TMI Blog2023 (10) TMI 1128X X X X Extracts X X X X X X X X Extracts X X X X ..... ing any regular assessment without their being any proper material on record to substantiate the relevant disallowances. In the given case, the assessing officer merely followed the percentage of disallowance adopted by the ITSC without their being any material to support the disallowances for the impugned assessment year. Similarly, the Ld.CIT(A) even though agreed that the percentage declared before ITSC cannot be adopted but proceeded to adopt percentage on adhoc basis. Therefore, in our considered view, the reasons given by the Ld CIT(A) to adopt the respective percentage are mere assumptions and there is no basis. Assessee adopted the relevant percentage of disallowance based on the findings of appellate authorities particularly the ITAT. Therefore, we are inclined to direct AO to verify the percentage proposed by the assessee and the relevant findings of the coordinate bench in each and every expense. Before we depart, for the distribution of Brand Reminder, being less than ₹ 1,000/- (below the threshold provided by MCI), this particular marketing expenses are within the threshold limit prescribed by the MCI and the coordinate benches have allowed this expense and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges is eligible for weighted deduction u/s 35(2AB). Rent taxes and repairs to building - As decided in assessee s own case [ 2012 (9) TMI 43 - ITAT MUMBAI] held that the repairs, rent, etc., the expenditure incurred relating to R D premises cannot form part of cost of land or building. In the absence of any fact that the said claim of the assessee aggregating to 62,00,689, is not the expenditure on rents, rates and taxes relating to R D premises, we are of the considered view that the said expenditure has to form part of weighted deduction as per section 35(2AB) of the Act. Therefore, we, by reversing the orders of the authorities below, hold that the assessee is entitled to weighted deduction on the said amount @ 150% as per section 35(2AB) of the Act. Netting off of sale proceeds of fixed assets against the expenses - As issue has diverse views. We are inclined to remit this issue back to the file of Assessing Officer to follow the decision of Wockhardt Ltd [ 2012 (5) TMI 823 - ITAT MUMBAI] Accordingly, the grounds raised by the revenue are dismissed except the issue of netting of sales proceeds, which we are inclined to allow for statistical purpose. Analysis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame no deduction is allowable in respect of Education Cess for the Assessment Year 2014-15 in terms of Section 40(a)(ii) of the Act read with Explanation 3 thereto - we observe that this issue of claim on account of education cess is held to be against the assessee. Accordingly, the ground raised by the revenue is allowed. - SHRI S. RIFAUR RAHMAN, HON'BLE ACCOUNTANT MEMBER AND MS. KAVITHA RAJAGOPAL, HON BLE JUDICIAL MEMBER For the Appellant : Shri Rahul Hakani For the Respondent : Shri. Ankush Kapoor ORDER PER S. RIFAUR RAHMAN (AM) 1. These appeals are cross appeals filed by the assessee and revenue against order of Learned Commissioner of Income Tax (Appeals)-53, Mumbai [hereinafter in short Ld.CIT(A) ] dated 31.03.2021 for the A.Y. 2018-19 in partly sustaining the action of the Assessing Officer. 2. Brief facts of the case are, Assessee is a leading health care company engaged in the business of research, development, manufacture, marketing and sale of various drugs including branded generics, dosage forms, Active Pharmaceutical Ingredient ('API's), bio-similars and other products. A search and survey action was conducted in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same was to be allowed in AY 2020-21 5. Aggrieved with the above order, both assessee as well as revenue are in appeal before us raising following grounds of appeal in their respective appeals: 6. Assessee has raised following grounds in its appeal: - General 1. erred in upholding the action of the leaned AO to the extent of additions made of INR 4,30,16,821 to the total income of the Appellant. Disallowance of expenditure under section 37(1) of the Act of INR 1,00,66,601/- 2 Erred in directing to make further ad-hoc disallowance at certain percentage of sales and marketing expenses (pertaining to brand reminders, medical camps, professional fees-Medical Advisory, market research survey and travel and accommodation relating to advisors attending conferences), over and above what was offered by the Appellant for the period of 3 months Le. 1 January 2018 to 31 March 2018 amounting to INR 1,00,66,601/- (after deduction under section 80-IC) under section 37(1) of the Act. 3. Erred in disregarding the detailed explanations and written submission of the Appellant during the course of assessment proceedings and CIT(A) proceedings on each of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r