TMI Blog2022 (8) TMI 1444X X X X Extracts X X X X X X X X Extracts X X X X ..... his tribunal in the own case of assessee above , we set aside the finding of the learned CIT(A) to the extent of amount of exclusion of income on account of scrap sale whereas we uphold the finding of the learned CIT(A). With regard to the exclusion of interest and other income as discussed above, we hold that such income is not eligible for deduction under section 80-IE of the Act. Thus, the ground of appeal raised by the Assessee is hereby partly allowed. Deduction u/s 80IE - HELD THAT:- We find that issue on hand is covered by the order of the coordinate bench of this tribunal in the own case of the assessee for AY 2010-11as held that Revenue failed to demonstrate that machineries exceeding 20% of the total value of the plant machinery were old machinery. Therefore, considering the facts on this fold of grievance of the Revenue, we do not find any error in the order of theCIT(A). Assessee is entitled for deduction under section 80IE. Quashing the book result u/s 145(3) - HELD THAT:- As before rejecting the books of accounts, the AO must record the specific reasons for rejecting the books of accounts. Such satisfaction has to be established and substantiated based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for use of logo, trademark etc. The assessee has already paid 5% of turnover as remuneration to SPIL for extending facility, sale and distribution, R D, use of logo etc - as assessee has already paid remuneration at 5% of the turnover which has been accounted in the accounts. No further adjustment was required. This stand of the assessee in the case of SPI has been approved. We find that the finding of the CIT(A) is on this line, and we do not see any reason to deviate from the order of the ITAT, Amristar Bench on this issue - also supplementary deed was a contract amongst the partners to decide the terms either prospective or retrospective. Therefore, remuneration to the partners cannot be disallowed by the AO with help of section 40b of the Act. Explanation 4 to section 40b talks of working partner to whom remuneration can be paid. Apart from the above, ld.CIT(A) further observed that in a revised return assessee itself disallowed this expenditure suomoto. Once this amount has been added back, then the AO is not justified to add back it again. Deduction u/s 80-IB in respect of interest on delayed payments in question allowed and direct the AO to delete the additions. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase and in law, the Learned CIT (A) erred in upholding the assessment of interest on bank F.D., interest on loan to employees and other income under the head 'Income from other sources' instead of assessing the same under the head 'Profits and gains of business'. (b) The learned CIT (A) also erred in not appreciating that all the above receipts/incomes are arising from business activities and hence derived from the business of industrial undertaking. 2. The first issue raised by the assessee is that the learned CIT(A) erred in confirming the disallowances of deduction under section 80IA(10) of the Act for Rs. 2,13,425/- after invoking the provision of section 80IE(6) of the Act. 2.1 At the outset we note that the learned AR for the assessee before us submitted that he has been instructed by the assessee not to press the issue due to smallness of amount involved in dispute. Hence, the ground raised by the assessee is dismissed as not pressed. 3. The next issue raised by the assessee is that the learned CIT(A) erred in confirming the action of the AO by treating the sale of scrap, interest and other income aggregating to Rs. 14,54,919/- as income from oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its, interest of loan to employees and other income, which are assessable under the head income from other sources, and therefore, not eligible for grant of deduction under section 80IE. He pointed out that out of the amount of Rs. 8,59,701/- a sum of Rs. 7,08,144/- represent scrap sale. Break up of this amount has been noted by the CIT(A) on page no.46 of the impugned order. She drew our attention towards page no. 46 where the ld.CIT(A) has noticed the following details: Details of Other Income Amount (Rs.) Interest - received from bank F.D. 1,42,269/- Interest - received on loan to employees 1,8087- Scrap sale 7,08,144/- Miscellaneous Income 7,4807- Total 8,59,701/- 9. On the strength of the decision of Hon ble Gujarat High Court in the case of CIT Vs. Nirma Ltd., 367 ITR 12 he contended that scrap sale has a direct nexus with the business of the assessee. It is a by-product and this could not be assessed as income from other sources. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the assessee's ground on disallowance of deduction u/s 80IE of Rs. 13,61,50,69,980/- without appreciating the fact that the assessee firm was formed by the splitting up and reconstruction of the existing business of SPI and the condition that old / used machinery is less than 20% of the stipulated limit has not been fulfilled by the assessee. I(b) On the facts and circumstances of the case and in law, the Ld. C.I.T. (A) erred in holding that rejection of books of accounts in this case is not legally tenable and hence rejection of books of accounts by the A.O could not be upheld without appreciating that as per the provision of section 145((3) of the Act, it is not mandatory for the A.O. to make assessment in the manner prescribed in section 144 of the Act. I(c) On the facts and circumstances of the case and in law the Ld. C.I.T. (A) erred in not. upholding the A.O's action of rejection books of accounts without appreciating that the assessee during the course of assessment proceedings did not furnish the details called for, and hence considering the facts of the case, the A.O. correctly rejected the books of accounts of the assessee and recorded satisfaction note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0) on apportionment of selling and distribution expenses of Rs. 182,57,00,000/- incurred by the working partner without appreciating the fact that all the sales and distribution expenses were debited to SPIL and no allocation was made to SPI and SPS units as has been revealed during the proceedings of survey action u/s. 133A. III(b) On the facts and circumstances of the case the Ld. C.I.T. (A) erred in deleting the disallowance of deduction u/s. 80IE In respect of selling and distribution expenses without appreciating the A.O's finding on supplementary partnership deed and without appreciating that that selling and distribution expenses cannot be considered in conjunction with remuneration and such charging of remuneration was not accordance with the spirit of section 40(b) of the Act. IV(a) On the facts and circumstances of the case the Ld. C.l.T. (A) erred in deleting the disallowance of deduction u/s 80IE(6) r.w.s. 80IA(10) on apportionment of research and development expenses of Rs. 30,40,000/- incurred by the working partner without appreciating the fact that expenditure related to R D was debited only in the hands of SPIL but no allocation was made to SPI and SPS u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tary Deed of partners if at all, applicable can be only from a date on or after 15th March, 2012, The assessee can not correct its mistakes or undone the anomaly by creating a retrospective charge by a written or otherwise instrument. Such type of the legal and binding written instruments or acts or rules at best can be made by a sovereign Parliaments or the Judiciary. The assessee has simply made a supplementary deed of partnership and tried to give the retrospective effect to its acts of omission and commission. VII(a) On the facts and circumstances of the case and in law the learned CIT(A) erred in deleting the disallowance of deduction u/s 80IE(6) r.w.s. 80IA(10) on remuneration to working partner of Rs. 86,63,97,628/- without appreciating the fact that the assessee