS BEEN EXPRESSED ON THE ISSUE ALLEGED THEREIN, WHILE PASSI NG ORIGINAL ORDER DATED 08/02/19. HE SUBMITTED THAT, GROUND NO.5.4 WA S DECIDED ALONG WITH GROUND NO. 5.1-5.3, THEREBY DISMISSING T HEM. ONLY ISSUE IT(TP)A NO.249/B/2014 A.Y:2009-10 IT(TP)A NO. 2200/B/20 16 A.Y:2011-12 3 ALLEGED IN REVENUES APPEAL SIMILAR WITH GROUND NO. 5.4 OF ASSESSEES APPEAL WHICH WAS ALLOWED IN FAVOUR OF REVENUE VIDE ORDER DATED 08/02/19. IT(TP)A NO. 249/B/2014 GROUND NO.5.4 3. AT THE OUTSET LD.AR SUBMITTED THAT GROUND NO.5.4 IN ASSESSEES APPEAL SHALL BE TAKEN UP 1 ST FOR SAKE OF CONVENIENCE. LD.AR SUBMITTED THAT GROUND NO. 5.4 ALONG WITH GROUND NO. 5.1-5.3 WAS DECIDED AGAINST ASSESSEE. HE SUBMITTED THAT, GROUND NO.5.1 -5.3 WAS IN RESPECT OF DENIAL OF R&D EXPENSES, INCLUDED IN REVISED RETURN FOR COMPUTING DEDUCTION UNDER SECTION 10 B O F THE ACT. HE SUBMITTED THAT THIS TRIBUNAL IN PARAS 23-28 DISCUSSED IN DETAIL ELIGIBILITY CRITERIA FOR ASSESSEE TO CLAIM DEDUCTIO N UNDER SECTION 10 B FOR MANUFACTURING ACTIVITY, WHICH WAS THE ISSUE RAI SED IN GROUND NO. 5.4. HE SUBMITTED THAT, IN PARA 29 THIS TRIBUNAL EXPRESSED THEIR OPINION REGARDING ISSUE IN GROUND 5.4 AS UNDER: 29. WITH RESPECT TO THE RATIFICATION BY THE BOARD GIVING EFFECT FROM 31/08/04, IN OUR VIEW, THERE SHOULD NOT BE ANY QUAR REL AS THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSESSEE BY THE AUT HORITY TO PRONOUNCEMENT BY THE BOARD. IN OUR VIEW, INITIAL PE RMISSION IS REQUIRED TO BE GRANTED BY THE DC IN ACCORDANCE WITH THE RULES FRAMED FOR THE PURPOSE OF SECTION 2. ONCE THE SAID PERMISS ION HAS BEEN GRANTED THEN THE RATIFICATION BY THE BOARD IS MEREL Y A FORMALITY AND THEREFORE WOULD RELATE BACK TO THE DATE OF ACTUAL G RANT, AS THE IT(TP)A NO.249/B/2014 A.Y:2009-10 IT(TP)A NO. 2200/B/20 16 A.Y:2011-12 4 ASSESSEE CANNOT BE PERMITTED TO WAIT TILL ENTITY, I F THERE IS A DELAY/LATCH ON THE PART OF THE BOARD FOR NOT RATIFY ING WITHIN THAT TIME SANCTIONED BY DC. 3.1. HE SUBMITTED THAT AFTER RECORDING OBSERVATIONS, REP RODUCED HEREINABOVE, THIS TRIBUNAL, WHILE CONCLUDING IN PARA 44, ONLY DECIDED ISSUE PERTAINING TO R&D SERVICES PROVIDED B Y ASSESSEE BEING NOT COVERED FOR CLAIMING DEDUCTION UNDER SECT ION 10 B OF THE ACT, THEREBY DISMISSING GROUNDS 5.1 - 5.4 OF ASSESS EES APPEAL. 