at, the time of hearing of the appeal, so as to enable the learned Hon'ble ITAT to decide this appeal according to law. 7. Revenue has raised following grounds in its appeal: - 1. On the facts and circumstances of the case and in law. whether the Ld.CIT(A) has erred in restricting the disallowance on account of freebies to doctors to Rs. 1,00,66,601/- from Rs. 6,68,10,499/- made by the assessing officer, in an adhoc manner without any reasoning and ignoring the fact that the addition was made on the basis of identical rate of disallowance on same set of facts, applied by the assessee suo-moto before the settlement commission and also, adopted by it for the major period of the year. 2. On the facts and in circumstances of the case, the Ld CIT (A) erred in facts and law in allowing the claim of weighted deduction u/s 35(2AB) of the Act made by the assessee company in respect of expenditure not approved by the DSIR. 3. On the facts and in circumstances of the case, the Ld CIT (A) erred in facts and law in allowing the claim of weighted deduction u/s 35(2AB) of the Act made by the assessee company in respect of incurred by the assessee on clinical trials, co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge and cess for MAT credit computation, relying on an ITAT order passed in violation of judicial discipline by ignoring an earlier decision of a coordinate bench rendered in the case of Richa Global Exports Private Limited vs ACIT (CPC) in ITA No. 2303/Del/2012. 11. On the facts and in circumstances of the case, the Ld CIT (A) is correct in allowing the deduction claimed by the assessee on account of education cess ignoring the fact that education cess is nothing but additional surcharge which falls within section 40(a)(ii) of the Act. 12. On the facts and circumstances of the case and in law, whether the Ld CIT(A) is justified in admitting the additional claim of the assessee even though the same had been deliberately not claimed earlier, and therefore, not in accordance with the principles of Goezte India 157 taxman 1 and Pruthvi Brokers and Shareholders in ITA 3908/2010 (Bom). 13. On the facts and circumstances of the case and in law, whether the Ld. CIT(A) is justified in admitting the additional claim of the assessee without examining the nature or giving the opportunity to verify the same and further giving a decision for a subsequent assessment year which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of expenditure Suo moto disallowance made by assessee Sr. No. 1-4-17 to 31-12-17 1-1-18 to 31-3-18 Total Amount % applied for 14- 17 to 31-12- 17 by Assessee as per ITSC Suo-moto Disallowance by Assessee from April 17 to Dec 17 % applied for 1-1-18 to 31-3- 18 by Assessee refer note Suo Moto Disallowance by Assessee for Jan 18 to Mar 18 Total Suo Moto Disallowance by Assessee 1 Brand Reminder - below 1000 12,02,93,039 2,97,98,091 15,24,46564 10% 1,20,29,304 -- -- 1,20,29,304 Brand Reminder - above 1000 23,55,434 10% 10% 2,35,543 2,35,543 2 Medical Cam 15,7073573 109308,623 196 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not find any shortcomings in the documentary evidences filed by the Assessee. However, the Assessing Officer without giving any cogent reason made following disallowance of expenses incurred during the period 1 January 2018 to 31 March 2018 to the extent of INR 6,68,10,449/- based on percentages of disallowance offered by the Assessee before the ITSC under section 37(1) of the Act for AY 2012-13 to 2017-18. The said Disallowance is as below:- Sr. No. Particulars Amount of expenditure disallowance made by Assessing Officer (refer AO order pg. 13-15) 01.01.18 to 31.03.18 % applied for 01.01.18 to 31.03.18 by AO disallowance as per AO Additional disallowance by AO 1 Brand Reminder -below 1000 2,97,98,091 10% 29,79,809 29,79,809 Brand Reminder -above 1000 23,55,434 10% 2,35,543 - 2 Medical Camp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elow 1000 2,97,98,091 2% 5,95,962 5,95,962 Brand Reminder -above 1000 23,55,434 - 2 Medical Camp 10,93,08,623 7% 76,51,604 21,86,172 3 Professional Fees 9,08,50,827 20% 1,81,70,165 45,42,541 4 Market research/ Survey 3,33,48,981 20% 66,69,796 16,67,449 5 Travel and Accommodation 3,37,27,069 25% 84,31,767 16,86,353 Total 29,93,89,025 4,15,19,294 1,06,78,478 less : Deduction - 80IC 6,11,877 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5,88,84,501/- is treated as sales promotion expenses. 