had claimed remuneration paid to SPIL on the basis of supplementary deed of partnership dated 15-03-2012 and the same was not allowable in light of the provisions of section 40(b) of the Income-tax Act, 1961. VII(b) On the facts and circumstances of the case and in law the learned CIT(A) erred in deleting the disallowance of deduction u/s 80IE(6) r.w.s. 80IA(10) on remuneration to working partner of Rs. 86,63, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim deduction under section 80IE is upheld in the first year of claim, the same cannot be disputed in the subsequent year on the same ground. The ld. AR vehemently supported the order of the ld. CIT-A. 8. We have heard the rival contention of both the parties and perused the materials available on record. At the outset, we find that issue on hand is covered by the order of the coordinate bench of this tribunal in the own case of the assessee for AY 2010-11 in ITA Nos. 3541/Mum/2017, where the bench vide order dated 16th May 2019 held as under: 18. Before adverting to the specific facts, we deem it appropriate to keep in mind that the assessee has moved an application under rule 46A of the Income Tax Rules, 1962 for permission to adduce additional evidence. In such application, it was contended by the assessee that the AO has issued a questionnaire on 12.11.2012 directing the assessee to file details on 29 counts. He directed the assessee to submit details of plant machinery as on 16.1.2009 as well as on 31.3.2010 along with relevant bills chronologically arranged and grouped as appearing in accounts. The assessment order has been passed on 19.3.2013. Since it was the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was ready for commercial production. The assessee firm was created on 15.1.2009. It booked cost through debit note on 5.3.2009 and journal entry. According to the AO, transfer of assets was just 15 days prior to the issue of provisional licence to manufacture on 20.3.2009 and 46 days prior to the commercial production which created a suspicion about establishment of a new undertaking at Sikkim. The AO thereafter made reference to the production and sales of Sun Pharma prior to splitting up and reconstruction and after such establishment of assessee-firm at Sikkim. On these circumstances, he harboured a belief that the assessee-firm has been established by splitting up and reconstruction of existing business which is a violation of sub-section (3) of section 80IE of the Act. On appeal, the ld.CIT(A) has re-appreciated this aspect and it was contended before the ld.CIT(A) that group was seeking its consolidated shares in the US market and to that end, it was required to secure US FDI approval which mean that unit(s) earmarked for production of export products could not be used for the purpose of domestic manufacture also. The assessee has further submitted that process of compliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs provided the undertaking is taken over as a running concern. Given that section 84 and 80IE are in parimateria, such deduction is available to an undertaking that acquires a running concern for the unexpired period of deduction. Therefore, once the undertaking remains unaffected or unchanged by subsequent change in the ownership, it cannot be said that the business of the undertaking has been reconstructed. Adverting to the facts of the appellant's case, it can be seen that the appellant had acquired the undertaking from SPI. The only change which took place is the ownership of the undertaking i.e. from SPI to SPS. Everything else remains the same. SPI had also filed an application vide letter dated 5th March 2009 (enclosed in Pages 124 125 of the paper book) before the Assistant Commissioner, Central Excise surrendering its Central Excise Registration for the Sikkim unit and stating that ownership of the undertaking has changed and that the capital goods purchased were never installed by SPI. There is also no dispute of the fact that the undertaking was under construction at the time when SPI sold it to the Appellant. Accordingly, the unit is transferred before commenceme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used old plant machinery exceeding 20%. The discussion made by the CIT(A) is worth to note. It reads as under: 4.2.10 The contentions of the appellant have been duly considered along with the findings AO. On perusal of the impugned order it is seen that while the AO, at the time of assessment noted that the appellant had furnished incomplete details of the addresses of suppliers to prevent verification, no such exercise was undertaken during remand proceedings when the appellant furnished the bills and vouchers for fresh verification. Test-check of the bills produced during these proceedings shows that the appellant's contention is borne out as follows: Sr. No. Name of Vendor Bill Amount Observations Of AO Remarks 122-6 122-7 in list of duplicate bills Suvidha Engineers India Ltd. 1,80,544/- Duplicate Bill is dated 01/01/2007 and pertains to HVAC System i.e. Heating, Air-conditioning and Ventilation system. 145-1 in list of duplicate bills Meckins Engineering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with storage and in built UPS. Invoice cum delivery challan available. 4.2.11 After considering the submissions of the appellant and the observations of the AO in the remand report, I find that on the issue of duplicate bills the AO has not carried out any independent enquiry to establish that such bills pertained to machinery that had already been put to use prior to its installation in the appellant's unit. In my considered opinion, the mere fact that a particular piece of plant or machinery is supported by a duplicate bill, by itself does not prove that the said item is second hand or used. The appellant's contention that many a time the original bills are retained by the State Government Check Post authorities etc. is not without weight. The bills purchased in the prior period are seen to be pertaining to the infra structural part of the new unit and nothing has been brought on record to show that such installation was utilized prior to the commencement of commercial production by the appellant, It is also seen that in most cases where the bills are duplicate or photocopies, the appellant has made other purchases from the same parties also for which ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it details work relating to excavation, filling, steel reinforcement, masonry, plaster and water-proofing work. In its submissions the appellant has continuously been stating that work relating to the Sikkim unit was initially undertaken by SPI and that it was only at a later stage that the appellant firm was brought into existence and that the plant and machinery etc. was duly assigned to the appellant firm. That being the case, civil work would have certainly begun much prior to 2009 and the fact that M/s Yuksom Engineering Works has Issued the final bill dated 31/03/2007 can only be taken as proof for completion of the works Indicated therein and not as evidence to show commencement of commercial production as the mere existence of an outside structure cannot by itself be taken to indicate that commercial work was going on inside it. 4.2.12 The AO has further observed that the commencement certificate issued by the Dept. of Commerce Industries, Govt. of Sikkim was issued on 14/12/2009 and from this fact inferred that the genuineness of the certificate was doubtful since while it gave the issue of date of commencement of production as 20/04/2009, it was issued 7 months later ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue from Sun Pharma Sikkim for the period October 2006 to March 2011. In this regard, the appellant has stated that the said notice was issued taking into account date of beginning of factory construction and that the appellant has only paid a fraction of the demand. From a perusal of the said document I find that it is merely a show cause which has been duly replied to by the appellant and that the document itself does reflect any adverse inference drawn by the Commercial Tax Division, Sikkim. 