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Income Tax Appellate Tribunal, “K” Bench, Mumbai
Before: Shri Shamim Yahya (AM) & Shri Amarjit Singh (JM)
These are cross appeals by the assessee and Revenue arising out of the order of learned CIT(A) dated 7.8.2009 and pertaining to A.Y. 2001-12.
2. Grounds of appeal raised in Revenue’s appeal read as under :- 1. 'Whether on the facts and in the circumstances of the case, the Ld. CIT (A) erred in holding that interest u/s. 234D cannot be charged on refund granted u/s.143(1) without appreciating the fact that assessment was done after 01.06.2003. i.e. after the insertion of section 234D".
2 M/s. Glaxo Smithkline Pharmaceuticals Limited
"The appellant prays that the order of Ld. CIT (A) on the above grounds be set aside and that of the Assessing Officer be restored."
Grounds of appeal raised in assessee’s appeal read as under :- (a) The Commissioner of Income-tax (Appeals) XXVI, Mumbai [hereinafter referred to as the CIT(A)] erred in confirming the action of the AO of holding that the following items forming part of 'miscellaneous income' do not have direct nexus with the business of the appellants and in reducing 90% thereof while computing 'profits of the business' for the purpose of computing deduction under section 80HHC.
Nature of Income (Rs. (in lakhs) i) Recoveries - Insurance claims 81.59 ii) Recovery -staff buses 4.82 iii) Amount received from Chemferm 42.37 iv) Cash discount received 2.84 v) Unclaimed credit balances 1 7.45 vi) Samples rebates 11.73 vii) Amount received on product 78.82 development Total 239.62
(b) The CIT(A) erred in not appreciating the fact that the aforesaid receipts are intrinsically associated with the appellants' business and the same have been assessed to tax under the head 'Profits of the business".
(c) Without prejudice, the CIT(A) ought to have directed the AO to reduce 90% of net amount of the 'miscellaneous income' while computing the profits for the purpose of deduction under section 80HHC.
Revenue’s appeal :- 4. At the outset learned Counsel of the assessee submitted that the tax effect in this appeal by the Revenue is below Rs. 50 lakhs fixed by the CBDT vide latest Circular No. 17/2019 dated 8.8.2019 for filing appeal before the ITAT. Hence, learned Counsel of the assessee pleaded appeal is liable to be dismissed in limine on account of tax effect.
Per contra, learned Departmental Representative did not dispute this proposition.
3 M/s. Glaxo Smithkline Pharmaceuticals Limited 6. Upon careful consideration, we find that the tax effect in this case is below the limit fixed by the CBDT for filing the appeal before the ITAT. Hence, this appeal is liable to be dismissed in limine on account of tax effect. Accordingly, the appeal is dismissed.
Assessee’s appeal :- 7. At the outset on this issue learned Counsel of the assessee submitted that similar issue was remitted by the ITAT in assessee’s own case in A.Y. 1998-99 and 2000-01 vide order dated 12.6.2013 to the file of the Assessing Officer for examination. Learned Counsel of the assessee submitted that upon examination the Assessing Officer has decided the issue in favour of the assessee. Per contra, learned Departmental Representative submitted that the items remitted to the file of Assessing Officer in the earlier year are not identical to the ones which are in the present assessment year. Hence, he submitted that the matter should be remitted to the file of the Assessing Officer as in earlier year.
Upon careful consideration we find that similar issue was remitted by the ITAT to the file of the Assessing Officer with following observations :- 7.2 We have considered the issue. Prima facie the part of amount represents the recoveries in the course of business which under the company law has been shown as other income. Balance of Manufacturing charges and Misc income details are not placed on record to verify. As the nature of amounts are not examined by AO in detail both on facts and on law and requires re- examination, issue is restored to the file of AO to examine afresh in the light of the principles laid down by the jurisdictional High Court relied upon by assessee and also other decision of the jurisdictional High Court or Supreme Court to decide each of the amount. In case it is part of the business receipts, not coming under the items under Explanation (baa) they should not be excluded at 90% from the profits of the business. Otherwise, the alternate contention of net amount to be considered if nexus is established. With these directions the ground is restored to the file of AO for examination and fresh adjudication. Assessee should be given due opportunity to explain the nature of the receipts.
4 M/s. Glaxo Smithkline Pharmaceuticals Limited 9. Accordingly, following the above precedent we remit this issue raised in this appeal also to the file of the Assessing Officer with similar direction as above.
In the result, Revenue’s appeal stands dismissed and assessee’s appeal stands allowed for statistical purposes.
Order has been pronounced in the Court on 28.8.2019.