3.2. ON THE CONTRARY, LD.CIT DR VEHEMENTLY ARGUED THAT, RECALL OF ORDER DATED 08/02/19 AMOUNTS TO REVIEW, AS ISSUE RA ISED BY ASSESSEE IN GROUND 5.4 HAS BEEN DECIDED AGAINST ASS ESSEE, AFTER DEALING WITH VARIOUS ASPECTS OF SCHEME AND PERMISSI ONS ISSUED BY THE DC. SHE LED US THROUGH ORDER PASSED BY THIS TRIBUNAL DATED 08/02/19, AND SUBMITTED THAT ASSESSEE DID NOT SATIS FY THE ELIGIBILITY CRITERIA FOR CLAIMING DEDUCTION UNDER SECTION 10 B WHICH HAS BEEN OBSERVED BY THIS TRIBUNAL IN PARA 43, THEREBY LEADING TO DISMISSAL OF CLAIM OF DEDUCTION UNDER SECTION 10 B. 3.3. SHE SUBMITTED THAT BEFORE DRP ASSESSEE DID NOT RAIS E ANY OBJECTION RELATING TO DEDUCTION CLAIMED IN RELATION TO INCOME EARNED FROM MANUFACTURING ACTIVITY AND THEREFORE THE ISSUE DESERVES TO BE SET-ASIDE TO DRP FOR ADJUDICATION. 4. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. LD.CIT DR OPPOSED RECALL OF ORDER DATED 08/02/19 FO R DECIDING GROUND 5.4 IN ASSESSEES APPEAL AND ISSUE RAISED IN REVENUES IT(TP)A NO.249/B/2014 A.Y:2009-10 IT(TP)A NO. 2200/B/20 16 A.Y:2011-12 5 APPEAL, WHICH ARE IN RESPECT OF CLAIM OF DEDUCTION UNDER SECTION 10 B RELATING TO MANUFACTURING ACTIVITY. ON PERUSAL OF OBJECTIONS RAISED BY HER, WE DO NOT FIND ANY FORCE IN THEM, AS THE SA ME HAS NOT BEEN ENTERTAINED AT THIS STAGE. THEREFORE, OBJECTIONS RA ISED BY LD.CIT DR, RECORDED HEREIN ABOVE STANDS REJECTED. 4.1. ON PERUSAL OF RECORDS BEFORE US, IT IS OBSERVED TH AT ASSESSEE IN GROUND NO. 5 RAISED TWO SEPARATE ISSUES IN CONNECTI ON TO REVISED CLAIM UNDER SECTION 10 B. THE 1 ST ISSUE IN GROUND NO. 5.1-5.3 ARE IN RESPECT OF DENIAL OF EXEMPTION UNDER SECTION 10 B R ELATING TO R&D SERVICES RENDERED BY ASSESSEE. AND, 2 ND ISSUE IN GROUND NO. 5.4 IS REGARDING DENIAL OF EXEMPTION UNDER SECTION 10 B RE LATING TO MANUFACTURING ACTIVITY. 4.2. IN DRAFT ASSESSMENT ORDER, IT HAS BEEN RECORDED THA T ORIGINAL RETURN FILED BY ASSESSEE FOR YEAR UNDER CONSIDERATI ON DECLARED NET INCOME OF RS.5,47,46,835/- AFTER CLAIMING DEDUCTION UNDER SECTION 10B OF THE ACT AMOUNTING TO RS.1,03,13,047/-. SUBSE QUENTLY, DURING THE ASSESSMENT PROCEEDINGS, THE NET TAXABLE INCOME WAS REVISED WHEREIN THE CLAIM OF DEDUCTION UNDER SECTIO N 10B OF THE ACT, AMOUNTED TO RS.1,19,45,674/-. LD.AO IN THE DRA FT ASSESSMENT ORDER DENIED THE ENTIRE CLAIM OF RS.1,19,45,674/- F OR FOLLOWING REASONS: THAT ASSESSEE HAS NOT BEEN ABLE TO ARRIVE AT THE CO RRECT FIGURE OF DEDUCTION TO BE CLAIMED UNDER SECTION 10B OF THE ACT. THE AO STATED THAT ASSESSEE HAS MADE AN ILLEGAL AND UND UE CLAIM UNDER SECTION 10B OF THE ACT; IT(TP)A NO.249/B/2014 A.Y:2009-10 IT(TP)A NO. 2200/B/20 16 A.Y:2011-12 