4.2.15 The AO has further sought to draw inference from the denial of deduction u/s 80IB(4) in the case of the sister concern Sun Pharma Industries Dadra Unit and Jammu Unit for A.Y. 2004-05 and 2005-06 to support his conclusions in the case of the appellant firm, stating that while the ITAT has decided the issue, the Department has not accepted the decision and the matter is pending adjudication before the High Court. A perusal of the orders passed by the Hon'ble ITAT in the case of SPI reveals that the Tribunal considered the issues related to disallowance of deduction u/s 80IB to SPI Jammu (on similar footing as in the present case), in detail in the orders passed for A.Y. 2005-06 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he orders of the ITAT passed in the case of its sister concern viz. Jammu Unit and Dadra Unit. Appeals of these units have been decided by the ITAT Amristar as well as Mumbai Bench. These orders have been placed on record i.e. ITA No. 184/ASR/2009 Asstt. Year 2005-06. 26. We have duly considered rival contentions and gone through the details. According to the AO, bills having value of Rs. 6.88 crores with regard to certain additions to plant machinery were not furnished. Therefore, he presumed such machinery as second-hand machinery. Against his presumption, the assessee has filed an application for permission to adduce additional evidence. It was contended therein that questionnaire issued on 12.11.2012; bills were lying at factory premises in Sikkim; staff was not well conversant with income tax proceedings; they were lying in boxes; hence in a short span of time, complete details could not be submitted. Thereafter, the assessee produced complete details. The remand report was called for by the ld.CIT(A) on those details. In the remand proceedings, each bill was analysed and objection of the AO were noted. The bills have been discussed by the CIT(A) and the details are avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aged pharmaceutical industries and found that the average NP declared by those assessee comes at 15.65%. Thus in view of the above the AO was of the opinion that the assessee in order to show higher profit which is eligible for deduction in its books of account and to reduce the profitability of parent company SPIL diverts the its ( the assessee) expenses in the books of the SPIL. Therefore, the AO called for certain details which were not provided by the assessee. 9.2 The AO also found that there was survey proceeding under section 133A of the Act carried out in case of the assessee as on 08-11-2011 and it was revealed that expenses such as research and development, selling and distribution and marketing and royalty etc incurred on behalf/for the assessee are claimed by the SPIL in its books. Thus, the AO in view of the above held that correctness of the books result declared by the assessee is not reliable and accordingly the AO rejected the books of the assessee by invoking the provisions of section 145(3) of the Act. 9.3 On appeal by the assessee, the leaned CIT(A) quashed the action for rejecting the books of account under section 145(3) of the Act by observing as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... account books maintained by the assessee, which are duly audited by an independent chartered accountant, there was no justification in rejecting the books of account and making the addition to the declared income. 5.6 The Hon'ble ITAT, Agra in the case of ITO vs Mayur Agarwal(2010) 133 TTJ 1 (Agra) was held that the books of account of the assessee could not be rejected by invoking the provisions of section 145(3) of the Act when no specific defect is pointed out in the books of account regularly maintained by the assessee or the method of accounting regularly employed by the assessee. In CIT vs Jacksons House (2010) 195 Taxman 402 (Del.) that additions made by alleging imagined manipulation without verifying the material available through field enquiry, and only based on own judgement, was held to be not justified. In ITO v. Girish M Mehta (20081 296 ITR (.AT) 125 (Rajkot), it was pointed out, that the precondition for estimating business income of the assessee, where an assessee keeps accounts is that the assessee's books should have been found to be unreliable or otherwise not capable of proving the assessee's income. However, in this case, it is found that the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecting the books in total such action would be illegal against the tenets of Law. In an identical case Kerala High Court in the case of CM. Francis Co. (P.) Ltd. v. CIT held that where purchase vouchers for agricultural produce purchased from agriculturists could not be produced, books of account cannot be rejected in total on the basis of such finding. Allahabad High Court in another case of Imran Ahmed v. CIT 1982 Tax LR (NOC) 111 (All.) held that on account of mere absence of vouchers to substantiate entries for the accounts, account in total cannot be rejected. In this scenario a very general finding made by the Assessing Officer without any specific focus on any particular item of expenditure, entire accounts cannot be rejected under Section 145(3). Action of the Assessing Officer clearly demonstrates that he could not gather any details or find any irregularity in maintenance of the books so as to justify rejection of books in toto. 5.8 Further, It was held by the Madhya Pradesh High Court in the case of Hemraj Nebhomal Sons v. C11120051 146 Taxman 345 (M.P.) that the assessee is not under obligation to satisfy the Assessing Officer as to the legitimacy and necessity o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per section 145(3) of the Act, the AO is empowered to reject the books of accounts of the assessee and make best judgment assessment in the manner as specified under section 144 of the Act if he is not inter-alia satisfied with the completeness or correctness of the books of accounts of the assessee. Generally, the instances for the rejection of books of account include when entries in respect of certain transactions are altogether omitted or incorrect or where the accounts show an abnormally low rate of profit or where there is an inherent lacuna in the system of accounting. However, the AO cannot use this power as a tool to reject the books of accounts merely due to non-maintenance of the stock register, variation in gross profit and non-furnishing of certain vouchers or its explanation or non confirmation of sundry creditors. Anyway, before rejecting the books of accounts, the AO must record the specific reasons for rejecting the books of accounts. Such satisfaction has to be established and substantiated based on facts and figures, which further depends on the circumstances of each case. Mere minor mistakes/typological errors/absence of stock registers/ lower GP may not ipso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions. 10.2 Without prejudice to the above, we also note that the AO after rejecting the books accounts has proceeded to disallow or recomputed the deduction under section 80IA of the Act on various different grounds. In other words, the AO has relied upon the same set of data/figures as shown by the assessee for making allowances or disallowances. As such, there was no iota of doubt on the genuineness of the other income and the expenses was brought on record by the AO. To our mind, once the books of accounts have been rejected, the AO has to estimate the profit and he has no right to make any individual addition or deletion to the total income of the assessee. However in the case on hand, the AO has not done so. In holding so we draw support and guidance from the judgment of this tribunal in case of Hynope Food and Oil Industries Pvt. Ltd reported in 48 ITD 202 where it was held as under: Section 145 