×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
The Revenue has filed the above mentioned appeals against the different order passed by the Commissioner of Income Tax (Appeals)-24, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Ys. 2009- 10 & 2011-12.
2. The Revenue has filed the present appeals against the order dated 02.02.2016 passed by the Commissioner of Income Tax (Appeals)-24,Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y. 2009- 10.
3. The Revenue has raised the following grounds: -
“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the reduction done by AD in the claims the assessee for deduction under section 10B of the Act invoking the provisions of section 80IA(10)/69-C of the Act.
2. On the facts and circumstances of the case and in law, the Id CIT (A) has erred in deciding that net profit @84% in not "more than ordinary profits" despite the fact that close connection between the parties carrying on he eligible business has been established and the course of business between the parties is so arranged that the business transacted between them earned "n-tore than ordinary profits"
3. The appellant prays that the order of CIT (A) on the above ground be set aside and that of the assessing officer be restored.
4. The appellant craves leave to add, amend or alter any of the grounds or add a new ground which may be necessary."
4. The brief facts of the case are that the assessee filed its e-return of income on 24.09.2009 declaring total income to the tune of Rs.4,26,73,588/-. The return was processed u/s 143(1) of the I.T. Act, 1961. Thereafter, the case was selected for scrutiny. Notices u/s 143(2) & 142(1) of the Act were issued and served upon the assessee. The assessee was engaged in the business of manufacturing key intermediates used in production of anti-ulcerant drug pantoprazole. During the year of under consideration, Export sales was shown to the tune of Rs.205,90,43,906/- and other related income in sum of Rs.6,07,16,078/-. Net profit was computed in sum of Rs.154,35,36,062/-. Since the assessee was having international transactions, therefore, the matter was referred to the Addl. Commissioner of Income-tax (Transfer Pricing)-II(6), Mumbai who did not made any adjustment to arm’s length price with reference to the international transaction vide order dated 31.08.2012 passed u/s 92CA(3) of the Act. The assessee claimed the deduction u/s 10B of the Act of Rs.151.04 crores. The claim of the assessee was declined on the basis of the reasons explained while finalizing the assessment of the assessee for the A.Y. 2006-07 and the total income of the assessee was assessed to the tune of Rs.155,35,32,810/- and book profit u/s 115JB of the Act in sum of Rs.154,31,59,062/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us.
5. We have heard the argument advanced by the Ld. Representative of the parties and perused the record. Before going further, we deem it necessary to advert the finding of the CIT(A) on record.: -
“2.4.5 G ound Nos. 1 & 2 are in respect of partial disallowance of claim for exemptio u/s 10B. Briefly stated the appellant company is manufacturer of key intermediates used in production of anti-ulcerant drug 'Pan oprazole' viz. KSM-6 and KSM-14 (in short). During the assessment year in question, the appellant company was a Joint Venture between the Nycomed GMBH, Germany and Cadilla Healthcare Limited, Ahmedabad. It had started its commercial production in year 2001-02 and as per the terms of the Joint Venture Agreement, the appellant company supplied all intermediates manufactured by it exclusively to Nycomed GMBH, Germany. The appellant company claimed deduction u/s 10B on the income earned from the above During the year it had shown sales of Rs.199.83 crore at a cost of production bf R16.25 crore and its gross profit margin worked out to 81% with net profit margin profit of 77%. Further, it was seen from the information furnished by the appellant that KSM-6 was sold at Euros 182 per kg equivalent to approximately Rs.10,323/- per kg and KSM-14 at Euros 200 per kg equivalent to approximately Rs.14,379/-