16. Further, ITAT in AY 2010-11 has also deleted the disallowance made on low value brand reminder items. The relevant extract is reproduced below: 29. We have heard the rival submissions and perused the relevant materials on record. We find that these expenses incurred comprise largely of low value mementoes like pen, pen drives, towels, eatables, cosmetics etc. with an individual value of Rs. 5000/- or less, meant for distribution to stockists/druggists/chemists/paramedical persons for brand recall / target completion/incentive to promote and market assessee's products / as a goodwill gesture during festival/birthdays etc. to maintain/enhance business below Rs. 5000 as the same is sales promotion expenditure incurred for purpose of business and is thus incurred wholly and exclusively for the purpose of business relationships. Thus it is crystal clear that the aforesaid expenditure is sales promotion expenditure incurred for the purpose of enhancing the assessee's business and is thus incurred wholly and exclusively for the purpose of business and therefore allowable as deduction u/s 37(1) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vey also, approximately 1/3rd of disallowance offered before ITSC is offered for disallowance. 19. Further, Ld. AR of the assessee submitted that the Ld. CIT(A) has made the disallowance on an adhoc basis ignoring the detailed submission made by the Assessee giving description and also detailed documentary evidence for each head of expense. The relevant pages of the paper book are as below: Sr. no. Particulars Description Details of expense Documentary Evidence 1. Brand reminder PB pg. 44 PB pg. 114-124 PB pg. 359 - 392 2. Medical Camp PB pg. 45 PB pg. 125- 208 PB pg. 425 - 541 3. Professional Fees PB pg. 46 PB pg. 87 112 PB pg. 542 - 669 4. Market research/ Survey PB pg. 47 PB pg. 209 343 PB pg. 670 - 751 5. Travel and Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and also Assessment Order for earlier Year, no further disallowance should be made than what is offered by the Assessee in the Return of income and prayed that assessee appeal Ground No 2 3 may be allowed and revenue appeal Ground No 1 may be dismissed. 22. Considered the rival submissions and material placed on record, we observe that the assessee has declared certain percentage of disallowance of respective expenses incurred for marketing expenses before ITSC in order settle the disputes raised during the search proceedings. The ITSC also agreed for the above settlement propositions and it is also fact on record that the percentage of disallowance offered before ITSC is to match the agreed declaration of income during search proceedings. Therefore, we are inclined to accept the submissions of the assessee and Ld CIT(A) that the purpose of declaration before ITSC are completely different and the same cannot be applied for the regular assessment unless and until it is brought on record the relevant material to support the additions proposed in the assessment order. In the given case, the assessee had offered the percentage of disallowance to match the amount agreed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds raised by the assessee are allowed and revenue is dismissed. 24. With regard to Ground No. 4 of grounds of appeal raised by the assessee and Ground No. 2 to 8 of grounds of appeal raised by the revenue, Ld. AR submitted that these grounds are similar which are relating to disallowance of weighted deduction u/s. 35(2AB) of the Act. The relevant facts are, the Assessee undertakes Research and Development (R D) activities from its units situated in Govandi (Mumbai) and Shirvane (Nerul) (Navi Mumbai) which are approved by the Department of Scientific and Industrial Research (DSIR'). The Assessee, in its Return of income claimed weighted deduction @150% u/s. 35(2AB) of the Act for R D expenses incurred by the said units. Revenue expenditure of ₹. 1,19,95,03,530/- along with capital expenditure of ₹. 9,87,08,100/- was claimed as deduction u/s. 35(2AB). Accordingly, a sum of ₹. 194,73,17,445/- (i.e. being 150% of the total R D expense of ₹. 129,82,11,630/-) was claimed by the Assessee in its return of income. The said expenses were claimed by the Assessee based on the DSIR approval obtained for the R D facility in Form 3CM. 25. During assessment procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , both assessee and revenue are in appeal before us. The Assessee is in appeal in relation to weighted deduction on analysis and testing and the department is in appeal in relation to relief provided by the Ld.CIT(A). 28. At the time of hearing, Ld. AR submitted that the ITAT in Assessee's own case has allowed weighted deduction on the merits of each head of expense and held that the said expenditure was incurred for in-house research and development as required by the provisions of Section 35(2AB). He relied on various decisions in assessee s own case and placed copies of the orders on record. 