deals with two situations : (a) where the method of accounting is faulty, and (b) where the accounts are not correct or complete. In the case of the former, the Assessing Officer is empowered to compute the income upon such basis and in such manner as he may determine. So fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the same, his predecessor in own case of the assessee for the A.Y. 2010-11 also found same modus operandi. Thus, the AO invoked the provision of section 80IA(10) read with section 80IE(6) of the Act and reduced the profit of the assessee firm by allocating the following expenses in turnover ratio which were assumed to be incurred by the parent company M/s SPIL on behalf/for the assessee. (i) Selling and distribution expenses for Rs. 182.57 crore (ii) Research and development expenses for Rs. 30.4 crore 11.2 Likewise the AO found that the assessee is using trade mark, brand and logo of M/s SPIL along with managerial services but no fee was paid by the assessee for the use of such trade mark, brand and logo or managerial services. The assessee also found that sister concern i.e. SPI also using the trade mark, brand and logo without paying royalty where the AO estimate the royalty at 8% of the turnover and managerial fees at 5% of turnover. Thus, following the same, the royalty fee of Rs. 139.42 crores allocated by the AO and also allocated the managerial fee for Rs. 87.14 crores being 5% of the turnover to the assessee firm. 11.3 The AO without prejudice to the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etween them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits then the AO would reasonably take the profit on the basis of relevant factors. In other words, there should be an assessee who is eligible for deduction under Chapter-VIA. It should have close connection with other person or for any other reasons demonstrating the facts that they have arranged their affairs in such a manner which is resulting extra profit to the assessee eligible for deduction under Chapter-VIA, on establishment of such factor the ld.AO would re-estimate the profit of the eligible units, and thereafter compute the deduction. 29. The expression the course of business between them is so arranged that the business transacted between them produces to the assessee more than the ordinary profits it indicates that there should be demonstrative facts on the record indicating the arrangement which resulted extra profit to the assessee, who is eligible for deduction under Chapter-VIA. Let us evaluate the circumstances highlighted by the AO, and whether he has able to lay his hand on the evidence demonstrating the arrangement between assessee and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be allocated among all the units which is being done herein below: A.Y. 2010-11 (Amount in Crores) Name Turnover % age of Turnover Expenses debited on account of Total Expenses debited Proportionate Expenditure allocated on the basis of turnover Selling Distribution Personnel staff cost (D (2) (3) (4) -(5) (6) (7) SPIL 1891.2 63% 122.3 76.9 199.2 132.8 SP1 496.5 16% 2.2 0 2.2 33.73 SPS 624 21% 9.4 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as per the original deed of partnership read with the supplementary deed dated 15.03.2012 it is evident that SPIL is to be remunerated for rendering various services to the appellant firm in the capacity of working partner. It is seen that the assertion of the AO that distribution and selling expenses are not incurred by the appellant is incorrect as appellant had debited Rs 9,4 crores to P L A/c as selling and distribution expenses. Further, the AO has. placed heavy reliance on the statements recorded from Mrs. Kalyana Sundaram, CEO of SPIL and Shri Sanjay Sahai, GM (Strategic Marketing Research) of SPILduring the survey proceedings. Both these persons have in the statements recorded stated that the marketing, selling and distribution activities are centralized functions. From the foregoing statement the AO inferred that the selling and distribution expenses incurred by the appellant are inadequate and that in actuality these are wholly incurred by SPIL and therefore, the profits of the appellant are overstated. However, as noted above, the inferences drawn by the AO suffer from factual inaccuracy inasmuch as the expenses incurred in relation to selling and distribution amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed order, the AO has placed heavy reliance on the statement recorded from Dr. T. Rajamannar to conclude that R D activity carried out by SPIL pertains to the appellant firm as well as SPI which fact is not denied by the appellant at any point in time. The appellant has explained that the products manufactured at the appellant unit are generic products. On consideration of facts it is apparent that the AO did not take into account the fact that the drugs being manufactured by the appellant firm did not enjoy high brand value but-were prescription drugs where the quality was more important than the brand recall. The AO also disregarded the decision passed by the Hon'ble Amritsar ITAT bench deleting the aforesaid addition in the case of SPI. Thus, on the facts of the case, there is nothing to show that the appellant should have paid any amount for R D work to SPIL, over and above the remuneration, Accordingly, the disallowance made cannot be sustained and is deleted. The ground raised by the appellant is therefore allowed. 32. The question is, whether the AO was possessing sufficient evidence to demonstrate that on account of close connection between the assessee and SPIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sales have been effected through that network. The assessee has debited expenditure of Rs. 9.4 crors. One can appreciate that if there were only few parties, through them sales were made, then looking into that network and the expenses debited by the assessee, can it be assumed that such a sale target could not be achieved on an incurrence of Rs. 9.5 crores. Let us be more specific. If an assessee sells hundred items produced by it, and those hundred items are being sold through four-five distributors. In other cases, an assessee is manufacturing 500 items, and selling its products through a number of distributions at micro level, their ratio of expenses would be totally different. The entity which is selling its products through four-five distributions would eventually incur less expenditure than the entities which is selling its products at micro level through large number of agents. It will end up incurring more expenditure. Thus, the angle of inquiry at the end of the AO should have been verification of distribution network, and thereafter to find out whether Rs. 9.5 crores is sufficient amount to achieve sale target of Rs. 624 cores. The AO has simply assumed existence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion at 5% of the turnover has been provided. This aspect has been considered by us as well as by the CIT(A) while considering the issues under the head Research and Development. In the case of SPI, this estimation of expenses under the head royalty at 8% of the turnover was deleted. We find that in the present appeals also ld.CIT(A) relied upon orders of the ITAT, Amristar Bench in ITA Nos. 345, 346, 13, 129 130 and ITA No. 391, 392, 18, 107 312. Copies of these orders have been placed in the paper book by the ld. counsel for the assessee. The finding of the ld.CIT(A) in this regard recorded in para 4.6.2 is worth to note, which reads as under: 4.6.2 On consideration of the facts related to the issue, I find that the disallowance has been made by the AO only on the basis of the similar disallowances made in the assessments in the case of SPI. Disallowance made under this head in the case of SPI-was deleted by the ITAT vide its orders no.ITA No. 345, 346, 13, 129 130 and ITA No. 391, 392, 18, 107 312. As observed before, the trade marks etc. belong to SPIL only and the appellant firm and SPI do not have any ownership rights in this regard. It is a fact that-the appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew taken by the CIT(A) is being upheld. ******************* 42. In the next ground of appeal, grievance of the Revenue is that the ld.CIT(A) has erred in deleting the disallowance of deduction under section 80IE(6) r.w.s. 80IA(10) on remuneration to working partner amounting to Rs. 29,02,26,973/-. 