M/S. STRIDES ARCOLAB LTD.,NAVI MUMBAI vs. ITO - 10(3)(4), MUMBAI

Brief facts relating to this issue are assessee company filed its return of income for the impugned assessment year on 1st December 2003, declaring loss of ` 3,15,35,060, under the normal provisions and paid tax of ` 5,44,980 under section 115JB of the Act. Subsequently, assessee on 31st March 2005, filed a revised return of income declaring loss of ` 5,25,97,009, under the normal provisions and computed tax of ` 1,09,148, on the book profit declared under section 115JB. During the assessment proceedings, the Assessing Officer noticed that 4 Strides Shasun Limited Strides Arcolab Limited assessee had debited an amount of ` 3,23,93,782 to the Profit & Loss account on account of research and development expenditure and claimed deduction under section 35(2AB) for an amount of ` 4,85,90,676. When called upon by the Assessing Officer to justify the deduction claimed with supporting evidence, it was submitted by the assessee that the expenditure of ` 3,23,93,782, was incurred during the relevant previous year. He submitted, as the expenditure incurred was on research and development the same is allowable under section 35(2AB). It was further stated, though, he assessee filed an application before the prescribed authority, it is still pending for approval. The Assessing Officer being of the opinion that without approval from prescribed authority i.e., Department of Scientific and Industrial Research (DSIR), deduction under section 35(2AB) cannot be allowed and as the assessee has failed to produce copy of the agreement entered with the prescribed authority, no deduction under section 35(2AB) can be allowed. Accordingly, the Assessing Officer disallowed excess deduction claimed at 150% amounting to ` 1,61,96,892. Being aggrieved of such disallowance, assessee preferred appeal before the learned Commissioner (Appeals).

The learned Commissioner (Appeals) also sustained the disallowance by concurring with the findings of the Assessing Officer.

Before us, learned Authorised Representative submitted, the issue is covered in favour of the assessee by the decision of the Tribunal in assessee’s own case for the assessment year 2002–03. In this context, he referred to the observations of the Tribunal in ITA no.1727/Mum./2006 dated 16th December 2015.

Learned Departmental Representative, without controverting the fact that similar issue was decided in assessee’s own case by the Tribunal, preferred to rely upon the observation of the Assessing Officer and the learned Commissioner (Appeals).

We have considered the submissions of the parties and perused the material available on record. As could be seen from the facts on record, the Assessing Officer has not disputed that assessee has incurred the expenditure of ` 3,23,93,782. The dispute is with regard to assessee’s claim of deduction under section 35(2AB) @ 150% of the expenditure incurred. The Assessing Officer, though, has allowed the actual expenditure incurred by the assessee on research and development, he has disallowed weighted deduction @ 150% on the ground that assessee has failed to furnish copy of agreement with the prescribed authority. It is noticed by us that similar issue arose in assessee’s own case in assessment year 2002–03 and the Tribunal after considering the submissions of the parties vis–a–vis deduction claimed under section 35(2AB), held as under:–

The provisions nowhere suggest or imply that research and development facility is to be approved from a particular date and, in other words, it is nowhere suggested that date of approval only will be cut-off date for eligibility of weighted deduction on the expenses incurred from that date onwards. A plain reading clearly manifests that the assessee has to develop facility, which presupposes incurring expenditure in this behalf, application to the prescribed authority, who after following proper procedure will approve the facility or otherwise and the assessee will be entitled to weighted deduction of any and all expenditure so incurred. The Tribunal has, therefore, come to the conclusion that on plain reading of section itself, the assessee is entitled to weighted deduction on 8 Strides Shasun Limited Strides Arcolab Limited expenditure so incurred by the assessee for development of facility. The Tribunal has also considered Rule 6(5A) and Form No. 3CM and come to the conclusion that a plain and harmonious reading of Rule and Form clearly suggests that once facility is approved, the entire expenditure so incurred on development of R&D facility has to be allowed for weighted deduction as provided by Section 35(2AB). The Tribunal has also considered the legislative intention behind above enactment and observed that to boost up research and development facility in India, the legislature has provided this provision to encourage the development of the facility by providing deduction of weighted expenditure. Since what is stated to be promoted was development of facility, intention of the legislature by making above amendment is very clear that the entire expenditure incurred by the assessee on development of facility, if approved, has to be allowed for the purpose of weighted deduction.

We are in full agreement with the reasoning given by the Tribunal and we are of the view that there is no scope for any other interpretation and since the approval is granted during the previous year relevant to the assessment year in question, we are of the view that the assessee is entitled to claim weighted deduction in respect of the entire expenditure incurred under Section 35(2AB) of the Act by the assessee."

We are in full agreement with the aforesaid approach of the Gujarat High Court. No substantial question of law, therefore, arises. The appeal is dismissed.‖ 3.5. It is noted by us that similar view has been taken by Hon’ble Madras High Court in the case of CIT vs. Wheels India Ltd. (supra). Thus, keeping in view the clear position of law and the facts of this case, stand of the Revenue on this issue is rejected. The other issue raised by the AO in disallowing the deduction was that no agreement has been entered as 9 Strides Shasun Limited Strides Arcolab Limited

Brief facts are, during the assessment proceedings, the Assessing Officer found that the assessee has claimed deduction of ` 17.70 crores on account of interest expenditure on various credit facilities

He, therefore, called upon the assessee to explain why proportionate interest relating to advance made to the subsidiary should not be disallowed out of the interest expenditure claimed. In response to the query raised by the Assessing Officer, it was submitted by the assessee, as far as Global Remedies Ltd. and Caryl Laboratories Ltd. are concerned, the advances to them are towards conversion charges since they have a 100% dedicated plant for meeting assessee’s manufacturing requirements to certain market segments. As far as advances made to Strides Research and Specialties, it was submitted, the Contract Research Manufacturing Division (CRMD) was hived off w.e.f. 1st April 2002, by virtue of a Court order and as per the scheme of arrangement framed by the Court, out of the amount of ` 30,69,31,123, which was appearing in the books of account. an amount of ` 23 crore was treated as advance and balance amount which pertains to inter division expenditure post hive off was treated as advance and required to be repaid by the subsidiary. The Assessing Officer referring to the balance sheet of the assessee observed investment in Global Remedies Ltd. and Caryl Laboratories Ltd. are to the tune of ` 2.61 crore and ` 5.09 crore respectively as on 31st March 2003. He further found, during the previous year relevant to assessment year 2003–04, assessee has made payments on account of job works to these subsidiaries to the tune of ` 1.26 crore and ` 1.01 crore respectively. On a comparative analysis, he found that the 11 Strides Shasun Limited Strides Arcolab Limited funds advanced to the subsidiaries are nearly 6 times and 11 times of the job work charges paid. He further found that the advances are on account of various expenses incurred on behalf of subsidiary companies which have to be recovered by the assessee. The Assessing Officer was of the view that the assessee should either have recovered the same during the previous year or it should have charged interest on the same. He observed, while on one hand, assessee was incurring costs on account of interest the subsidiary is benefiting by availing interest free funds.