6 THAT ASSESSEE CLAIMED DEDUCTION UNDER SECTION 10B O F THE ACT IN RESPECT OF RESEARCH AND DEVELOPMENT SERVICES, AN D LD.AO HELD THAT SUCH INCOME FROM R&D SERVICES ARE NOT ELI GIBLE TO WOULD CLAIM DEDUCTION UNDER SECTION 10B OF THE ACT; THAT ASSESSEE HAS NOT OBTAINED A SEPARATE RATIFICAT ION FROM BOA WITH REGARD TO CLAIM OF DEDUCTION UNDER SECTION 10B OF THE ACT; THAT FORM 56G OF OBTAINED BY ASSESSEE AT THE TIME O F FILING ORIGINAL RETURN OF INCOME DOES NOT SUPPORT THE CLAI M OF DEDUCTION MADE BY THE COMPANY. 4.3. FROM THE ABOVE, AS WELL AS OBSERVATIONS RECORDED BY LD.AO IN DRAFT ASSESSMENT ORDER IN PARA 5.6, REVEALS THAT, I N ORIGINAL FORM 56G FILED BY ASSESSEE DEDUCTION UNDER SECTION 10B W AS CLAIMED FOR MANUFACTURING SEGMENT AT RS.1,03,13,047/-. AND SUBS EQUENTLY FORM 56G WAS REVISED BY CLAIMING DEDUCTION UNDER SE CTION 10B AT RS.1,19,45,674/-, WHEREIN CLAIM INCLUDED RECEIPTS F ROM R&D SERVICES. AND FURTHER THAT ASSESSEE HAS NOT OBTAINE D A SEPARATE APPROVAL FOR THE R&D SERVICES. 4.4. DRP WHILE CONSIDERING THE ISSUE OBSERVED AS UNDER: 23. WE HAVE DULY CONSIDERED THE FACTS OF THE CASE, SUBMISSIONS OF THE ASSESSEE AND THE DRAFT ASSESSMENT ORDER. WE OBS ERVE THAT ASSESSEE WAS 100% EOU, ENGAGED IN THE MANUFACTURING OF ACTIVE PHARMACEUTICAL INGREDIENTS (APIS) AND THE INTERMEDI ATES FOR APOTEX GROUP. APART FROM THIS, THE ASSESSEE WAS ALSO PROVI DING THE APOTEX GROUP CERTAIN CONTRACT R&D SERVICES WHICH APPARENTL Y FELL OUTSIDE THE IT(TP)A NO.249/B/2014 A.Y:2009-10 IT(TP)A NO. 2200/B/20 16 A.Y:2011-12 7 MANUFACTURING ACTIVITIES CARRIED ON BY ASSESSEE AND AE, RATHER, CONSTITUTED CONTRACT SERVICES HAVING NO NEXES WITH THE MANUFACTURING OF APIS. THOUGH IT SUBMISSIONS, THE ASSESSEE SOUGHT TO EMPHASISE THAT THESE ARE AND THESE SERVICES WOULD BE COVERED BY EXPLANATION 2 TO SECTION 10 B, PRECISELY BY CLAUSE (B) OF THE SAI D EXPLANATION 2 I.E., ANY CUSTOMISED ELECTRONIC DATA OR ANY PRODUCT OR SE RVICES OF SIMILAR NATURE AS MAY BE NOTIFIED BY THE BOARD. ON A CAREFU L PERUSAL OF THE PROVISIONS OF SECTION 10 B AND CBDTS NOTIFICATION NO. S0 890 (E) DATED 26/09/00, WE ARE OF THE VIEW THAT WHAT WAS SO UGHT TO BE COVERED BY CLAUSE (B) OF EXPLANATION 2 TO SECTION 1 0 B IS IN THE CONTEXT OF COMPUTER SOFTWARE AND IN VIEW OF THE RULE OF E JUSDEM GENERIS, THEY CANNOT MEAN ANYTHING ELSE THAN COMPUTER SOFTW ARE. HENCE, THE ASSESSEE IS RELIANCE UPON CLAUSE (B) OF EXPLANA TION 2 TO SECTION 10 B IS FAR-FETCHED AND