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TMI Blog2016 (11) TMI 1416X X X X Extracts X X X X X X X X Extracts X X X X ..... e Grounds of Appeal before Id. CIT(A) without adjudicating on merits : "2. The Learned Assessing Officer has erred in disallowing depreciation of Rs. 43,99,739/- as capital expenditure has been allowed as expenditure in the earlier year as application of fund. 3. The Learned Assessing Officer has erred in disallowing "net application of income by purchase of fixed assets during the year worth" Rs. 13,09,804/- claimed by the assessee u/s 11. 4. The Learned Assessing Officer has erred in disallowing Business Loss of Rs. 8,23,58,027/- to be carry forward as deduction u/s 11 has been withdrawn." 3. Alternatively and without prejudice to above, even if it is held that the alleged benefit is provided to the concern as per S.I3 of the Act, then also, entire exemption as claimed u/s 11 of the Act cannot be declined and it can be declined only vis-a-vis the alleged transactions in violation of S.13. 4. Alternatively and without prejudice to above raised grounds, even if it is held that the Appellant-Trust is not eligible for exemption as claimed u/s 11 of the Act and exempt income is treated as taxable business income, appropriate directions may be issued to compute the income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 200 ml. approximately). Apart from that, as evident from the bills furnished by the assessee, service charges amounting to Rs. 80/- per unit were also charged from the patients. Therefore, the total fee charged from the patients per unit (200 ml) of FFP came to Rs. 680/-. Celestial Biologicals Limited, which is the associate of Advanced Transfusion Medicine Research Foundation is a subsidiary of Intas Biopharmaceuticals Limited (as per the reliable data available with this office, source of information being Red Herring Prospectus of Intas Pharmaceuticals Limited). The Board of Directors of Celestial Biologicals Limited include Dr. Urmish Chudgar (also the Managing Director of the assessee Company) and Mr. Nimish Chudgar (also the Director of the assessee Company). In order to understand the logic/rationale behind the business transaction between advanced Transfusion Medicine Research Foundation and Celestial Biologicals Limited, the Assessing Officer found it necessary to understand the family profile of Chudgar family and its business interests and is having 29.8% stake in Intas Biopharmaceuticals Limited directly and more than 95% stake indirectly (as the Chudgar family is h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogicals Ltd.), which is an associate concern of the assessee, at highly subsidized rates (as discussed above) be called as charity when the I same blood component (FFP) is distributed to needy patients at much higher rates?" On the basis of above discussion, you are required to show cause as to why deduction u/s 11 of the Act be not denied and the income of the Company be brought to taxation as per normal provisions of the Act. * On the basis of above discussion, it becomes very clear that the Chudgar family is having complete shareholding in the company (Advanced Transfusion Medicine Research Foundation). Apart from that, it also becomes very clear that Chudgar family is having majority share holding in Celestial Biologicals Ltd. indirectly (as the Chudgar family is having the majority shareholding in Intas Biopharmaceuticals Ltd., Equatorial Private Limited and Cytas Research Limited as discussed in para 7 and 8 above). In this context, and in view of concessional benefit provided to Celestial Biologicals Ltd. as discussed in preceding paragraphs, you are required to show cause as to why deduction u/s 11 of the Act be not denied considering the provisions of section 13 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Copy of Court order attached. 5) NPFC picked last lot of Plasma in year July 2002. Following that we struggled to let anyone pick our Plasma, as critical life saving FFP would have gone to drain. After many efforts, Reliance Life Science picked a little plasma for trial purpose, but they also stopped as their plant was not functional. Later, Celestial picked up first lot of Plasma in year July, 2006. By this time we wasted many liters of plasma as there was no buyer. 6) Amidst, difficult situation to dispose plasma, Celestials Biological initiated operation of Contract fractionation. They started collecting plasma front various blood banks across the country and started paying higher than NPFC. Their payments were significantly more secured than NPFC. By this time NPFC had also closed their operation and we had already proceeded with legal action against NPFC. In fact give our Celestial became the only option to surplus plasma. 7) After Celestial, Reliance life sciences also started collecting plasma from Indian blood banks. This resulted in competition amongst these two companies and led to rise in prices of Fresh Frozen Plasma & CPP. At present we are only supplying FFP & C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these factors along with stringent Quality Control mechanism have brought highest level of safely with blood at Prathama. This has also resulted in possibly India's lowest infectivity rate amongst donor population. We are accredited by NABH and ISO. It would be our pleasure to show you around Prathama and it's contribution. We will be happy to answer any further queries for the Income Tax Department." 3. As per the Assessing Officer, Celestial Biologicals Limited is covered in the definition of person under section 13(3)(e) read with explanation-1 & 3. The assessee company is a tool to maximise profit, and to widen the horizon of Intas group of companies held by Chudgar family. The same can be established by the fact that business transactions of the assessee company with the related companies, and hence the concessional benefits have increased in the coming years. Based on the above discussion, the deduction under section 11 & 12 of the Act claimed by the assessee was disallowed. It is seen that the assessee has claimed set-off and carry forward of unabsorbed deficit pertaining to assessment years 2001-02, 2002-03, 2003-04, 2007-08 and 2008-09. The income for the above a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . In the first round, a co-ordinate bench of ITAT has remanded this matter back to the file of CIT(A) to decide the matter afresh. 7. We have gone through the relevant records, the impugned order and paper book filed by the appellant. In our opinion, the authorities below ought to have looked into processing cycle and given the same importance to the FFP, Red Cells and Platelets, whereas the FPP is actually a by-product and not the product. In our opinion, authorities below have not understood the costing part of process because whenever by-product is sold then it actually adds to the revenue and profit and that is why cost of the Red Cells is higher as it is the main product. Authorities below have not seen the comparative selling price of the same product of other blood banks like Red Cross which is also a trust and operates on the same basis. In our opinion, the balance sheet and income and expenditure account dealt with the report comply with the applicable accounting standard referred to in sub-section (3C) of section 211 of the Companies Act, 1956 which shows that the assessee has followed all the applicable Indian Accounting Standards and the same was also explained to the ..... 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