Learned Commissioner (Appeals) also confirmed the disallowance more or less relying upon the observations of the Assessing Officer.

Learned Authorised Representative reiterating the stand taken before the Departmental Authorities, submitted that Global Remedies Ltd. and Caryl Laboratories Ltd., are 100% subsidiaries of the assessee and during the relevant financial year, they are having dedicated plants to meet assessee’s manufacturing requirements. It was submitted, assessee paid job work, data conversion charges for suply of goods. Thus, the advances made are on the basis of commercial expediency. He further submitted, in any case of the matter, the advances made being out of interest free funds / internal accruals available with the assessee no disallowance out of interest expenditure can be made. In support of such contention, he relied upon the decision of the Hon'ble Supreme Court in Hero Cycles P. Ltd. v/s CIT, [1997] 379 ITR 347 (SC). As far as advance to Strides Research and Specialties, learned Authorised Representative submitted that assessee had demerged its CRAM division to form a separate company w.e.f. 1st April 2002, as per the directions of the Court. He submitted, pursuant to demerger, the debit balance to the CRAM division was treated as advance to the new company. Learned Authorised Representative submitted, the so called advance is a mere book entry and there was no actual cash out flow from the assessee to the said company towards such demerger. Learned Authorised Representative submitted, though, advance to Indian subsidiary companies were 13 Strides Shasun Limited Strides Arcolab Limited made from the earlier assessment year and also continued in subsequent assessment years, the Assessing Officer has not made any disallowance up to assessment year 2002–03 or even in subsequent assessment year 2004–05 to 2006–07, though, assessments were completed under section 143(3) of the Act. He submitted, in fact in assessment year 2004–05, against the disallowance made by the Assessing Officer, assessee preferred appeal before the learned Commissioner (Appeals) accepting assessee’s claim deleted the addition and Department accepted the decision of the learned Commissioner (Appeals) by not preferring any appeal before the Tribunal. He submitted, from assessment year 2005–06, the Assessing Officer himself did not make any disallowance under section 36(1)(iii). Thus, it was submitted by the assessee, no disallowance should have been made.

Learned Departmental Representative relying upon the reasoning of the Departmental Authorities submitted, assessee has to prove commercial expediency.

We have considered the submissions of the parties and perused the material available on record. Undisputedly, two of the companies to whom advances were made by the assessee viz., Global Remedies Ltd. and Caryl Laboratories Ltd. are 100% subsidiary of the assessee. It is also not disputed that these two companies have dedicated plants to only manufacture the products of the assessee. It is also borne out on record that for such manufacturing activities undertaken by these subsidiaries, assessee paid job work / conversion charges. These facts are not disputed by the Assessing Officer. Therefore, it is proved on record that there is a business relationship between the assessee and the two subsidiaries. That being the case, it cannot be said that the 14 Strides Shasun Limited Strides Arcolab Limited advance made to these subsidiaries is not for the purpose of business. Moreover, the fact that Assessing Officer has not disallowed expenditure on advances made to the subsidiaries on the ground of commercial expediency in the earlier assessment year or subsequent assessment year has not been controverted by the Department., As far as the advance to Strides Research and Specialties is concerned, it is evident on record that there was no actual cash outflow. When the CRAM division of assessee company was hived off and the separate company was formed as per the scheme of arrangement framed by the Court, the debit balance standing in the books in the name of CRAM was treated as advance. Thus, as could be seen, the assessee has actually not made any advances to Strides Research and Specialties, in strict sense of the term. Moreover, the Department has also failed to establish nexus between the borrowed funds and advances made. One more crucial factor which cannot be ignored is, though, similar advances have been made to the Indian subsidiary in preceding as well as subsequent assessment years, the Assessing Officer has never disallowed proportionate interest expenditure, even though, assessments have regularly been completed under section 143(3) of the Act. In fact, in assessment year 2004–05, the disallowance made by the Assessing Officer on the ground of commercial expediency was found unacceptable by the learned Commissioner (Appeals) and the Department accepted the decision of the learned Commissioner (Appeals) by not referring any further appeal. All these facts invariably prove that the advances made are on account of commercial expediency as the assessee has a close business connection with the subsidiaries. The Hon'ble Supreme Court in Hero Cycle Ltd. (supra), while approving its earlier decision in CIT v/s S.A. Builders, [2007] 288 ITR 001 (SC) held as under:–

No doubt, as held in Madhav Prasad Jatia v. CIT [1979 (118) ITR 200 (SC)], if the borrowed amount was donated for some sentimental or personal reasons and not on the ground of commercial expediency, the interest thereon could not have been allowed under section 36(1)(iii) of the Act. In Madhav Prasad's case [1979 (118) ITR 200 (SC)], the borrowed amount was donated to a college with a view to commemorate the memory of the assessee's deceased husband after whom the college was to be named, it was held by this court that the interest on the borrowed fund in such a case could not be allowed, as it could not be said that it was for commercial expediency.

It has been repeatedly held by this court that the expression "for the purpose of business" is wider in scope than the expression "for the purpose of earning profits" vide CIT v. Malayalam Plantations Ltd. [1964 53 ITR 140 (SC), CIT v. Birla Cotton

Ground no.3, assessee has challenged the disallowance of ` 16,82,953, and ` 10,888, on account of PF and ESIC respectively.