CANNOT BE ACCEPTED. FURTHER, T HE ACTIVITIES CARRIED ON BY THE ASSESSEE CLEARLY FELL WITHIN TWO DISTINCT BUSINESS SEGMENTS ONE IS MANUFACTURING OF APIS AND THE OTHER IS CONTRACT R&D SERVICES. JUST BECAUSE THE APIS WERE MANUFACTURED F OR APOTEX GROUP AND ALSO AT THAT THE SAME TIME THE R&D SERVICES WER E PROVIDED TO THIS GROUP ON CONTRACT BASIS, THE TWO SEGMENTS CANN OT BE CONSIDERED TOGETHER AS TO HAVE CONSTITUTED A COHERENT OR INTEG RAL WHOLE SO AS TO QUALIFY FOR DEDUCTION OF PROFITS AND GAINS OF BOTH THE SEGMENTS UNDER SECTION 10B OF THE ACT. WE FIND SUFFICIENT FORCE IN THE FINDINGS RECORDED BY THE AO IN DENYING THE CLAIM FOR DEDUCTI ON UNDER SECTION 10 B OF THE ACT. IN THE RESULT, WE CONFIRMED THE AC TION OF THE AO AND THE ASSESSEES GROUNDS OF OBJECTIONS (A) TO (G) ARE , THEREFORE, REJECTED. IT(TP)A NO.249/B/2014 A.Y:2009-10 IT(TP)A NO. 2200/B/20 16 A.Y:2011-12 8 4.5. WE THEREFORE DO NOT AGREE WITH OBJECTION RAISED BY LD.CIT DR THAT THE ISSUE REGARDING RATIFICATION OF CERTIFICAT E BY THE BOARD DOES NOT ARISE OUT OF ORDER OF DRP. IN FACT DRP REJECTED ASSESSEES GROUND UPHOLDING THE ASPECT THAT CERTIFICATE OF OBT AINED BY ASSESSEE FROM SEZ OF BEING 100% EOU DOES NOT AMOUNT TO A CER TIFICATE ISSUED BY BOARD CONSTITUTED UNDER INDUSTRIES DEVELO PMENT AND REGULATION ACT, 1951 (IDRA). 4.6. ON A DETAILED PERUSAL OF ORDER DATED 08/02/19, WE N OTE THAT DISCUSSION/ANALYSIS OF ISSUE IN GROUND NO. 5.4 HAS BEEN RECORDED IN PARA 23-28 FOLLOWING WHICH IN PARA 29 (WHICH IS REPRODUCED HEREINABOVE) HAS EXPRESSED A CLEAR OPINION OF CLAIM REGARDING MANUFACTURING UNIT BEING AVAILABLE TO ASSESSEE FOR REASONS MENTIONED THEREIN. 4.7. THEREAFTER, FROM PARA 30 ONWARDS TILL PARAGRAPH 43 THE TRIBUNAL DISCUSSED AND ANALYSED SCOPE OF ELIGIBILITY WITH R EGARD TO R&D ACTIVITIES UNDERTAKEN BY ASSESSEE WITHIN THE AM BIT OF SECTION 10B. IN PARA 43-44 BEING CONCLUSION, THIS TRIBUNAL OPINES AS UNDER: 43. FROM A CLOSE SCRUTINY OF THE ACTIVITIES UNDERT AKEN BY THE ASSESSEE, IT IS CLEAR THAT THE ASSESSEE IS REQUIRED TO CONDUCT THE RESEARCH IN COMPLIANCE WITH THE SPECIFICATIONS THAT MAY BE PROVIDED IN WRITING TO THE ASSESSEE BY ITS AES AND ASSESSEE IS NOT PERMITTED TO DEVIATE FROM THE SPECIFICATIONS WITHOUT A WRITTE N PRIOR APPROVAL. MOREOVER THE APPROVAL GRANTED TO THE ASSESSEE BY TH E DC WITH RESPECT TO THE ITEM MENTIONED UNDER: IT(TP)A NO.249/B/2014 A.Y:2009-10 IT(TP)A NO. 2200/B/20 16 A.Y:2011-12 9 RESEARCH AND DEVELOPMENT CENTRE