29. With regard to Analysis and Testing Charges, Ld. AR of the assessee submitted that Assessee develops various active pharmaceuticals ingredients (API's) which can be categorized into small molecules, peptides and bio-similar during it's R D activities. These API's are required to be tested for their efficacy. Such testing takes place mostly within the R D facility. Sometimes based on the requirement such testing is also outsourced. It is this outsourcing which is held against the Assessee by DSIR. It is akin to the view of the DSIR on clinical trials which take p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction in respect of the above expenses, on the point of amendment in the Rules the Ld. AR of the assessee brought to our notice the relevant extract of section 35(2AB) of the Act, for the sake of clarity it is reproduced below:- Relevant extract of section 35(2AB) of the Act is as under: (2AB)(1) Where a company engaged in the business of bio- technology or in any business of manufacture or production of any article or thing, not being an article or thing specified in the list of the Eleventh Schedule incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility as approved by the prescribed authority, then, there shall be allowed a deduction of a sum equal to one and one-half times of the expenditure so incurred: (4) The prescribed authority shall submit its report in relation to the approval of the said facility to the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General in such form and within such time as may be prescribed. 35. Referring to the above, Ld. AR of the assessee submitted that by Co-joint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y 2008-2009 2009-2010 relying upon Hon'ble Gujarat High Court decision in CIT v. Cadila Healthcare 263 CTR 686 held that expenses incurred for clinical trials were eligible for deduction u/s. 35(2AB) though incurred outside the R D facility and thus the view of DSIR came to be rejected. The relevant portion of ITAT order in assessee s own case for A.Y. 2008-09 2009-10 in ITA No 6747/Mum/2012 ITA No 4248/Mum/2013 dated 20/2/2015 are reproduced below:- 3.4 Before us, the decision of the Tribunal in assessee's own case is against the assessee but as pointed out elsewhere the decision of the Hon'ble Gujarat High Court was pronounced later on and therefore the Tribunal did not have the benefit of the decision of the Hon'ble Gujarat High Court. Now that we have the benefit of the decision of the Hon'ble Gujarat High Court as mentioned hereinabove, we are following the decision of the Hon'ble Gujarat High Court and accordingly we set aside the findings of the Ld. CIT(A) and direct the AO to allow the claim of weighted deduction u/s. 35(2AB) in respect of clinical trials as claimed by the assessee. Ground No. 1 is accordingly allowed. 40. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 in ITA.No. 4517/Mum/2010 dated 04.07.2012 observed as under: - 31. Therefore, it is evident that this section excludes from weighted deduction only cost of land and building and not any charges and expenses related to land or building. The repairs, rent, etc., the expenditure incurred relating to R D premises cannot form part of cost of land or building. In the absence of any fact that the said claim of the assessee aggregating to 62,00,689, is not the expenditure on rents, rates and taxes relating to R D premises, we are of the considered view that the said expenditure has to form part of weighted deduction as per section 35(2AB) of the Act. Therefore, we, by reversing the orders of the authorities below, hold that the assessee is entitled to weighted deduction on the said amount @ 150% as per section 35(2AB) of the Act. Hence, ground no.1(b) of the appeal taken by the assessee is allowed. 44. In view of our above observation in respect of each head of expenses i.e., Clinical Trials (Page No. 76/PB Assessee s own case for A.Y. 2014-15), consultancy and professional fees (Assessee s own case ITA No 4517/MUM/2010 dt 4/7/2012), rent taxes, repairs to building (Assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-10. The Tribunal in para 9 of the order has restored back the matter to the AO for statistical purposes. Pursuant to the direction of the Tribunal, the AO passed order giving effect for the above assessment years. After the directions provided by the Tribunal, the Department has not preferred an appeal before the High Court. Thus the issue having attained finality in assessee's own case, we direct the AO to allow expenditure on gross basis. We make it clear that this finding is specific to the present appeal only. Thus the 4th and 7th grounds of appeal are allowed. Against the Assessee - ITAT order for AY 2014-15 2015-16 On perusal of the above, it is clear that in the case of Mircolabs Ltd. (supra) the Tribunal has concluded that only sales realization arising out of the assets sold that should be offset against research and development expenditure, whereas sale realization arising out of the research and development products sold need not be reduced from the research and development expenditure. Similarly, we note that in the case of Wockhardt Ltd. (supra) also the Tribunal has held that income of INR 6.45 Crores earned by the Assessee in that case in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f fixed asset is separately offered to tax. The Provision of the Act are clear and unambiguous to allow deduction of gross expenditure and no netting off is to be done. 46. With regard to issue of Netting of sales realization, which is having diverse views. We are inclined to remit this issue back to the file of Assessing Officer to follow the decision of Wockhardt Ltd (supra). Accordingly, the grounds raised by the revenue are dismissed except the issue of netting of sales proceeds, which we are inclined to allow for statistical purpose. 