Brief facts are, during the assessment proceedings, the Assessing Officer on a perusal of tax audit report found that there was a delay in remittance of employer’s and employees’ contribution to P.F. He also found similar delay in respect of payment of ESIC dues. He, therefore, called upon the assessee to explain why the expenditure incurred should not be disallowed under section 43B, and treated as assessee’s income in terms of section 2(24)(x) r/w section 36(1)(va). In response to the query raised by the Assessing Officer, it was 17 Strides Shasun Limited Strides Arcolab Limited submitted by the assessee that payments were made within the grace period and further it was submitted as the payments were made before the due date of filing of return of income for the assessment year under consideration, no disallowance under section 43B, can be made after deletion of second proviso to the said provisions.

The Assessing Officer, however, did not find merit in the submissions of the assessee. Relying upon certain judicial pronouncements, the Assessing Officer held that in terms of section 36(1)(va), due date as provided under the relevant provisions would mean the due date prescribed under the relevant statute and not Income Tax Act, 1961. On the aforesaid premise, he disallowed ` 55,20,655 and ` 48,89,235 under section 43B and section 36(1)(va). Being aggrieved of such disallowance, assessee preferred appeal before the first appellate authority.

Learned Commissioner (Appeals), after considering the submissions of the assessee in the light of certain judicial pronouncements held that employer’s contribution to PF having been paid prior to date of filing of return of income is allowable. As far as employees’ contribution is concerned, the learned Commissioner (Appeals) held that only if the amount was paid within the grace period provided under the relevant Act, the deduction is allowable. Accordingly, he directed the Assessing Officer to verify and compute the disallowance.

Learned Authorised Representative submitted, the issue is covered by the decision of the Tribunal in assessee’s own case for the assessment year 2002–03.

Learned Departmental Representative, though, did not dispute the contention of the assessee that issue is covered by the decision of the Tribunal but he nevertheless supported the reasoning of the learned Commissioner (Appeals).

We have considered the submissions of the parties and perused the material available on record. As could be seen, the issue in dispute is whether the employees’ and employer’s contribution to PF and ESIC are allowable deduction in case it is paid beyond the prescribed date under the relevant statute but before the due date of filing of return of income under the Income Tax Act, 1961. It is observed, identical issue arose in assessee’s own case for the assessment year 2002–03, in ITA no.1727/Mum./2006 dated 16th December 2015, the Tribunal, after following its own decision in assessee’s case for assessment year 2001–02, allowed assessee’s claim with the following observations:–

Facts being identical, respectfully following the aforesaid decision of the co–ordinate bench, we allow assessee’s claim of deduction in respect of payment made towards PF contribution and ESIC. This ground is allowed.

Brief facts are, the Assessing Officer noticing that the assessee has claimed deduction under section 80HHC, in respect of sale of DEPB credits called upon the assessee to justify the same. In response to the query raised, it was submitted by the assessee, the transfer of credits under the DEPB has not resulted in any profit, hence, no amount is deductible under section 28(iiid) of the Act. It was submitted by the assessee, it had incurred losses on sale of DEPB credits amounting to ` 51,59,166. It was contended as the assessee had incurred losses on sale of DEPB credit, there are no amount of profit in terms of section 28(iiid), hence, assessee did not exercise

Learned Commissioner (Appeals) after considering the submissions of the assessee that only profit on transfer of DEPB credit is covered by the newly inserted section 28(iiid), however, did not accept the same and confirmed the assessment order on this issue.

Learned Departmental Representative submitted, the issue may be restored back to the Assessing Officer for deciding in terms of the decision of the Hon'ble Supreme Court in Topman Exports (supra).

We have considered the submissions of the parties and perused the material available on record. It is the claim of the assessee that as per section 28(iiid), only the profit on transfer of DEPB credit can be treated as income of the assessee. He submitted, as in the impugned assessment year, the assessee has incurred loss on sale of DEPB. There is no income to the assessee in terms of section 28(iiid) having considered the submissions of the assessee in the light of the relevant statutory provisions and the decision of the Hon'ble Supreme Court in Topman Exports (supra), we find force in the submissions of the assessee. Moreover, it is seen, similar issue arose in assessee’s own case for assessment year 2001–02. The Tribunal, while deciding the issue in appeal preferred by the Department held as under:–

Respectfully following the aforesaid decisions of the Hon'ble Supreme Court and co–ordinate bench of the Tribunal, we restore the matter back to the file of the Assessing Officer to allow assessee’s claim in terms of principle laid down by the Hon'ble Supreme Court.

In ground no.5, assessee has challenged the addition made on account of transfer pricing adjustment relating to disallowance of interest on the advances made to overseas subsidiaries.

Brief facts are, the assessee is engaged in the business of manufacturing of generic pharma and nutritional products. It exports formulations, packing material and bulk drugs to its overseas group of companies hereinafter called A.Es. Though, the assessee had subsidiaries located in U.S.A., Mexico, Switzerland, Brazil, Uruguay, U.A.E. and South Africa, however, subsidiaries located in U.S.A., Brazil and Mexico are engaged in manufacturing activities. Other subsidiaries are engaged in trading activities only. During the relevant previous year, assessee entered into international transactions with its A.E. as under:–

In the course of assessment proceedings, the Assessing Officer noticing that assessee has entered into international transactions with its A.E. made a reference to the Transfer Pricing Officer for determining arm's length price of the transactions. The Transfer Pricing Officer after verifying the transfer pricing study and other relevant facts and material on record, made an adjustment of ` 86,10,000, to the price charged for export of manufactured goods. Further, the Transfer Pricing Officer found that the assessee has paid interest amounting to ` 29.49 crore on various credit facilities availed by it. He also found that advances to subsidiary companies were of significant value. He noticed that advances are on account of various expenses incurred by the assessee on behalf of the subsidiary companies which have to be recovered by it. The Transfer Pricing Officer was of the view that either the assessee should have recovered the expenditure incurred from subsidiary or it should have charged interest. The Transfer Pricing Officer observed while on the one hand the assessee was incurring interest expenditure on the credit facilities availed, on the other hand, the subsidiary companies are benefiting by availing interest free funds from the assessee. He, therefore, opined that a charge has to be made on account of interest receivable by the assessee from the subsidiary companies on the extended credit facility provided to them. From the information available on record, he found that a sum of ` 10.56 crore is outstanding as advances from subsidiary companies. He, therefore, called upon the assessee to work out the interest on such advances outstanding from subsidiaries. As stated by the Transfer Pricing Officer, assessee without prejudice to its claim that no interest is chargeable submitted a note working out the interest on advances made by applying rate of 6.9% per annum which as per the Transfer Pricing Officer is the weighted average rate on the 24 Strides Shasun Limited Strides Arcolab Limited loan availed by the assessee. Though, while objecting to charge of interest on the outstanding advances to the subsidiary, the assessee contended that subsidiary companies have generated significant sales and the margin generated by them is more than other transactions, however, the Assessing Officer did not accept the contention of the assessee on the reason that the assessee had not brought on record any contemporaneous document to show that interest was not charged having regard to the volume and margins on the A.E. transactions. Secondly, according to the Transfer Pricing Officer, interest chargeable is on account of financial cost which has nothing to do with profit at the operational level. Accordingly, he determined the arm's length price for the interest free credit extended to the assessee at ` 13,05,113 and made an adjustment. In terms of the adjustment made by the Transfer Pricing Officer, the Assessing Officer completed the assessment. Though, the assessee challenged the addition made on account of transfer pricing adjustment of the advances made to the subsidiary but the learned Commissioner (Appeals) dismissed the same by observing that the assessee was not able to justify its claim that no interest should be charged on the interest free advances to the subsidiary. Learned Commissioner (Appeals) observed, as the assessee was paying heavy interest on borrowing, whereas it has advanced money free of interest to subsidiary, the TPO was justified in determining the ALP of interest free advances.