43. Brief facts of the case are that the assessee has executed a supplementary partnership deed on 15.3.2012 whereby it has provided that remuneration to the working partner, SPIL would be granted at 5% of the turnover. The assessee has debited this amount to an allowable expenditure and reduced it from deduction admissible under section 80IE. The ld.AO has disallowed the claim of expenditure and added back to this to the total income of the assessee. He further disallowed deduction admissible to the assessee on this amount. The ld.CIT(A) has deleted this disallowance for two reasons. She observed that the supplementary deed was a contract amongst the partners to decide the terms either prospective or retrospective. Therefore, remuneration to the partners cannot be disallowed by the AO with help of section 40b of the Act. Explanation 4 to section 40b talks of working partner to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E(6) r.w.s. 80IA(10) and thereby upholding the disallowance of Rs. 1,25,288/- on account of purchase of materials by the Appellant from SPIL. 2. Re: Assessing the interest other income under the head Income from other sources' Rs. 12,49,847/-. (a) On the facts and in the circumstances of the case and m law, the Learned CIT(A) erred in upholding the assessment of interest on bank F.D., interest on loan to employees and Interest on income tax refund under the head 'Income from other sources' instead of assessing the same under the head 'Profits and gains of business'. (b) The learned CIT (A) also erred in not appreciating that all the above receipts/incomes are arising from business activities and hence cleaved from the business of industrial undertaking. 15. The first issued raised by the assessee is that the learned CIT(A) erred in confirming the disallowances of deduction under section 80IA(10) of the Act for Rs. 1,25,288/- after invoking the provision of section 80IE(6) of the Act. 16. At the outset we note that the learned AR for the assessee before us submitted that he has been instructed by the assessee not to press the impugned ground of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO in the assessment order. 3.2 On the facts and circumstances of the case and in law, the learned CIT(A) has erred in allowing the assessee's ground on disallowance of deduction u/s 80IB of Rs. 264,48,12,798/- without appreciating the fact that the assessee firm was formed by the splitting up and reconstruction of the existing business of SP1, and the condition that used machinery is less than 20% of the stipulated limit, has not been fulfilled by the assessee. 3.3 On the facts and circumstances of the case and in law, the Ld, C.I..T. (A) erred in holding that the claim of the appellant in respect of deduction u/s. 80IE of the Act is allowable without appreciating that in the absence of proper details and bills, it could not be ascertained as to whether plant and machinery were new and not used earlier, and without appreciating that plant and machinery transferred by Sun Pharma Industries to Sun Pharma Sikkim was used by Sun Pharma Industries prior to put to use by Sun Pharma Sikkim, and hence such plant and machinery could not be regarded as new plant and machinery. 3.4 On the facts and circumstances of the case and in law the Ld. C.I.T. (A) erred in holding tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of deduction u/s 80IE(6) r.w.s. 80IA(10) on apportionment of research and development expenses of Rs. 21,45,000/- incurred by the working partner without appreciating the fact that expenditure related to R D was debited only in the hands of SPIL but no allocation was made to SPI and SPS units, as has been revealed during the proceedings of survey action u/s 133A, and the working of allocation of R D activity on the basis of turnover in the ratio of 3:1 is justifiable and reasonable. 5.2 On the facts and circumstances of the case the learned CIT(A) erred in deleting the disallowance of deduction u/s 80IE(6) r.w.s. 80IA(10) in respect of research and development expenses without appreciating that R D work requires specialized skill and knowledge, and consequently payment towards R D activity cannot be termed as remuneration but would be termed as professional payment. 6.1 On the facts and circumstances of the case and in law, the learned C1T(A) erred in deleting the disallowance of deduction u/s 80IE(6) r.w.s. 80IA(10) on apportionment of royalty expenses of Rs. 29,80,00,000/- without appreciating the fact that the assessee was using trademarks, brands and logo of SPIL for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the AY 2013-14 are identical to the issues raised by the Revenue in ITA No. 1397/Ahd/2017 for the assessment year 2012-13. Therefore, the findings given in ITA No. 1397/Ahd/2017 shall also be applicable for the year under consideration i.e. AY 2013-14. The ground of appeal of the Revenue for the assessment 2012-13 has been decided by us vide paragraph Nos. 10 to 10.3 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2012-13 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 22. The next issue raised by the Revenue is that the learned CIT(A) erred in deleting the disallowance of deduction claimed under section 80IE of the Act for Rs. 264,48,12,798/- only. 23. At the outset, we note that the issues raised by the Revenue in its grounds of appeal for the AY 2013-14 are identical to the issues raised by the Revenue in ITA No. 1397/Ahd/2017 for the assessment year 2012-13. Therefore, the findings given in ITA No. 1397/Ahd/2017 shall also be applicable for the year under consideration i.e. AY 2013-14. The gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion that, for the purpose of section 80-IB, the initial assessment year is to be reckoned from the date of commencement of commercial production and not from any earlier date. Holding the year under appeal as the 10th year for claiming deduction u/s 80IB(4) of the Act being bad in law, the claim of the appellant treating the year as the 8th year from the beginning with the initial assessment year needs to be allowed/accepted. 3. Re: Invoking the provisions of S. 80IB(13) r.w.s. 80IA(10): On the facts and in the circumstances of the case and in law, the Learned CIT(A) erred in upholding the invoking of the provisions of S. 80IB(13) r.w.s. 80IA(10) for the purpose of computing the deduction u/s. 80IB. Re: Disallowance of deduction u/s 80IB/10B in respect of interest income on staff advances - Rs. 71,284/- (Jammu Unit Rs. 11,572/- and Dadra Unit Rs. 59,712/- (a) On the facts and in the circumstances of the case and in law, the Learned CIT (A) erred in confirming the disallowance u/s 80IB/10B in respect of and to the extent of interest on loan to employees amounting to Rs. 71,284/- holding them to be not derived from the industrial undertaking. (b) The learned CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re us submitted he has been instructed by the assessee not to press this issue. Hence, the ground raised by the assessee is dismissed as not pressed. 