TMI Blog2016 (11) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... est has been charged by Celestial Biologicals Limited and its promoters are only trying to help the assessee financially. If the promoters were to take any undue advantage, they would have preferred to draw interest from assessee and ask for complete loan repayment. The Assessing Officer has not considered the fact that the Celestial Biologicals Limited has given interest free unsecured loan of ₹ 3.36 crores and closing balance of ₹ 2.26 crores as on 31.03.2009. - Decided in favour of assessee. - ITA No.399/Ahd/2013 - - - Dated:- 17-11-2016 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER Appellant by : Shri T.P. Hemani, A.R. Respondent by : Shri Mudit Nagpal, Sr. D.R. ORDER PER MAHAVIR PRASAD, J.M. This is an appeal against the order of CIT(A) and following grounds have been taken by the assessee : 1. The Id. CIT(A) has erred both in law and on the facts of the case in confirming the action of Id. AO in holding that the Appellant Trust has provided undue benefit to the concern falling u/s 13(3)(c) of the Act and accordingly erred in not allowing exemption of ₹ 18,63,860/- claimed u/s 11 12 of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been considered before passing the impugned order. This action of the lower authorities is in clear breach of law and Principles of Natural Justice and therefore deserves to be quashed. 7. The Id. CIT(A) has erred in law and on facts in confirming the action of Id. AO in charging interest u/s 234B/C/D of the Act. 8. The Id. CIT(A) has erred in law and on facts in confirming the action of Id. AO in initiating penalty proceedings u/s 271(1)(c) of the Act. The appellant craves leave to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 2. The facts of the case are that the appellant company had entered into business transaction with Celestial Biologicals Limited (an associate of assessee Company). During the year under consideration, the total value of transaction amounting to ₹ 30,26,652/- and the nature of transaction being distribution of blood components , the blood component being Fresh Frozen Plasma (FFP). As per the details furnished by the assessee company in it's submission dated 21.11.2011, the assessee had supplied 19950 units of FFP to Celestial Biologicals Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . As is evident from the bills furnished by you, no service charges have been charged from Celestial Biologicals Ltd. On the other hands, it is observed that you have distributed/supplied 15,635 units of FFP to patients during the year @ ₹ 600.00 per unit (each unit admeasuring to 200 ml approximately). Apart from that, as is evident from the bills furnished by you, service charges amounting to ₹ 80.00 per unit have also been charged from the patients. Therefore, the total fees charged from the patients per unit (200 ml) of FFP is ₹ 680.00. So, the amount charged per liter from common patients is ₹ 3,400/- (i.e., more than six times of the rate charged from the referred company). As per the information available with this office, Celestial Biologicals Ltd. is a corporate entity (currently, on indirect subsidiary of Intas Pharmaceuticals Ltd., whose main promoter is Chudgar family) engaged in the production of blood products and being a business entity, aiming at profit maximization. You (Advanced Transfusion Medicine Research Foundation) have been granted registration u/s 12A(a) of the I.T. Act, 1961 with the understanding/rationale that the company (Advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Frozen Plasma (FFP). Fresh Frozen Plasma can be converted in to Cryo Poor Plasma (CPP) and Cryoprecipitate (CPT). Requirement of these 3 components directly by the patients is not in the ratio of 1:1:1. 2) There is almost 100% demand for red blood cells, whereas platelets are demanded about 30% of total blood collection Fresh Frozen Plasma is demanded about 15-20% of total blood collection. This is as per the medical requirement across the country. Please find enclosed data since inception (last 10 years) which clearly shows distribution of blood components to needy patients directly from Prathama. Thus, there is surplus of Fresh Frozen Plasma. 3) Surplus platelet has no medical use and they are destroyed after deactivation. Fresh Frozen Plasma has a pharmaceutical use. It can be converted into different types of plasma fractionation proteins in a facility called Plasma Fractionation Facility 4) At the beginning of Prathama's operation, in yr-2000 there existed only one semi-functional National Plasma Fractionation Centre (NPFC) at KEM Hospital, Mumbai, with a capacity of only 10,000 ltrs. p.a. plasma fractionation. There was competition amongst blood bank to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al in year 2006-07. As they were the best payers for the surplus plasma. e. From July 2011, we started getting better deals from Reliance Life sciences and we had switched over to supply plasma o them. 10. However, the Plasma sent for fractionation always brings less revenue compared to that given directly to patients it is considered as by product and not the main product. 11. Since July 2011, we have shifted our plasma supply to Reliance Life science at prices for FFP at ₹ 1400/ltr. and CPP ₹ 600/ltr. (Agreement copy attached). 12. Current testing charges of FFP issued directly to patients are as under: Sr. No. Name of Product General Charges AMC/BPL Charges 1. FFP-Large Rs.650 Rs.450 2. FFP-Medium Rs.600 Rs.420/- These prices are in line with FFP charges applicable across the country and to help us recover cost of operation. 13) We hope, this would make you believe that prices for surplus plasma is totally market driven and has not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee as per the accounting principles in the case of an assessee with business income. The claim of the assessee for set-off and carry forward of deficit of earlier years worth ₹ 8,23,58,027/- was disallowed as the same were not business losses as per Income Tax Act. 4. The assessee has claimed depreciation of ₹ 43,99,739/- in the income and expenditure account. The assessee was specifically asked to furnish the Profit Loss account and balance sheet as per the Indian accounting standards, but the assessee has failed to do so. The assessee has not furnished the detailed working of depreciation as per Income Tax Act. The capital expenditure incurred on fixed assets has been allowed as expenditure in the earlier years as application of fund, and allowing of depreciation as further application of receipts in subsequent year would apparently be double deduction which would be apparently inconsistent with accounting principles and not so provided in law and hence untenable. In view of above facts, the claim of depreciation of ₹ 43,99,739/- is disallowed and added to the income of the assessee company. 5. The assessee has claimed net application of income b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 11 and benefit of application of income by purchase of fixed assets should have been given. 8. The Assessing Officer has not seen the fact that there are no transactions between assessee and Celestial Biologicals Limited in the assessment years 2001-02 to 2004-05. It has started from assessment year 2005-06 and that too is very negligible compared to total production of FFP in the assessment years 2005-06, 2006-07 2007- 08 and the same is between 40% to 50% of total production of FFP during the assessment years 2008-09 to 2011-12. Further, the Assessing Officer has not seen the fact that the assessee has stopped transaction during the assessment year 2012-13 as it got some better deal from Reliance which was tried in previous years also but did not work out. It also shows the intention of the assessee. If the assessee wants to take any undue benefit under the heading of trust then transactions must have been continued in the assessment year 2012-13. On page no.91 and 92 of the paper book, the FPP at the same rate was sold to other blood banks also but this fact was not considered by the Assessing Officer as life of FPP is one year because it is a perishable item and after o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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