Learned Authorised Representative submitted, the transfer pricing provision contained under Chapter–VI of the Act, is a computation provisions and not a charging provision. When the assessee has not charged any interest on the advance made to the subsidiary, no income has arisen to the assessee from the 25 Strides Shasun Limited Strides Arcolab Limited international transaction. Therefore, no transfer pricing adjustment could be made on notional basis. He submitted, advancing of loans to the A.E. cannot be regarded as an international transaction. He submitted, overseas subsidiaries have been formed by the assessee with a view to market its pharmaceutical products in the respective countries and to establish its business in the overseas jurisdiction. He submitted, receivables recorded in the books of account are towards expenditure incurred by the assessee on behalf of its A.Es. He submitted, such expenditures were incurred by the assessee from interest free funds / internal accruals and no borrowed funds were utilised for incurring such expenditure. Therefore, as there was no cost to the assessee in respect of the interest free advances, no charge on account of notional interest on the advance to subsidiary should be made. Learned Authorised Representative submitted, the assessee had not actually advanced any amount in cash to the A.Es. The expenditure incurred by the assessee was inextricably connected with the conduct of assessee’s business. Such fact is evident from the significant sales generated by the A.E. in respective of jurisdictions in the succeeding assessment years. Learned Authorised Representative submitted, as the expenditure incurred was for commercial / business expediency, notional interest cannot be computed on the advance made to subsidiaries. Without prejudice to the aforesaid submissions, learned Authorised Representative submitted, in any case of the matter, if the advancement of interest free funds to the subsidiary is treated as international transaction, the interest rate to be applied by using LIBOR instead of INR rate. He submitted, during the relevant year, the prevailing LIBOR was 1.698% which could be considered in case it is held that interest is chargeable on the interest free advance to the subsidiary. Learned Authorised Representative referring to the 26 Strides Shasun Limited Strides Arcolab Limited working furnished before the first appellate authority, contended that the average cost of borrowing during the relevant assessment year was 4.34%. He, therefore submitted, LIBOR plus 200 basis points can be considered as the rate of interest.

Learned Departmental Representative, on the other hand, submitted, as per the amended provisions of section 92B, the expression ―International Transaction‖ would include capital financing including receivable or any other due arising during the course of business. Therefore, assessee’s claim that interest free advances would not constitute international transaction is not acceptable. Learned Departmental Representative submitted, once the interest free advances are held to be coming within the ambit of international transaction, then determination of arm's length price of such transaction is imperative. He submitted, the interest free advance is in effect extended credit period granted to the A.E. for receivables. Hence, arm's length price has to be determined as per method prescribed under section 92C. He submitted, since the assessee has exported goods to A.Es and non–A.Es and there is delay in realisation of export proceeds from both there is internal CUP available to bench mark its transactions. Therefore, the same needs to be applied to bench mark the international transaction and TNMM is not a preferable method. Learned Departmental Representative submitted, the contention of the assessee that the loan is for business expediency would have no effect as the assessee advanced loan without charging any interest whereas it is bearing interest cost on credit facilities availed. Therefore, the assessee has shifted its profit based to the overseas A.E. who have benefited at the cost of the assessee. He submitted, if the assessee had not advanced such interest free funds

We have considered the submissions of the parties and perused the material available on record. As far as the contention of the learned Authorised Representative that the interest free advances to the overseas subsidiary on account of reimbursement of expenditure is not an international transactions and the transfer pricing provisions are not applicable, we are not convinced with the same. On a reference to section 92B of the Act, it is observed that after amendment effected vide Finance Act, 2012, with retrospective effect from 1st April 2002, the definition of international transactions as provided under the Explanation (i) to section 92B, has been expanded to include the following transactions.

On a plain reading of clause (c) of Explanation–(i) to section 92B, it is evident that any type of advance payment or deferred payment or receivable or any other debt arising during the course of business including capital financing would come within the scope of ―International Transaction‖. Thus, the assessee having incurred expenditure on behalf of its overseas A.Es which are receivables from the A.Es comes within the meaning of ―International Transactions‖. Therefore, contention of the learned Authorised Representative that receivables on account of expenditure incurred on behalf of A.E. are not international transaction or no computation can be made is not acceptable in view of specific statutory provisions. The next contention of the learned Authorised Representative is, the assessee has long standing business relation with the subsidiary and as a result of investment / advances made, assessee has derived benefit as substantial sales have been recorded from the geographical locations where the subsidiaries are situated. In our view, plea of business /

In the result, assessee’s appeal is partly allowed. ./2007 – Department’s Appeal C.O. no.121/Mum./2007 – Assessee’s Cross Objection

Ground no.1, in Department’s appeal corresponding to ground raised

Before the first appellate authority, it was submitted by the assessee by furnishing a fund flow statement that assessee had sufficient interest free funds to invest in overseas subsidiaries. However, learned Commissioner (Appeals) observed that assessee had not disputed the allegation of the Assessing Officer that borrowed funds were not utilised for investment in shares of overseas company.