33. The next issue raised by the assessee vide ground Nos. 4 and 5 of its appeal is that the learned CIT(A) erred in confirming the exclusion of interest income from computation of deduction u/s 80IB/10Bof the Act. 33.1 The assessee during the year has shown interest income received on account advance given to the staff for Rs. 11,572/- and Rs. 71,284/- in Jammu unit and Dadra unit eligible under section 80IB/10B of the Act. Similarly, the assessee also earned interest income on FD maintained with bank for Rs. 2,08,573/- only. However, the AO found that such interest income is not arising out of business of undertaking eligible for deduction and this view has been consistently taken by his predecessor. Thus, the AO excluded the same from the computation of deduction u/s 80IB/10B of the Act. 33.2 On appeal by the Assessee the learned CIT(A) also confirmed the view of the AO. 33.3 Being aggrieved by the order of the learned CIT(A) the assessee is on appeal before us. 33.4 The learned AR before us submitted that the issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... staff advances statutory/bank deposits. 34.1 Thus, respectfully following the consistent view of Amritsar tribunal in the own case of the assessee, we do not find infirmity in the finding of the learned CIT(A). Hence the ground of appeal of the assessee is hereby dismissed. 35. In the result appeal of the assessee is hereby dismissed. ITA No. 4096/Mum/2016 an appeal by the Revenue A.Y. 2011-12 (Sun Pharma Industries) 36. The revenue has raised the following grounds of appeal: 1. The learned Commissioner of Income-tax (Appeals) erred in holding that the industrial undertaking of the assessee firm at Dadra was not formed by the splitting up or reconstruction of the existing business of M/s. Sun Pharmaceuticals Industries Ltd. 2. The learned Commissioner of Income-tax (Appeals) erred in holding that the rejection of books of accounts of the assessee by the AO was not sustainable. 3. The learned Commissioner of Income-tax (Appeals) erred in deleting the disallowance made by the AO on account of deduction u/s 80IB in respect of Dadra Unit Rs. 8,30,03,087/-. 4. The learned Commissioner of Income-tax (Appeals) erred in deleting the disallowance made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. 37.3 Being aggrieved by the order of the learned CIT(A), the Revenue is in appeal before us. 37.4 The learned DR before us vehemently supported the stand of the AO by reiterating the findings contained in the assessment order which we have already adverted to in the preceding paragraph. Therefore we are not repeating the same for the sake of brevity. 37.5 On the other hand learned AR before us submitted issue is covered in favour of the assessee by the order of this Tribunal in the own case of the assessee for AY 2010-11 bearing ITA No. 2465/Mum/2014. 38. We have heard the rival contentions of both the parties and perused the materials available on record. We found that the issue on hand is covered in favour of the assessee by the order of the coordinate bench of Mumbai Tribunal in own case of the assesse for A.Y. 2010-11 bearing ITA No. 2465/Mum/2014 where the coordinate bench by following the order of Amritsar tribunal in own case of the assessee for A.Y. 2005-06 to A.Y. 2009-10 decided the issue in favour of the assessee. The relevant finding of the coordinate bench in ITA No. 2465/Mum/ 2014 reads as under: 15. So far as the department's appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO is not sustainable. 40. At the outset we note that the issues raised by the Revenue in its grounds of appeal is identical to the issues raised by the Revenue in case of sister concern of the assessee namely Sun Pharma Sikkim bearing ITA No. 1397/Ahd/2017 for the assessment year 2012-13. Therefore, the findings given in ITA No. 1397/Ahd/2017 shall also be applicable for the ground of appeal raised by the Revenue in case of assessee on hand i.e. Sun Pharmaceutical Industries. The ground of appeal of the Revenue for Sun Pharma Sikkim bearing ITA No. 1397/Ahd/2017 has been decided by us vide paragraph nos. 10 to 10.3 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for Sun Pharma Sikkim bearing ITA No. 1397/Ahd/2017 shall also be applied for the ground of appeal raised by the Revenue for the assessee on hand. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 41. The next issue raised by the Revenue vide ground Nos. 4 to 6 of its appeal is that the learned CIT(A) erred in deleting the allocation of notional royalty expenses, managerial fee, selling and distribution expenses to Jammu and Dadra unit b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ised by the Revenue vide ground No. 7 of its appeal is that the learned CIT(A) erred in deleting the disallowances/exclusion of excise duty refund from computation of deduction u/s 80IB of the Act. 42.1 During the year, the assessee received refund of central excise duty of Rs. 1,53,23,302/- in Jammu unit which was included in the income for the purpose of deduction u/s 80IB of the Act. However the AO held that the refund of central excise is not derived from the business activity of the eligible undertaking. In holding so, the AO given reasoning at length in his order and relied on various case laws. Thus the AO excluded/disallowed the same from the computation of deduction. 42.2 On appeal by the assessee, the learned CIT(A) following the order of the Amritsar Tribunal in the own case of the assessee for AY 2004-05 to 2008-09 deleted the disallowance made by the AO. 42.3 Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us. 42.4 The learned DR before us vehemently supported the stand of the AO by reiterating the findings contained in the assessment order which we have already adverted to in the preceding paragraph. Therefore we are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the assessee for A.Y. 2004-05 to 2008-09 deleted the disallowances made by the AO. 44.3 Being aggrieved by the order of the learned CIT(A) the Revenue is in appeal before us. 44.4 The learned DR before us vehemently supported the stand of the AO by reiterating the findings contained in the assessment order which we have already adverted to in the preceding paragraph. Therefore we are not repeating the same for the sake of brevity. 44.5 On the other hand learned AR before us submitted issue is covered in favour of the assessee by the order of the tribunal in own case of the assessee for A.Y. 2010-11 bearing ITA No. 2465/Ahd/2014. 45. We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we find that the issue on hand is covered in favour of the assessee by the order of the coordinate bench of Mumbai Tribunal in own case of the assessee for AY 2010-11 bearing ITA No. 2465/Mum/2014 where the coordinate bench by following the order of Amritsar Tribunal in own case of the assessee for AY 2005-06 to AY 2009-10 decided the issue in favour of the assessee. The relevant finding of the coordinate bench in ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,63,741/- which was claimed in Jammu unit, Dadra unit as well as in Dadra EOU unit in following manner: Dadra Unit Jammu Unit Dadra-EOU Remuneration to Partners u/s 40(b) Rs. 2,02,55,937/- Rs. 3,38,38,383/- Rs. 7 8,69,391/- *Disallowances u/s 43B on a/c of earned leave Bonus Rs. 4,29,322/- Rs. 1,22,763/- Rs. 30,095/- Total Rs. 2,06,85,259 Rs. 3,39,61,146/- Rs. 78,99,486/- (* the assessee has already added back the same in its computation.) 46.2 The AO disallowed the deduction of partner remuneration under section 40(b)(i) of the Act for reason that remuneration was not paid to individual partner. Thus the profit of eligible unit being Dadra and Jammu unit increased due to disallowances of remuneration expenses. However the AO also excluded the amount of addition on account of partner s remuneration disallowances from computation of deduction under section 80IB of the Act on reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the facts in assessee's own case for the assessment year 2004-05 decided by us hereinabove, following the same, ground No. 4 5 of the Revenue are dismissed. 27. Respectfully following the findings of the Amritsar Tribunal we, dismiss this ground of appeal of the Revenue. 47.1 Thus, respectfully following the consistent view of Tribunal in the own case of the assessee, we do not find any infirmity in the finding of the learned CIT(A). Hence the ground of appeal raised by the Revenue is hereby dismissed. 