WITH AN ASSOCI ATED PRODUCTION FACILITY OF CHLORO BENZENE AND OTHER CHEMICALS. THUS IT IS CLEAR THAT THE ACTIVITY UNDERTAKEN BY AS SESSEE UNDER ESSAYS IT WAS ONLY ONE THAT IS R&D CENTRE AND THERE WERE TWO SEPARATE INDEPENDENT ACTIVITIES WHICH WERE PERMITTE D TO BE UNDERTAKEN, VIZ., PRODUCTION OF MEDICAL FORMULAS AN D SECONDLY FOR R&D RELATED TO THE MEDICAL FORMULA. IN FACT THE DRP HAD GIVEN COGENT AND ROBUST FINDING REPRODUCED HEREINABOVE, WHEREAS THE DRP HAS UPHELD THE FINDING OF THE AO BY RECORDING THAT R&D SERVICES AND MANUFACTURING OF ITEMS ARE TO DIFFERENT SEGMENTS AN D CANNOT BE CONSIDERED TO BE A COHERENT AND INTEGRAL PART OF TH E SAME ACTIVITY. FURTHER WE ARE OF THE OPINION THAT THE AMENDMENT OF THE ITEM OF MANUFACTURE PRODUCED UNDER SECTION 2 OF SEZ ACT, PR IME ASSESSEE DO NOT COVER THE RENDITION OF R&D SERVICES. WE DO NOT FEEL THAT THE DECISION OF THIS TRIBUNAL SYNGENE INTERNATIONAL LTD (SUPRA) IS OF ANY HELP TO THE ASSESSEE AS IN THE SAID CASE, THERE WAS A STAND-ALONE PERMISSION GRANTED BY THE DC OF THE BOARD FOR THE P URPOSES, WHEREAS THERE IS NO SUCH SPECIFICATIONS GRANTED BY THE BOAR D. MOREOVER, WE ARE OF THE OPINION THAT FOR PURPOSES OF ADJUDICATIN G THE PRESENT DISPUTE BEFORE US, THE DECISION OF SYNGENE INTERNAT IONAL (SUPRA) IS A MISFIT AS THE SAID DECISION WAS ON A DIFFERENT SET OF FACTS. WHEN PERMISSION WAS NOT GRANTED FOR 2 SEPARATE AND INDEP ENDENT ACTIVITIES AND THE PERMISSION WAS ONLY GRANTED WITH RESPECT TO ONE ACTIVITY. 44. THE RATIO LAID DOWN BY THE COORDINATE BENCH IN THE MATTER OF SYNGENE INTERNATIONAL LTD (SUPRA) IS NOT APPLICABLE TO THE ACTIVITIES OF IT(TP)A NO.249/B/2014 A.Y:2009-10 IT(TP)A NO. 2200/B/20 16 A.Y:2011-12 10 THE ASSESSEE AS THE ASSESSEE IS DOING TWO ACTIVITIE S AND TWO ACTIVITIES ARE NOT PERMISSIBLE. IN VIEW OF THE ABOV E THE ISSUE ON SECTION 10 B, RAISED BY THE ASSESSEE IS REQUIRED TO BE DISMISSED. WE DO SO. HENCE, GROUND NUMBERS 5.12 5.4 RAISED BY THE ASSESSEE ARE DISMISSED. 4.8. ON A JOINT READING OF ALL THESE PARAGRAPHS, WE ARE OF OPINION THAT THIS TRIBUNAL IN PARA.29 (REPRODUCED HEREINABOVE), REJECTS OBJECTION OF LD.AO REGARDING PERMISSION GRANTED BY DC ONLY AVAILABLE W.E.F. FINANCIAL YEAR 2011-12. HAVING HEL D SO, THIS TRIBUNAL OPINED THAT ASSESSEE IS ELIGIBLE FOR CLAIM UNDER SE CTION 10B IN RESPECT OF MANUFACTURING ACTIVITY. IT IS OBSERVED T HAT CERTIFICATE ISSUED BY DC DATED 31/08/04 HAS BEEN PLACED AT PAGE 521 OF PAPER BOOK WHICH IS IN