As far as the claim of commercial expediency is concerned, the learned Commissioner (Appeals) observed, assessee has not demonstrated how the investment in subsidiary has helped in furthering the business of the assessee. He, therefore, upheld the disallowance of proportionate interest made by the Assessing Officer. However, he observed that as the income from subsidiary by way of dividend is taxable as income from other sources, the interest expenditure on account of investment in subsidiary would be eligible for deduction under section 57(iii) of the Act. In this regard, he relied upon the order passed by his predecessor–in–office in assessee’s own case for the assessment year 2002–03.

Learned Departmental Representative though agreed that in assessment year 2002–03, learned Commissioner (Appeals)’s view in allowing deduction of interest expenditure under section 57(iii) was upheld by the Tribunal but he nevertheless submitted, assessee having

Learned Authorised Representative submitted, assessee has made investment in fixed asset during the year which was out of borrowed funds, therefore, it cannot be said that the borrowed funds were not utilised for the purpose for which they were availed. He submitted, in any case of the matter, as the assessee had mixed funds, both interest bearing and interest free presumption would be investments made in subsidiary were out of interest free funds. For such proposition, he relied upon the decision of the Hon'ble Jurisdictional High Court in CIT v/s Reliance Utilities and Power Ltd. [2009] 331 ITR 340 (Bom.), and HDFC Bank Ltd. v/s DCIT, W.P. no.1753 of 2016. Further, learned Authorised Representative

We have considered the submissions of the parties and perused the material available on record. It is evident from the orders of the Departmental Authorities, though the assessee had contended that borrowed funds were utilised for acquiring fixed asset and working capital, whereas, interest free funds available through reserve and surplus and internal accruals were utilised for advance to the subsidiary but the Assessing Officer had rejected such claim of the assessee and disallowed proportionate expenditure from the interest cost alleging utilisation of borrowed funds towards investment in shares of foreign subsidiary. It has been brought to our notice by the learned Authorised Representative by furnishing a summary of cash flow that during the financial year 2002–03, the total interest free funds to the assessee by way of internal accruals and infusion of equity was to the tune of ` 14,93,70,838, whereas the investment made in subsidiary was to the tune of ` 14,30,50,843, thereby stile leaving a surplus interest free funds available with the assessee of ` 63,19,996. Moreover, the assessee has contended before the Departmental Authorities and also has stated before us, borrowed funds were utilised for the purpose for which they were availed by investing in fixed assets and working capital. Aforesaid, contentions of the assessee was not considered by the Departmental Authorities with any genuineness. When the Assessing Officer makes the disallowance of interest expenditure on the allegation that borrowed funds were utilised for the purpose of investment in subsidiary, the burden is on 36 Strides Shasun Limited Strides Arcolab Limited the Assessing Officer to establish the nexus between the borrowed funds and the investments made. Establishment of such nexus assumes more importance when it is found that along with borrowed funds, assessee had sufficient interest free funds available with him to make the investment. In such situation, as held by the Hon'ble Jurisdictional High Court in Reliance Utilities Pvt. Ltd. (supra), subsequently following in HDFC Bank Ltd. (supra), the presumption would be investment in subsidiary has been made out of own surplus funds available with the assessee. In the present case, the fact that assessee has sufficient interest free funds available with it, has not been controverted by the Department. In such circumstances, following the ratio laid down by the Hon'ble Jurisdictional High Court as referred to above no disallowance in terms of section 36(1)(iii) can be made on account of interest attributable to investment / advance made in overseas subsidiary. Another aspect of the issue is whether the advance / investment made is on account of commercial expediency. It is seen from the material placed on record that the assessee had made investment for establishment of the overseas subsidiary to expand its market has in other geographical locations. It is not disputed by the Departmental Authorities that as a result of aspect of overseas subsidiary, there is substantial increase in sales in such geographical location. Therefore, the contention of the assessee that overseas subsidiaries are acting as the marketing arms of the assessee cannot be disputed or denied. Moreover, it is seen from the record that the assessee has regular business transactions with overseas subsidiary by supplying raw material, etc. for manufacture of goods. Further, the assessee has also sold finished goods to the A.Es. All these factors clearly establish that there is a business / trade relationship between the assessee and overseas subsidiary. That being

In ground no.2, Department has challenged allowance of assessee’s claim of deduction in respect of employer’s contribution made towards PF / ESIC.

Before us, both the parties admitted, the issue arising out of the aforesaid ground is identical to ground no.3, raised by the assessee in its appeal in ITA no.641/Mum./2007, wherein, vide Para–21, the said issue is decided in favour of the assessee and against the Revenue. Consistent with the view taken therein, we allow this ground also.

In ground no.3, assessee has challenged the decision of the learned Commissioner (Appeals) in respect of rejection of indirect cost by 10% of the export incentives for computing profits under section 80HHC.

Brief facts are, during the assessment proceedings, the Assessing Officer, while perusing the note attached to report in form no.10CCAC, noticed that while working out indirect cost of trading export for claiming deduction under section 80HHC, assessee has reduced the indirect cost of trading export by 10% of the export incentives and other income. He, therefore, called upon the assessee to justify the method adopted by the assessee. In response, it was submitted by the assessee that 10% of export incentive was reduced from indirect cost debited to Profit & Loss account as the same was deemed to have been incurred for earning incentive. In this regard, assessee relied upon the Special Bench decision of the Tribunal in Surendra Engineering Corp. V/s ACIT, [2003] 86 ITD 212. The Assessing Officer,

Learned Commissioner (Appeals), after considering the submissions of the assessee in the light of the decision of the Tribunal Special Bench held that indirect cost has to be reduced by 10% of the export incentive for calculating profit from trading export.

We have considered the submissions of the parties and perused the material available on record. It has been brought to our notice by the learned Authorised Representative that issue is squarely covered by the decision of the Tribunal in assessee’s own case for assessment year 2002–03, wherein following its earlier order for assessment year 2001–02, the Tribunal has upheld the order of the learned Commissioner (Appeals). Learned Departmental Representative has not controverted the factual position.

On a perusal of the order of the co–ordinate bench of the Tribunal for assessment year 2002–03, in assessee’s own case, in ITA no.1727/Mum./2006 dated 16th December 2015, it is noticed that while upholding the order of the learned Commissioner (Appeals) in assessee’s own case claim of reduction in indirect cost by 10% of the export incentives the Tribunal followed its own order for assessment year 2001–02 in assessee’s own case wherein the Tribunal had decided the issue by following the decision of the Hon'ble Supreme

There being no material difference in the facts brought to our notice by the learned Departmental Representative, respectfully following the aforesaid decision of the co–ordinate bench of the Tribunal, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised by the Department.

