Case Law Details
Case Name : ACIT Vs. Nestor Pharmaceuticals Limited (Delhi High Court)
Appeal Number : ITA No. 2010-TIOL-124-HC-DEL-IT
Date of Judgement/Order :
Related Assessment Year :
Courts :
All High Courts Delhi High Court
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Recently, the Delhi High Court in the case of ACIT Vs. Nestor Pharmaceuticals Limited [2010-TIOL-124-HC-DEL-IT] on the issue of whether the year in which trial production starts can be considered as initial Assessment Year (AY) for claiming benefit under section 80-IA of the Income Tax Act, 1961 (the Act) after relying on various judicial precedents held that the initial year is the year in which the commercial production starts and not trial production.
Facts and background of the case
- As per Section 80-IA of the Act, profits and gains derived by an eligible industrial undertaking will be entitled to a deduction, beginning from the year in which the undertaking begins manufacture of produce articles or things.
- The taxpayer, a company eligible to benefit under section 80-IA of the Act, was engaged in the business of manufacturing of pharmaceuticals formulations in bulk drugs. The taxpayer carried out trial production from 20 March 1998 (i.e. AY 1998-99), however, its commercial production starts from (AY 1999-00). Accordingly, the taxpayer after considering AY 1999-2000 as initial assessment year, claimed benefit from AY 1999-2000 to 2003- 04
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What about suggestion/ ruling to be in case of IT Exemption scheme period is going to expire i.e 31.3.2004 , in such cases production has to start before 31.3.2004 and production was started in systematic manner before 31.3.2004 will be eligible for deduction u/s 80 IB