CONTINUATION TO CERTIFICATE DATED 16/04/04 PLACED AT PAGE 513 OF PAPER BOOK. ASSESSEE THUS CANNOT BE DENIED THE CLAIM UNDER SECTION 10B IN RELATION TO MANUFACTURIN G ACTIVITY FOR YEAR UNDER CONSIDERATION. AND THEREFORE, GROUND NO. 5.4 STANDS ALLOWED IN FAVOUR OF ASSESSEE. ACCORDINGLY THIS GROUND STANDS ALLOWED. IN THE RESULT ASSESSEES GROUND STANDS ALLOWED AS I NDICATED HEREINABOVE. IT(TP)A 2200/B/2016 (AY 2011-12) 5. IN GROUNDS ALLEGED BY REVENUE, CONTENDS THAT LD.CIT (A) GRANTED DEDUCTION U/S.10B OF THE ENTIRE CLAIM, EVEN THOUGH CERTIFICATE ISSUED BY DC WAS NOT AVAILABLE DURING RELEVANT PER IOD. IT(TP)A NO.249/B/2014 A.Y:2009-10 IT(TP)A NO. 2200/B/20 16 A.Y:2011-12 11 THIS TRIBUNAL IN ORIGINAL CONSOLIDATED ORDER DATED 08/02/2019, ALLOWED REVENUE APPEAL BY FOLLOWING ITS DECISION IN PARAGRAPH 44(REPRODUCED HEREIN ABOVE) IT IS OBSERVED THAT DATE OF ISSUE OF APPROVAL WAS 2 5/03/11, WHICH IS A MERE EXTENSION OF ORIGINAL APPROVAL DATED 16/04/0 4, PLACED AT PAGE 513 OF PAPER BOOK. FURTHER, LD.AO FOLLOWING A. Y.2009-10 DISALLOWED THE CLAIM OF ASSESSEE, WHICH WAS REVERSE D BY LD.CIT(A) BY OBSERVING AS UNDER: 4. IN VIEW OF THE ABOVE AND THE FACT THAT APPROVAL OF THE DEVELOPMENT COMMISSIONER WAS RATIFIED BY THE BOARD OF APPROVAL, THE CONTENTION OF THE APPELLANT IS CORRECT. 5. IT IS SEEN THAT IN THE CASE OF ENABLE EXPORTS PR IVATE LTD (ITA NO. 1072 OF 2011) THE DELHI HIGH COURT HAS HELD THAT AP PROVAL GRANTED BY THE DEVELOPMENT COMMISSIONER OF THE EOU/SEZ IS V ALID FOR CLAIMING DEDUCTION UNDER SECTION 10 B OF THE ACT. T HE ORDERABLE HIGH COURT HAD RELIED ON THE CBDT IN ITS CIRCULAR F. N. 178/19/2008-ITA DATED 09/03/09. 6. IT IS ALSO SEEN THAT HONBLE CBDT IN ITS INSTRUC TION F.N. 178/19/2008-ITA DATED 09/03/08 HAD ISSUED A CLARIFI CATION REGARDING DEDUCTION UNDER SECTION 10 B OF THE ACT, WHICH READS AS UNDER: THE MATTER REGARDING VALIDITY OF APPROVAL GIVE N BY DEVELOPMENT COMMISSIONER HAS BEEN EXAMINED IN THE BOARD. IT HAS BEEN TEST SIDED THAT AN APPROVAL GRANTED BY DEVELOPMENT COMMI SSIONER IN THE CASE OF AN HUNDRED PERCENT EXPORT ORIENTED UNIT WILL BE IT(TP)A NO.249/B/2014 A.Y:2009-10 IT(TP)A NO. 2200/B/20 16 A.Y:2011-12 12 CONSIDERED VALID ONCE SUCH AN APPROVAL IS RATIFIED BY THE BOARD OF APPROVAL FOR EOU SCHEME. 7. FURTHER IT IS SEEN THAT THE TAX POSITION TAKEN B Y THE APPELLANT HAS ALSO BEEN UPHELD BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF ECI TECHNOLOGIES PRIVATE LIMITED (TAX APPEAL NO. 20 3 OF 2015) WHEREIN THE ASSESSEE PLACED RELIANCE ON CIRCULAR NO . 