Ground no.4, is in relation to treatment of foreign exchange fluctuation gain as business income for grant of deduction under section 80HHC.

Brief facts are, during the assessment proceedings, the Assessing Officer noticed that while computing deduction under section 80HHC, assessee has included the foreign exchange fluctuation gain of ` 17,61,491 in the business income. Assessing Officer, however, was of the view that export realisation is not directly relatable to the export turnover of the year. He observed that income arising out of exchange rate fluctuation has to be treated as income from other sources. Accordingly, he reduced the same from business income while computing deduction under section 80HHC.

The learned Commissioner (Appeals), however, allowed assessee’s claim by observing that the exchange fluctuation gain derived by the assessee being part of export turnover is eligible for deduction under section 80HHC.

We have considered the submissions of the parties and perused the material available on record. There is no dispute to the fact that foreign exchange gain was directly as a result of export made by the assessee. Moreover, it is observed from the order of the learned Commissioner (Appeals) similar relief was also granted to the assessee in the preceding assessment year. In view of the above, we do not find any infirmity in the order of the learned Commissioner (Appeals). Ground no.4, is dismissed.

In ground no.5, the Department has challenged the decision of the learned Commissioner (Appeals) with regard to netting of interest

In the course of assessment proceedings, the Assessing Officer noticing that the assessee had included interest earned on fixed deposit in the banks amounting to ` 89,82,566, in the business income for claiming deduction under section 80HHC, disallowed the claim by holding that such income being in the nature of income referred to any Explanation (baa) to section 80HHC(4B), 90% of such income has to be reduced from profit of business for computing deduction under section 80HHC.

In the appeal preferred by the assessee against the aforesaid decision of the Assessing Officer, learned Commissioner (Appeals) held that the interest received should be netted off against interest payment. He further held that if the interest is generated out of the margin money for issuing guarantee or opening of L/C the same is directly connected with the business of assessee. Hence, the interest income generated from such activities has to be assessed as business income. He, therefore, directed the Assessing Officer to net off interest received and paid and thereafter apply Explanation (baa) to section 80HHC to interest remaining after netting–off.

We have considered the submissions of the parties and perused the material available on record. At the outset, learned Authorised Representative submitted, the issue is squarely covered by the decision of the Tribunal in assessee’s own case for assessment year 2001–02. Learned Departmental Representative has not controverted the aforesaid factual position. On a perusal of the order dated 16th December 2015, in ITA no.1727/Mum./2006, for assessment year

There being no material difference in facts brought to our notice by the learned Departmental Representative, respectfully following the aforesaid decision of the Tribunal, we uphold the order of the learned Commissioner (Appeals) by dismissing ground no.5, raised by the Department.

In ground no.6, Department has challenged the decision of the learned Commissioner (Appeals) in directing the Assessing Officer to exclude excise duty and sales tax from the total turnover for computation of deduction under section 80HHC.

Brief facts are, while completing the assessment, Assessing Officer held that excise duty has to form part of total turnover for computing deduction under section 80HHC. Though, assessee had excluded the excise duty from the total turnover following the judgment of Hon'ble Jurisdictional High Court in CIT v/s Sudarshan Chemical Industries Ltd. [2000] 245 ITR 769 (Bom.), but the Assessing Officer reasoning that Department has filed SLP against the said decision of the Hon'ble Bombay High Court rejected assessee’s contention.

The learned Commissioner (Appeals), however, following the decision of the Hon'ble Jurisdictional High Court, as referred to above,, directed the Assessing Officer to exclude sales tax and excise duty from the total turnover for computing deduction under section 80HHC.

We have considered the submissions of the parties and perused the material available on record. In the course of hearing, it has been brought to our notice by the learned Authorised Representative that the issue has been decided in favour of the assessee by the Tribunal in assessment year 2001–02 and 2002–03, in assessee’s own case following the decision of the Hon'ble Supreme Court in CIT v/s Lakshmi Machine Works, [2007] 290 ITR 667 (SC). On a perusal of the order passed by the Tribunal in assessee’s own case for the assessment year 2002–03, it is observed that the Tribunal while deciding the issue held as under:–

After considering the rival submissions and perusing the relevant material on record we find that this issue has also been settled by the Hon’ble Supreme Court in the case of CIT v. Laxmi Machine Works [(2007) 290 ITR 667 (SC)] holding that the excise duty is not includible in the `total turnover’ in the formula contained in section 80HHC. The impugned order on this issue, being in conformity with the view taken by the Hon’ble Supreme Court, does not warrant any interference. This ground is not allowed.‖ 16.2. No contrary judgment has been placed before us, and therefore, respectfully following judgment of Tribunal and that of Hon’ble Supreme Court, we decide this issue in favour of the assessee and therefore Ground no. 7 of the Revenue’s appeal is dismissed.‖

There being no material difference in facts, respectfully following the decision of the co–ordinate bench of the Tribunal, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised by the Department.

Ground no.7, raised by the Department relates to transfer pricing adjustment in respect of sale of finished goods.

Brief facts are, assessee is engaged in the business of generic, pharma and nutritional products. It exports formulation, packing material and bulk drugs to its group companies. As noted by the Transfer Pricing Officer, assessee has subsidiaries located in U.S.A., Mexico, Switzerland and Brazil, Uruguay, U.A.E. and South Africa. He also noted that the subsidiaries located in U.S.A., Brazil and Mexico are engaged in the manufacturing activities, whereas, other subsidiaries are engaged in trading activities. In the course of proceeding before him, the Transfer Pricing Officer after perusing the transfer pricing documents of the assessee and other relevant material found that margin shown by the assessee is much more than the margin of the comparable companies, however, the Transfer Pricing Officer called upon the assessee to show the margin earned in respect of different therapeutic segment with each of the A.Es and the third party margin in the same segment. After considering the information submitted by the assessee, Transfer Pricing Officer noticed that margin earned on transaction with A.E. are lower than the margin earned on the transaction with third parties in respect of two therapeutic segments. Accordingly, he proceeded to determining the arm's length price of two segments by applying the margin earned by the assessee on its third party transactions. By following the aforesaid process, the Assessing Officer made an adjustment of ` 86,10,000. In terms of the adjustment made by the Transfer Pricing Officer, the Assessing Officer passed the draft assessment order by making addition of ` 86,10,000. Assessee challenged the addition before the learned Commissioner (Appeals).