47. Coming to the issue of Analysis and testing charges, the Ld CIT(A) has rejected the submissions of the assessee. The issue involved are, the assessee develops various API s and these requires testing to analyse their efficacy. Mostly, these are carried out in-house and sometimes, these tests are outsourced. It is part of operations and activities which are necessary to carry out the R D and its efficacies. These trials are integral part of any R D. These activities are part of R D but DSIR will permit clinical trials but will not approve where it needs to be done. This aspect of allowability was specifically approved by the Hon ble Gu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for a patent under the Patents Act, 1970 (39 of 1970). Such explanation thus provides that for the purpose of said clause, i.e. clause (1) of section 35(2AB), expenditure on scientific research in relation to drugs and pharmaceuticals shall include expenditure incurred on clinical drug trial, obtaining approval from any regulatory authority under the Central, State or Provincial Act and filing an application for a patent under the Patents Act, 1970. The whole idea thus appears to be to give encouragement to scientific research. By the very nature of things, clinical trials may not always be possible to be conducted in closed laboratory or in similar inhouse facility provided by the assessee and approved by the prescribed authority. Before a pharmaceutical drug could be put in the market, the regulatory authorities would insist on strict tests and research on all possible aspects, such as possible reactions, effect of the drug and so on. Extensive clinical trials, therefore, would be an intrinsic part of development of any such new pharmaceutical drug. It cannot be imagined that such clinical trial can be carried out only in the laboratory of the pharmaceutical company. If we giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the Tribunal committed no error. Merely because the prescribed authority segregated the expenditure into two parts, namely, those incurred within the inhouse facility and those can were incurred outside, in our opinion, by itself would not be sufficient to deny the benefit to the assessee under section35(2AB) of the Act. It is not as if that the said authority was addressing the issue for deduction under section 35(2AB) of the Act in relation to the question on hand. The certificate issued was only for the purpose of listing the total expenditure under the Rules. Therefore, no question of law arises. 48. Further, it is brought to our notice that in assessee s own case, the coordinate bench has analysed the same and allowed the claim of the assessee. The Coordinate Bench in assessee s own case in ITA.No. 2575 2576/Mum/2021 for the A.Y. 2014-15 and 2015-16 held as under: - 12. We note that the deduction for Quality Control/Testing Expenses under Section 35(2AB) of the Act was restricted to 100% by the Assessing Officer solely on the ground that the aforesaid expenses were not approved by DSIR. The CIT(A) overturned the decision of the Assessing Officer on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the extent of Rs. 23.14 Lacs. Concurring with the same, Ld. CIT(A) directed Ld. AO to verify the claim and allow the deduction, if found correct. 6.3 Before us, it is the argument of Ld. AR that the amount mentioned in Form 3CL would have no relevance prior to amendment in the Rule 6(7A)(b) w.e.f. 01/07/2016 and the deduction has to be allowed as claimed by the assessee and certified by the Auditors. For the same, Ld. AR referred to the cited decision of Pune Tribunal. The Ld. DR, on the other hand, submitted that deduction would be available only in accordance with Form 3CL issued by the prescribed authority. 6.4 After going through the cited decision of Pune Tribunal, we concur with the submissions of Ld. AR that deduction has to be allowed as claimed by the assessee and certified by the Auditors since the amendment was brought in the Rule 6(7A)(b) w.e.f. 01/07/2016 only. Prior to the amendment, the prescribed authority was to submit its report in relation to the approval of in-house research development facility in form No.3CL to the DG (IT exemptions) within 60 days of its granting approval. It was only with effect from 01/07/2016, the prescribed authority was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This ground stand allowed. 