68 DATED 14/05/09 ISSUED BY THE EXPORT PROMOTION COUNCIL FOR EOUS AND S EZ IS CLARIFYING THE CBDT INSTRUCTION NO. 2/2009 DA TED 09/03/09. 8. THE HONBLE GUJARAT HIGH COURT HELD THAT- THE MOMENT THE DECISION/APPROVAL OF THE DEVE LOPMENT COMMISSIONER IS RATIFIED BY THE BOARD OF APPROVAL I T WILL RELATE BACK TO THE DATE ON WHICH THE APPROVAL WAS GRANTED BY THE DEVELOPMENT COMMISSIONER. 9. ACCORDINGLY, IT IS HELD THAT THE DENIAL OF DEDUC TION UNDER SECTION 10 B IS HEREBY DELETED. 5.1. THIS TRIBUNAL WHILE ALLOWING REVENUES APPEAL VIDE C ONSOLIDATED ORDER DATED 08/02/2019, FOLLOWED ITS VIEW FOR A.Y 2 009-10. IN OUR VIEW, THIS TRIBUNAL IN ORIGINAL ORDER DATED 08/02/19 EXPRESSED RATIFICATION OF CERTIFICATION FROM ORIGIN AL DATE OF 31/08/04 PARAGRAPH 29, REPRODUCED HEREINABOVE FOR MANUFACTUR ING SEGMENT. UNDER SUCH CIRCUMSTANCES WE DO NOT FIND ANY REASON TO DEVIATE FROM VIEW EXPRESSED BY THIS TRIBUNAL IN ORDER DATED 08/02/19 IN PARAGRAPH 29, WHICH IS REPRODUCED HEREINABOVE. BASE D UPON THE SAME WE HAVE GRANTED DEDUCTION U/S.10B HEREIN ABOVE . IT(TP)A NO.249/B/2014 A.Y:2009-10 IT(TP)A NO. 2200/B/20 16 A.Y:2011-12 13 5.2. WE UPHELD 10B DEDUCTION FOR A.Y 2009-10 IN ASSESSEE S APPEAL, BASED UPON VIEW EXPRESSED BY TRIBUNAL IN ORIGINAL ORDER DATED 08/02/2019(PARAGRAPH 29 REPRODUCED HEREINABOV E), ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S.10B, FOR YEAR UNDER C ONSIDERATION, ONLY IN RESPECT OF INCOME EARNED FROM MANUFACTURING SEGM ENT, WHICH CANNOT BE INTERFERED WITH AT THIS STAGE. THUS, IN T HE PRESENT APPEAL FILED BY REVENUE, LD.AO SHALL CALL FOR NECESSARY DE TAILS REGARDING BIFURCATION OF TOTAL CLAIM ATTRIBUTABLE TO MANUFACT URING AND R&D SEGMENT. SINCE THIS TRIBUNAL HAS UPHELD CONTENTION OF ASSESSEE REGARDING RATIFICATION OF APPROVAL RELATING BACK TO THE DATE OF ORIGINAL APPROVAL, ASSESSEE SHALL BE GRANTED CLAIM U/S.10B, PERTAINING TO INCOME EARNED FROM MANUFACTURING SEGM ENT. ACCORDINGLY THE VIEW EXPRESSED BY LD. CIT (A) IS RE VERSED IN PART . IN THE RESULT APPEAL FILED BY REVENUE STANDS ALLOWE D PARTLY. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH JANUARY, 2020. SD/- SD/- (B. R. BASKARAN) (BEENA PILLAI) ACCOUNTANT MEMBER (JUDICIAL MEMBER) BANGALORE, DATED 17 TH JANUARY, 2020 /MK/ IT(TP)A NO.249/B/2014 A.Y:2009-10 IT(TP)A NO. 2200/B/20 16 A.Y:2011-12 14 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE .