ACIT vs. M/S AISHWARYA HEALTHCARE,

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ITA 61/PAT/2015Status: DisposedITAT Patna07 March 2018AY 2011-124 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue was covered by a previous order in the assessee's own case for AY 2009-10. In that order, it was found that the assessee manufactured products as per third-party specifications using its own raw materials and sold the finished goods, qualifying for the deduction.

What were the facts?

The department appealed against the deletion of additions made on account of deduction under Section 80IC of the Income-tax Act for assessment years 2010-11, 2011-12, and 2012-13. The assessee claimed deduction for conversion charges related to work performed for pharmaceutical companies.

What were the issues?

Whether the deduction under Section 80IC is admissible for conversion charges when the assessee manufactures products as per third-party specifications using its own raw materials.

Which sections of the Income-tax Act were involved?

Section 80IC,Section 80IA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PATNA BENCH, PATNA

For Appellant: Ms. Smriti Singh & Rajiv Kumar, Adv
Hearing: 06.03.2018Pronounced: 07.03.2018

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, PATNA Before Sh. N. K. Saini, AM and Sh. Amit Shukla, JM ITA No. 54/Pat./2015 : Asstt. Year : 2010-11 ITA No. 61/Pat./2015 : Asstt. Year : 2011-12 Asstt. Commissioner of Income Vs M/s Aishwarya Healthcare, Tax, Circle-4, Opp: Health Office, Sultanganj, Patna Ashok Raj Path, Patna (APPELLANT) (RESPONDENT) PAN No. AAOFA1208J ITA No. 114/Pat./2016 : Asstt. Year : 2012-13 Deputy Commissioner of Vs M/s Aishwarya Healthcare, Income Tax, Circle-4, Opp: Health Office, Sultanganj, Patna Ashok Raj Path, Patna (APPELLANT) (RESPONDENT) PAN No. AAOFA1208J Assessee by : Ms. Smriti Singh & Rajiv Kumar, Adv. Revenue by : Sh. Abhay Kumar, Sr. DR Date of Hearing : 06.03.2018 Date of Pronouncement : 07.03.2018 ORDER Per Bench: These appeals by the department are directed against the separate orders dated 30.09.2015, 30.10.2015 & 31.08.2016 for the assessment years 2010-11, 2011-12 & 2012-13 respectively passed by the ld. CIT(A)-2, Patna.

2.

Since the issues involved are common in these appeals which were heard together so these are being disposed off by this consolidated order for the sake of convenience and brevity.

2 ITA Nos. 54 & 61/Pat./2015 ITA No. 114/Pat./2016 Aishwarya Healthcare 3. At the first instance, we will deal with the appeal in ITA No. 54/Pat./2015 for the assessment year 2010-11. Following grounds have been raised in this appeal: “1. The CIT(A) has erred in deleting the addition of Rs.50,34,598/- made on account of deduction u/s 80IC of the Income-tax Act, 1961 in course of scrutiny.

2.

The CIT(A) has erred in case as Section 80IC is pari material with 80IA and since deduction u/s 80IA is available to the actual developer and not to a contractor as seen in explanation to section 80IA, the Assessing Officer was correct in holding that deduction u/s 80IC does not apply in case of conversion charges which relates to work contract performed by the assessee for some pharmaceutical companies.

3.

Any other ground taken at the time of hearing.”

4.

During the course of hearing, the ld. Counsel for the assessee at the very outset stated that the issue under consideration is squarely covered vide order dated 10.04.2017 in ITA No. 245/Pat./2013 for the assessment year 2009-10 in assessee’s own case (copy of the said order was furnished which is placed on record).

5.

In his rival submissions, the ld. Sr. DR although supported the order of the AO but could not controvert the aforesaid contention of the ld. Counsel for the assessee.

6.

We have considered the submissions of both the parties and carefully gone through the material available on record. It is noticed that an identical issue having similar facts was a subject

3 ITA Nos. 54 & 61/Pat./2015 ITA No. 114/Pat./2016 Aishwarya Healthcare matter of the departmental appeal in assessee’s own case in the aforesaid referred to case for the assessment year 2009-10 in ITA No. 245/Pat./2013 wherein the issue has been decided in favour of the assessee and against the department. The relevant findings have been given in para 6 of the order dated 10.04.2017 which read as under: “6. We have heard rival submissions and gone through the facts and circumstances of the case. We take note that in the appellate order of Ld. CIT(A) dated 26.10.2012 the Ld. CIT(A) held that manufacturing by the assessee shown under the head ‘third party manufacture’ was done by the assessee with the raw material supplied by such third parties and held that the said income would not qualify for deduction/s. 80IC of the Act. The assessee moved an application u/s. 154 of the Act for rectification of the mistake which has been allowed by the Ld. CIT(A). We note that the Ld. CIT(A) has taken note of the JCIT’s order u/s. 144A of the Act (supra) wherein the JCIT has clearly made a finding that the assessee is engaged in the manufacturing and selling of the products on its own account and is also manufacturing the products as per specification of third party by using its raw material, packing material etc. and is selling finished products to the third parties after charging VAT. This particular fact has been reconfirmed by the Ld. CIT(A) in the impugned 154A proceedings from the AO vide report dated 16.05.2013 wherein the AO has confirmed the finding of the JCIT on this issue. Further, the Ld. CIT(A) has also taken note of the fact that in the subsequent assessment year i.e. AY 2010-11 the AO himself has given deduction to the assessee for third party manufacture in the assessment order passed u/s. 143(3) of the Act on 30.03.2013. Since the JCIT and AO have confirmed that the claim made by the assessee under the head ‘third party manufacture’ was indeed executed by the assessee as per the specification of third party, however the goods/products were manufactured by the assessee using its own raw material, packing material etc. and has sold the finished products to such third parties after charging VAT and further, we note that in the subsequent assessment year 2010-11 the AO himself has allowed the claim of

4 ITA Nos. 54 & 61/Pat./2015 ITA No. 114/Pat./2016 Aishwarya Healthcare the assessee in respect to third party manufacture and held it as qualifying for 80IC deduction, so, we do not find any infirmity in the order passed by the Ld. CIT(A) and, therefore, dismiss the appeal of the revenue.”

7.

So, respectfully following the aforesaid referred to order dated 10.04.2017 in ITA No. 245/Pat./2013 for the assessment years 2009-10. We do not see any valid ground to interfere with the findings of the ld. CIT(A) and accordingly do not see any merit in this appeal of the department.

8.

In other appeals of the department for the assessment years 2011-12 and 2012-13, the facts are identical to the facts involved in the assessment year 2010-11, therefore, our finding given in the former part of this order shall apply mutatis mutandis.

9.

In the result, the appeals of the department are dismissed. (Order Pronounced in the Court on 07/03/2018)

Sd/- Sd/- (Amit Shukla) (N. K. Saini) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 07/03/2018 *Subodh* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5.DR: ITAT ASSISTANT REGISTRAR

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