AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (1) TMI 30
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....s return of income for the impugned year dated 29.11.2011, declaring total income of Rs.320,35,26,593/-. The assessee's case was selected for scrutiny and notice u/s. 143(2) of the Act dated 02.08.2012 and notice u/s. 142(1) of the Act was served upon the assessee company. A survey action u/s. 133A of the Act dated 06.03.2014 was carried out in the case of the assessee company in which the assessee company has offered expenses incurred by way of gifts, freebees, travelling allowance, monetary grants or any advantage in kind from pharmaceutical companies which according to the A.O. was in contravention to the MCI guidelines was disclosed by the assessee, which amounts to Rs.269,57,57,193/-. 4. The Assessing Officer (A.O. for short) passed the assessment order u/s. 143(3) dated 31.03.2015, declaring total income at Rs.712,87,82,100/-. 5. The assessee challenged the said addition before the ld. CIT(A) who had partly allowed the appeal filed by the assessee. 6. Both the assessee as well as the Revenue are in appeal, challenging the order of the ld. CIT(A). 7. The assessee company during the assessment proceeding had submitted the details of its manufacturing plants at Vikhroli, Mum....
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....hat it owned a power plant at Cipla Ltd. (Captive Power Plant) situated at Verna, Goa. 9. The grounds of appeal raised by the Revenue in ITA No. 2639/Mum/2018 are as below: (i) "On the fact and circumstances of the case and in law, the Ld. CIT(A) erred in not confirming the basis adopted by Assessing officer for computing 801B deduction of Rs.149,24,40,574/- as against Rs.427,10,08,471/- claimed by the Assessee as admissible to the eligible units and in holding that the Assessing Officer was not justified in invoking the provisions of section 801B(13) r.w. proviso to section 80LA(8) of the Act, when the assessee was under the obligation of law to adopt the 'market value'for the goods transferred to and from the 801B undertaking. (ii) "On the facts and circumstances of the case and in law, the Ld. cIT(A) erred in holding that the assessee is eligible for claiming deduction of Rs.23,42,32,944/ u/s. 80IB of the Act, on the profits derived from the work/manufacturing got done through Lease and License Manufacturers(LLMs). " (iii) "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that miscellaneous sales/processing charge, miscellan....
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....impugned year, the assessee has not adopted the market rate as per the submission of the assessee which has stated that in case of finalized bulk drugs, the domestic market rate will be considered as a first choice based on the assessee's local actual weighted average purchase rate or market quotations or the control price as per the Drug Price Control Order (DPCO) and in the non availability of the domestic market rates, then the import rate based on the actual import weighted average rate/quotation and in the non availability of both, the assessee has considered the weighted average export rate. The assessee further stated that in absence of none of the rates specified above, the rate arrived at by adding the notional profit margin of 23.10% to the cost of the production as per cost audit report for the relevant year has been considered. 11. Further to this, the assessee has stated that in case of intermediates when the above market price is unavailable, then the market price derived by uniformly apportioning to the cost of the production, the actual profit/loss margin of the final bulk drug based on its market price will be considered. The A.O. has held that the consideration f....
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....rted the same and contended that the issue was covered by the Tribunal's decision in assessee's own case for A.Y. 2010-11 and relied on the principle of consistency. The ld. AR relied on the order of the ld. CIT(A). 16. Having heard the rival submissions and perused the materials available on record. The relevant extract of the said decision is cited hereunder for ease of reference: 16. The first ground relates to the grievance that the ld. CIT(A) erred in not confirming the basis adopted by the A.O. for computing 80IB deduction admissible to the eligible unit. 17. This issue has been decided against the Revenue by the Tribunal in ITA No. 6558/M/2011 for A.Y. 2009-10. The Tribunal has considered this issue at para 32 of its order wherein it has followed the finding given in A.Y. 2008-09 in ITA No. 6299/M/2010. We find that in ITA No. 6299/M/2010, the Tribunal has followed the decisions of the co-ordinate Benche in ITA No. 7412/M/05 for A.Y. 2003-04, ITA No. 4320/M/2006 for A.Y. 2004-05 and ITA No. 4321/M/2006 for A.Y. 2005-06. Respectfully following the findings of the co-ordinate Bench in assessee's own case (supra), ground No.1 of the Revenue is dismissed. 17. It is obser....
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....d that the assessee was eligible for claiming deduction u/s. 80IB of the Act for profits derived from outsourcing the manufacturing activities carried out through LLMs. The relevant extract of the said decisions are cited hereunder for ease of reference. 18. Ground No. 2 relates to the grievance that the ld. CIT(A) erred in holding that the assessee is eligible for claiming deduction u/s. 80IB of the Income Tax Act, 1961 on the profit derived from the work/manufacturing got done through lease and license manufacturers. 19. An identical issue was considered by the Tribunal in ITA No. 6299/M/2010 for A.Y. 2008- 09 vide ground No.2 of that appeal and has considered this issue at para 17 of its order and decided the ground against the Revenue. The facts and issue being identical, respectfully following the findings of the Tribunal (supra), ground No. 2 is dismissed. 23. From the above observations and by respectfully following the said decisions, we find no infirmity in the order of the ld. CIT(A). Accordingly, this ground of appeal raised by the Revenue is dismissed. 24. Ground no. 3 of the appeal pertains to the miscellaneous sales/processing charge, miscellaneous receipts of....
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....ends that the assessee has incurred expenditures for the purpose of marketing and promotional activities such as gifts, travel facility, hospitalization, cash or monetary grant, etc. for the marketing and promotional activities. The lower authorities have relied on the CBDT Circular (supra) which states that the Medical Council of India in excess of powers vested in it under the Indian Medical Counsel (Professional Conduct, Etiquette and Ethics) Regulations, 2002 has imposed prohibition on any medical practitioner or through professional associates from accepting any gift, travel facility, hospitality, cash or monetary grant, etc. from any pharmaceutical and allied health sector industries. The ld. CIT(A) has relied on various decisions which has held that the gifts that are given by the pharmaceutical companies, is against the public policy and even if it is a genuine transaction, the same cannot be allowed as 'business expenditure' under the provisions of section 37 of the Act. The ld. CIT(A) confirmed the addition made by the A.O., amounting to Rs.48,13,05,699/- under Explanation 1 to section 37 of the Act. 31. Having heard the rival submissions and perused the materials availa....
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.... for correction of the amount of deduction as per the revised certificate before the A.O. Further to this, the ld. CIT(A) directed the A.O. to follow the order of the Tribunal in assessee's case for A.Y. 2008-09 with regard to the deduction on clinical trials, by relying on the decision of the Hon'ble Gujarat High Court in the case of Cadila Health Care Ltd [2013] (214 Taxman.com 672) t. 37. From the above observation, we find no infirmity in the order of the ld. CIT(A) in setting aside the issue to the file of the A.O. for examining the expenses claimed by the assessee and to be considered in light of the Hon'ble High Court decision is Cadila Health Care Ltd (supra), pertaining to the claim of the expenses relating to clinical trials. The assessee has raised the ground that the ld. CIT(A) has failed to give any finding on the eligibility of expenses incurred on foreign consultancy expenses, building repairs, etc. for weighted deduction u/s. 35(2AB) of the Act. In this regard, we direct the ld. CIT(A) to decide these issues raised by the assessee on merit of the case. Therefore, we remand this issue to the file of the ld. CIT(A) for the limited purpose of considering the eligi....