50. Respectfully, following the above decisions, we are inclined to allow the same in favour of the assessee. 51. With regard to Ground No. 5 and 6 of grounds of appeal raised by the assessee and Ground No. 12 and 13 of grounds of appeal raised by the revenue, Ld. AR submitted that these grounds are similar which are relating to deduction u/s. 35(1)(i) of the Act of amount paid to Continuus Pharma Inc.,. The relevant facts are Assessee had made a claim before the Ld.CIT(A) in respect of payment made to Continuus Pharmaceuticals Inc (Continuus Pharma) towards R D for improvement in the manufacturing process to be allowed as a deduction U/s. 35(1)(1) of the Act. At the end of the study, the Assessee would be in a position to evaluate whether to commercialize the new manufacturing process for the said product. For this, Continuus was required to provide periodical reports of costs undertaken, milestones achieved and further research to be undertaken. The study concluded that while the raw material cost, the overall cost of production through new manufacturing process was much higher as compared to the cost of production being achieved for manufacturi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en amalgamated with the USV being appointment from 01.04.2016 vide order 06.07.2017 of National Company Law Tribunal ('NCLT'). Bharavi Laboratories has following brought forward losses from AY 2015-16 and unabsorbed depreciation from AY 1997- 98 onwards which is in compliance with the provisions of section 72A and section 79 of the Act. 57. The Assessee had raised it's claim for set-off before the Assessing Officer vide letter dated 17.12.2018. The Assessee at the time of filing of return of income, did not set off brought forward business losses and unabsorbed depreciation as mentioned above due to pendency of assessment proceedings in case of Bharavi Laboratories for some of the relevant assessment years. The details were also reflected in the Tax Audit Report submitted during the course of Assessment Proceedings. The Assessing Officer however did not allow the set off while passing the Assessment order. It is submitted that the Assessee inadvertently missed taking a ground before the Ld.CIT(A) as the Assessing Officer did not adjudicate this claim. It was submitted that the Scheme was approved by the Hon ble National Company Law Tribunal vide its order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... depreciation in the impugned year i.e. A.Y. 2018-2019 or in AY 2017-18 i.e. the Year when the Appointed date falls 62. On the other hand, Ld. DR submitted that the set off should have been done in AY 2017-18 and considering the said year was a subject matter before the settlement commission, now the same cannot be claimed. 63. In the rejoinder, Ld. AR of the assessee submitted that the Ld DR during the course of hearing argued that the set off should have been done in AY 2017-18 and considering the said year was a subject matter before the settlement commission the same cannot be claimed. It is humbly submitted that as per section 245-1 of the Act, every order of settlement commission shall be conclusive only with respect to matters stated therein. The claim with respect to Bharavi Laboratories was never a matter before the settlement commission and thus the Tribunal has power to adjudicate on the same. Ld. AR further submitted that the Assessee would also like to place reliance on the decision in case of Perfect Equipments v. DCIT 120031 85 ITD 50 (Ahmedabad - ITAT) wherein it is held that the Tribunal by virtue of powers vested upon it under provisions of section 254(1) fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TC generated on account of surcharge and education cess, nor did he provide any cogent. reasons for the same in its order. 7.3. The said issue is covered in favour of the Assessee, by the order passed by ITAT in Assessee's own case for AY 2015-16 [ITA No 2575/Mum/2021 and 2576/Mum/2021 dtd 7/9/2022] [Pg 69-94 (88-94)]. The relevant extract is reproduced below: 32. In all the above decisions, the Tribunal has, though for somewhat different reasons, held that surcharge and education cess are to be included for determination of the amount of MAT credit in terms of Section 1153AA of the Act. Accordingly, respectfully following the above decisions of the Tribunal we refrain to interfere with the order passed by the CIT(A) on this issue. Ground No. 8 raised by the Revenue is, therefore, dismissed. In view of the above submission the Department Ground of Appeal No 9-10 may be dismissed. 68. Considered the rival submissions and material placed on record, we observe that the issue of giving MAT credit in the subsequent assessment years are already well settled that the tax paid as per provisions of sec.115JB always includes surcharge and cess. Similarly, while giving ..... X X X X Extracts X X X X X X X X Extracts X X X X
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