48. The next issue raised by the Revenue vide ground No. 10 of its appeal is that the learned CIT(A) erred in deleting the disallowance of deduction under section 80IB on account disallowances of expenses under section 43B of the Act. 48.1 During the assessment proceeding the AO disallowed the deduction of earned leave for Rs. 5,82,180/- under the provision of section 43B of the Act by holding that the same has not been paid till the due date of furnishing the return of income. Thus the profit of eligible unit being Dadra and Jammu unit increased due to disallowances of the said expense. However, the AO also excluded the amount of addition on account above disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , vide its order dated 11.06.2010 in ITA No 184(Asr)/2009 in assessee's own case vide paras 37 to 40 at pages 67 to 69 (pages 190 to 192P8), wherein ITAT, Amritsar Bench, has allowed the claim of the assessee on the consequential higher amount eligible foe deduction under section 80IB of the Act. Following the said order of the Tribunal, dated 11.06.2010 these grounds of the Revenue are dismissed. 29. In view of the decisions of the Tribunal in assessee's own cases we uphold the findings of the Ld. CIT(A) and dismiss this ground of Revenue's appeal. 49.1 Thus, respectfully taking the consistent view of tribunal in own case of the assessee, we do not find any infirmity in the finding of the learned CIT(A). Hence the ground of appeal raised by the Revenue is hereby dismissed. 50. The next issue raised by the Revenue vide ground No. 11 of its appeal is that the learned CIT(A) erred in deleting the disallowance of the deduction under section 80IB on account allocation of R D expenses. 50.1 During the assessment proceeding, the AO found that the assessee is engaged in the business of manufacturing and formulation of pharmaceutical products which requires R D ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gies are completely owned by SPIL and that neither the appellant firm nor SPI hold any rights of ownership. In the impugned order, the AO has placed heavy reliance on the statement recorded from Dr. T. Rajamannar to conclude that R D activity carried out by SPIL pertains to the appellant firm as well as SPI which fact is not denied by the appellant at any point in time. The appellant has explained that the products manufactured at the appellant unit are generic products. On consideration of facts it is apparent that the AO did not take into account the fact that the drugs being manufactured by the appellant firm did not enjoy high brand value but were prescription drugs where the quality was more important than the brand recall. The AO also disregarded the decision passed by the Hon'ble Amritsar ITAT bench deleting the aforesaid addition in the case of SPI. Thus, on the facts of the case, there is nothing to show that the appellant should have paid any amount for R D work to SPJL, over and above the remuneration. Accordingly, the disallowance made cannot be sustained and is deleted. The ground raised by the appellant is therefore allowed. 16.6 My predecessor in appellant& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the learned CIT(A). Hence the ground of appeal raised by the Revenue is hereby dismissed. 52. In the result appeal filed by the Revenue is hereby dismissed. ITA No. 2595/Mum/2018 an appeal by the Assessee A.Y. 2012-13 (Sun Pharmaceutical Industries) 53. The Assessee has raised the following grounds of appeal: 1. The orders of the lower authorities are arbitrary, not based on proper evidences, without proper reasons, invalid and also bad in law. 2. Re: Initial assessment year u/s 80-IB(14)(c) read with sec. 80-IB(2)(ii) (a) On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) [hereinafter referred to as Learned CIT (A)], while allowing the deduction under section 80-IB(4) in respect of profit from industrial undertaking at Dadra, erred by considering the previous year as 11th year of operation [i.e. after expiry of eligible period of 10 years] as against the assessee's claim of 9th year of operation. (b) The learned CIT (A) has not appreciated the facts in proper perspective and erred in not appreciating the legal position that, for the purpose of section 80-IB, the initial assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal is that the learned CIT(A) erred in upholding the year under consideration as 11th year of claim u/s 80IB(4) with regard to Dadra undertaking against the 9th year claimed. 56. At the outset, we note that the issue raised by the assessee in its grounds of appeal for the AY 2012-13 is identical to the issue raised by the assessee in ITA No. 3507/Mum/2016 for the assessment year 2011-12. Therefore, the findings given in ITA No. 3507/Mum/2016 shall also be applicable for the year under consideration i.e. AY 2012-13. The appeal of the assessee for the assessment 2011-12 has been decided by us vide paragraph no. 30 of this order against the assessee. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2011-12 shall also be applied for the year under consideration i.e. AY 2012-13. Hence, the ground of appeal filed by the assessee is hereby dismissed. 57. The next issue raised by the assessee vide ground no. 4 and 5 of its appeal is that the learned CIT(A) erred in confirming the exclusion of interest income from computation of deduction u/s 80IB/10B of the Act. 58. At the outset, we note that the issues raised by the assessee in it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was using trademarks, brands and logo of SPIL, a major partner, for which neither any fee or royalty is charged and hence disallowance made @ 8% of sales adopted by the Assessing Officer is justifiable and reasonable. 4.2 On the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the disallowance of deduction u/s 80IB(13) r.w.s. 80IA(10) on apportionment of royalty expenses without appreciating that the assessee in the guise of payment in the nature of remuneration for technical services of the nature of royalty adopted a device to inflate its non taxable income as is evident from the fact that assessee itself had admitted that it had included compensation for use of trademark, brand name etc as remuneration and that compensation could not be equated with remuneration. 5.1 On the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the disallowance of deduction u/s 80IB(13) r.w.s. 80IA(10) on apportionment of management fees of Rs. 23,78,81,123/- without appreciating the fact that the affairs of the assessee were managed by SPIL, the working partner, and nothing is paid or charged by SPIL and hence disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 On the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the disallowance of deduction u/s 80IB on remuneration to working partner of Rs. 15,53,28,841/- without appreciating the fact that the assessee had claimed remuneration paid to SPIL on the basis of supplementary deed of partnership dated 15-032012 and the same was not allowable in light of the provisions of section 40(b) of the Income-tax Act, 1961. 8.2 On the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the disallowance of deduction u/s 80IB on remuneration to working partner of Rs. 15,53,28,841/- without appreciating the A.O's findings in the assessment order particularly with regard to assessee's reliance on supplementary partnership deed for inflating its profit for claiming higher deduction u/s. 80IB of the Act. 9.1 On the facts and circumstances of the case and in law, the learned CIT(A) erred in deleting the disallowance of deduction u/s 80IB(13) in respect of disallowance of Rs. 15,52,384/- made u/s 43B of the Act without appreciating the facts that the AO has made addition on account of excise duty and earned leave due to non d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es raised by the Revenue in its grounds of appeal for the AY 2012-13 are identical to the issues raised by the Revenue in ITA No. 4096/Mum/2016 for the assessment year 2011-12. Therefore, the findings given in ITA No. 4096/Mum/2016 shall also be applicable for the year under consideration i.e. AY 2012-13. The appeal of the assessee for the assessment 2011-12 has been decided by us vide paragraph no. 38 to 38.1 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2011-12 shall also be applied for the year under consideration i.e. AY 2012-13. Hence, the ground of appeal filed by the Revenue is dismissed. 