The learned Commissioner (Appeals), after considering the submissions of the assessee vis–a–vis the facts and material on record, found that the method adopted by the Transfer Pricing Officer is not correct in view of various discrepancies / short comings as the Transfer Pricing Officer has not taken into consideration various facets of the transactions. The learned Commissioner (Appeals) held that the Transfer Pricing Officer has made comparison of sale price which were different in terms of packing and marketing. He observed, as far as U.S. market is concerned, the same is more mature and competitive as against smaller market at Cellopharm and Brazil, which forms Latin market part. He further observed, while the sales made to Brazil and Cellopharm are in small packing, which could be termed as ready to use pack not requiring any further processing whereas the bulk sales made to A.E. are not same. He further noticed that in the preceding assessment year, under identical facts and circumstances, the learned Commissioner (Appeals) had held that there was no transfer of profit from assessee to A.E. Thus, on the basis of aforesaid consideration, learned Commissioner (Appeals) held that price charged by the assessee to its A.E. is reasonable requiring no further adjustment.

We have considered the submissions of the parties and perused the material available on record. It is observed against the order of the learned Commissioner (Appeals) for assessment year 2002–03, the Department came in appeal before the Tribunal. The Tribunal restored the issue back to the Assessing Officer / Transfer Pricing Officer for fresh consideration observing as under:–

On a careful reading of the observations of the co–ordinate bench, it is noticed that they have disapproved the approach / method adopted by the Transfer Pricing Officer while determining the arm's length price as well as the conclusion drawn by the learned Commissioner (Appeals). Therefore, taking into consideration of relevant facts restored the matter back to the Transfer Pricing Officer with direction to make fresh research and fresh analysis keeping in 49 Strides Shasun Limited Strides Arcolab Limited view the objections raised by the assessee. In the impugned year facts are identical. Therefore, keeping in view of the observations of the Tribunal as referred to above, we restore the matter back to the file of the Assessing Officer with a direction to make a fresh analysis relating to most appropriate method which could be adopted for bench marking the international transaction and, thereafter, undertake a comparably analysis. It is further directed, the Transfer Pricing Officer should consider the objections / submissions of the assessee with regard to adoption of most appropriate method as well as the selection of comparables, etc. Only after considering the submissions of the assessee and affording due opportunity of being heard, the Transfer Pricing Officer shall pass a speaking and reasoned order meeting all the objections raised by the assessee. With the aforesaid direction, the issue is restored to the file of the Assessing Officer. Ground no.7, is allowed for statistical purposes.

In ground no.8, the Department has challenged the decision of the learned Commissioner (Appeals) in directing the Assessing Officer not to reduce the deduction computed under section 80HHC, while computing book profit under section 115JB.

Brief facts are, while computing the book profit under section 115JB, Assessing Officer reduced the deduction computed under section 80HHC, amounting to ` 2,78,66,066, being aggrieved of such computation, assessee challenged it before the learned Commissioner (Appeals).

In the course of proceedings before the first appellate authority, it was submitted by the assessee that in the preceding assessment year, the issue has been decided in favour of the assessee. Learned

We have considered the submissions of the parties and perused the material available on record. At the outset, learned Authorised Representative submitted before us that the issue has been decided in favour of the assessee by the Tribunal in assessee’s own case for the assessment year 2001–02. Learned Departmental Representative also agreed that the Tribunal has decided the issue in favour of the assessee. On a perusal of the order dated 3rd August 2012, in ITA no.6487/Mum./2004, for assessment year 2001–02, it is noticed, the co–ordinate bench following the decision of Hon'ble Supreme Court in Ajanta Pharma Ltd. v/s CIT, [2010] 327 ITR 305 (SC), held as under:– ―17. Last ground of the Revenue’s appeal is against the direction of the learned CIT(A) to reduce export profits based on book profit in the ratio of export turnover to total turnover and not the quantum of deduction as worked out u/s 80HHC for the purposes of working out `book profit’ liable for MAT u/s 115JB of the Act.

After considering the rival submissions and perusing the relevant material on record we find that this issue is directly covered in favour of the assessee by the judgment of the Hon’ble Supreme Court in the case of Ajanta Pharma Ltd. v. CIT [(2010) 327 ITR 305 (SC)] in which it has been held that clause (iv) of the Explanation to section 115JB covers full export profits of 100% as `eligible profits’ and the same cannot be reduced to 80% by relying on section 80HHC(1B). Thus it is evident that the learned CIT(A) has taken an inescapable view on this point which does not require any interference. This ground is not allowed.‖

There being no material difference in facts, respectfully following the aforesaid decision of the co–ordinate bench, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised by the Department.

In the result, Department’s appeal is partly allowed for statistical purposes and assessee’s cross objection is allowed. ./2010 – Department’s Appeal 81. Ground no.1 relates to acceptance by the learned Commissioner (Appeals) assessee’s claim of deduction under section 80HHC in respect of sales effected to Mission Pharma Logistic Pvt. Ltd.

Brief facts are, the Assessing Officer in the course of assessment proceedings, while verifying assessee’s claim of deduction under section 80HHC, noticed that during the relevant previous year, assessee had effected sales to another entity viz. Mission Pharma Logistic Pvt. Ltd. and claimed deduction under section 80HHC, on such sales. Assessing Officer observed that Mission Pharma Logistic Pvt. Ltd. is not doing any manufacturing activity and is only engaged in re– packing liberalising, kit packing, etc. He, therefore, opined that Mission Pharma Logistic Pvt. Ltd. is not eligible for deduction under section 10A. Referring to sub–section (4C) of section 80HHC, the Assessing Officer called upon the assessee to explain why deduction under section 80HHC on sales made to Mission Pharma Logistic Pvt. Ltd. should not be disallowed. Though, assessee objected to proposed disallowance by stating that the concerned company being a SEZ unit, sales effected to such unit will be considered as deemed export and, hence, eligible for deduction under section 80HHC, however, the Assessing Officer on the basis of his conclusion that Mission Pharma

Learned Commissioner (Appeals), after considering the submissions of the assessee held that as the assessee has fulfilled the condition of 80HHC(4C), it is eligible for deduction. While coming to such conclusion, learned Commissioner (Appeals) observed the entity to which the assessee has effected sales is an unrelated party and the Assessing Officer has not brought any material on record to substantiate his conclusion. The learned Departmental Representative relying upon the observations of the Assessing Officer, submitted that in terms of section 80HHC(4C), assessee has to fulfill two conditions; firstly, the unit to which sales is effected must be situated in SEZ and secondly, such SEZ unit should be eligible for deduction u/s 10A.