67. The next issue raised by the Revenue vide ground no. 4 to 6 of its appeal is that the learned CIT(A) erred in deleting the allocation of notional royalty expenses, managerial fee, selling and distribution expenses to Jammu and Dadra unit by invoking the provision of section 80IB(13) r.w.s. 80IA(10) of the Act. 68. At the outset we note that the issues raised by the Revenue in its grounds of appeal for the AY 2012-13 are identical to the issues raised by the Revenue in ITA No. 4096/Mum/2016 for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, the ground of appeal filed by the Revenue is dismissed. 73. The next issue raised by the Revenue vide ground no. 10 of its appeal is that the learned CIT(A) erred in deleting the disallowances deduction under section 80IB on account disallowances of expenses under section 43B of the Act. 74. At the outset we note that the issues raised by the Revenue in its grounds of appeal for the AY 2012-13 are identical to the issues raised by the Revenue in ITA No. 4096/Mum/2016 for the assessment year 2011-12. Therefore, the findings given in ITA No. 4096/Mum/2016 shall also be applicable for the year under consideration i.e. AY 2012-13. The appeal of the assessee for the assessment 2011-12 has been decided by us vide paragraph no. 49 to 49.1 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2011-12 shall also be applied for the year under consideration i.e. AY 2012-13. Hence, the ground of appeal filed by the Revenue is dismissed. 75. The next issue raised by the Revenue vide ground no. 10 of its appeal is that the learned CIT(A) erred in deleting the disallowance of deduction under section 80IB o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oking of the provisions of S. 80IB(13) r.w.s. 80IA(10) for the purpose of computing the deduction u/s. 80IB, 4. Re: Disallowance of deduction u/s 80IB/10B in respect of interest income on staff advances - Rs. 90,324/- (Jammu Unit-I- Rs. 9,787/-, Jammu unit-II - Rs 19,873/-and Dadra Unit Rs 60,664/-) (a) On the facts and in the circumstances of the case and in law, the Learned CIT (A) erred in confirming the disallowance u/s 80IB/10B in respect of and to the extent of interest on loan to employees amounting to Rs. 90324/- holding them to be not derived from the industrial undertaking. (b) The learned CIT (A) also erred in not appreciating that the section 80IB/10B grants deduction in respect of 'any profits from any business' of the industrial undertaking. 5. Re: Disallowance of deduction u/s 80IB in respect of interest income - Rs. 79,922/- on bank FDR (Jammu Unit-I Rs. 65,601/s Dadra Unit Rs. 14,321/-) (a) On the facts and in the circumstances of the case and in law, the Learned CIT (A) erred in confirming the disallowance u/s 80IB in respect of and to the extent of interest on FDRs amounting to Rs.79,922/ - holding them to be not derived from the industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment year 2011-12 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the ground of appeal filed by the assessee is hereby dismissed. 84. The next issue raised by the assessee vide ground no. 6 is either consequential or premature to decide. Hence the same is dismissed accordingly. 85. In the result appeal of the assessee is hereby dismissed. ITA No. 1467/Ahd/2018 an appeal by the Revenue A.Y. 2013-14(Sun Pharmaceutical Industries) 86. The Revenue has raised following grounds of appeal: 1. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assessee and in not confirming the additions made by the AO on these issues. 2.1 On the facts and circumstances of the case and in law, the Ld. C.I.T. (A) erred in holding that rejection of books of accounts in this case is not legally tenable without appreciating the facts and reasons mentioned by the AO in the assessment order. 2.2 On the facts and circumstances of the case and in law, the Ld. C.I.T. (A) erred in not upholding the A.O's action of rejection of books of accounts without appreciating that the assessee during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een revealed during the proceedings of survey action u/s. 133A. 6.2 On the facts and circumstances of the case and in law, the Ld. CIT (A) erred in deleting the disallowance of deduction u/s. 80IB in respect of selling and distribution expenses without appreciating the A.O's finding on supplementary partnership deed and without appreciating that selling and distribution expenses cannot be considered in conjunction with remuneration and such charging of remuneration was not in accordance with the spirit of section 40(b) of the Act. 7.1 On the facts and circumstances of the case and in law, the learned CIT(A) has erred in allowing the assessee's ground on disallowance of deduction u/s 80IB in respect of receipt of interest of Rs. 5,03,91,648/- on delayed payments on sales without appreciating the facts and reasons mentioned by the AO in the assessment order. 7.2 On the facts and circumstances of the case and in law, the learned CIT(A) has erred in allowing the assessee's ground on disallowance of deduction u/s 80IB in respect of receipt of interest on delayed payments on sales without appreciating the fact that this was not derived from manufacturing activity and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re general in nature and not requiring any separate adjudication. Hence the same are being dismissed as infructuous. 88. The next issue raised by the Revenue vide ground No. 2 of its appeal is that the learned CIT(A) erred in holding that the books of account rejected by the AO is not sustainable. 89. At the outset we note that the issues raised by the Revenue in its grounds of appeal for the AY 2013-14 are identical to the issues raised by the Revenue in ITA No. 4096/Mum/2016 for the assessment year 2011-12. Therefore, the findings given in ITA No. 4096/Mum/2016 shall also be applicable for the year under consideration i.e. AY 2013-14. The appeal of the assessee for the assessment 2011-12 has been decided by us vide paragraph no. 40 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2011-12 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the ground of appeal filed by the Revenue is dismissed. 90. The next issue raised by the Revenue vide ground No. 3 of its appeal is that the learned CIT(A) erred in holding that Dadra unit was not formed by splitting of existing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee for the assessment 2011-12 has been decided by us vide paragraph no. 45 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2011-12 shall also be applied for the year under consideration i.e. AY 2013-14. Hence, the ground of appeal filed by the Revenue is hereby dismissed. 96. The next issue raised by the Revenue vide ground No. 8 of its appeal is that the learned CIT(A) erred in deleting the disallowance of deduction under section 80IB of the Act on account of remuneration paid to partner. 97. At the outset we note that the issues raised by the Revenue in its grounds of appeal for the AY 2013-14 are identical to the issues raised by the Revenue in ITA No. 4096/Mum/2016 for the assessment year 2011-12. Therefore, the findings given in ITA No. 4096/Mum/2016 shall also be applicable for the year under consideration i.e. AY 2013-14. The appeal of the Revenue for the assessment 2011-12 has been decided by us vide paragraph no. 47 of this order against the Revenue. The learned AR and the DR also agreed that whatever will be the findings for the assessment year 2011-12 shall also be appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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