Learned Departmental Representative submitted, though, the assessee fulfilled first condition but the second condition was not fulfilled as the assessee failed to establish the fact that Mission Pharma Logistic Pvt. Ltd. is eligible for deduction under section 10A.

Learned Authorised Representative strongly supporting the reasoning of the first appellate authority submitted, the Assessing Officer while disallowing assessee’s claim of deduction 80HHC, has failed to substantiate his allegation with supporting evidence that Mission Pharma Logistic Pvt. Ltd. is not engaged in manufacturing activity. He, therefore, submitted, no adverse inference can be drawn with reference to the conclusion of the learned Commissioner (Appeals).

We have considered the submissions of the parties and perused the material available on record. Undisputedly, assessee has set–up a unit outside SEZ for manufacturing and sale of generic pharma products and other nutritional products. It is also not disputed that assessee during the relevant previous year, has sold its products worth ` 3,33,62,706 to Mission Pharma Logistic Pvt. Ltd. a company set–up in SEZ and claimed deduction under section 80HHC, on such sales turnover. On a perusal of sub–section (4C) of section 80HHC, it is noticed that an assessee having set–up a unit outside SEZ engaged in manufacture / production of goods or merchandise, if sells such products to any undertaking situated in SEZ which is eligible for deduction under section 10A, then such sales effected by the assessee shall be deemed to be export out of India for the purpose of section 80HHC. Thus, on a plain reading of the provisions contained in sub– section (4C) of section 80HHC, it becomes clear that to qualify as deemed export out of India three conditions are to be satisfied. Firstly, assessee claiming such deduction must have set–up an undertaking for manufacture or production of goods outside SEZ; secondly, the goods / products manufactured by it, should be sold to an undertaking situated in SEZ; thirdly, such SEZ units must be eligible for deduction under section 10A. In the present case, there is no dispute between the parties that assessee has satisfied conditions no.1 and 2. As far as condition no.3, is concerned, it is the allegation of the Assessing Officer that SEZ unit to which assessee has effected sales viz. Mission Pharma Logistic Pvt. Ltd. is not an eligible unit under section 10A, as it is not engaged in any manufacturing activity but is doing only re– packing, re–labeling and kit packing. However, on what basis, the Assessing Officer has come to such conclusion has not been indicated in the assessment order. The learned Commissioner (Appeals), while

In ground no.2, Department has challenged the decision of the learned Commissioner (Appeals) in accepting assessee’s claim of deduction under section 80HHC in respect of profit derived on transfer of DEPB credit.

This issue is similar to the issue raised in ground no.4, of assessee’s appeal in ITA no.641/Mum./2007, dealt by us in the earlier part of the order. Following our reasoning given in Para–30, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground no.2, raised by the Department.

In ground no.3, Department has challenged the decision of the learned Commissioner (Appeals) in rejecting indirect cost by 10% of the export incentives for computing profit from trading exports under section 80HHC.

Similar issue arose in Department’s appeal in ITA no.274/Mum./ 2007, dealt by us in ground no.5. Following the reasoning given in Para–50 to 52, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground no.3, raised by the Department.

In ground no.4, Department has challenged the decision of first appellate authority for netting of interest receipts against interest payment for computation of deduction under section 80HHC.

This issue is similar to the issue raised in Ground no.5, by the Department in its appeal in ITA no.274/Mum./2007. Following the reasoning given in Para–60 and 61, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground no.4, raised by the Department.

In ground no.5, Department has challenged the decision of the learned Commissioner (Appeals) in deleting the adjustment made to the arm's length price by the Assessing Officer and the Transfer Pricing Officer.

This issue is similar to the issue raised in ground no.7, by the Department in its appeal in ITA no.274/Mum./2007. Following the reasoning given in Para–70 and 71, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground no.5, raised by the Department.

In the result, Department’s appeal is dismissed. C.O. no.61/Mum./2011 (Assessee’s Cross Objection arising out of Department’s appeal in ITA no.4063/Mum./2010)

Ground no.1, relates to disallowance of deduction claimed under section 35(2AB) of the Act.

This issue is similar to the issue raised in Ground no.1, by the assessee in its appeal in ITA no.641/Mum./2007. Following the reasoning given in Para–8 and 9, we set aside the impugned order passed by the learned Commissioner (Appeals) and allow the ground no.1, raised by the assessee.

Ground no.2, relates to transfer pricing adjustment of ` 22,19,174, in respect of outstanding receivables / debit balance of foreign subsidiary.

This issue is similar to issue raised in ground no.2, by the assessee in its appeal in ITA no.641/Mum./2007, wherein vide Para– 16 and 17, we have partly allowed the claim of the assessee. Consistent with the findings given therein, we direct the Assessing Officer to re–compute / charge interest in terms of our finding as aforesaid. Ground no.2, is also partly allowed.

In ground no.3, assessee has challenged the computation of book profit under section 115JB of the Act, after reducing the deduction under section 80HHC.

This issue is also similar to the issue raised by the Department in ground no.8, in its appeal in ITA no.274/Mum./2007, wherein we have 57 Strides Shasun Limited Strides Arcolab Limited dismissed the ground raised by the Department. The only difference is, the learned Commissioner (Appeals) has decided the issue against the assessee. However, there being no material difference in facts between the impugned assessment year and in assessment year 2003–04, consistent with the findings given in Para–75 and 76, we set aside the impugned order passed by the learned Commissioner (Appeals) on this issue and allow the ground no.3, raised by the assessee.

In the result, assessee’s cross objection is partly allowed.

To sum up, assessee’s appeal in ITA no.641/Mum./2007 is partly allowed, Department’s appeal in ITA no.274/Mum./2007 is partly allowed for statistical purposes, assessee’s cross objection no.121/ Mum./2007 is allowed, Department appeal in ITA no.4063/Mum./2010 is dismissed and assessee’s cross objection no.61/Mum./2011 is partly allowed. Order pronounced in the open Court on 29.04.2016