ITAT MUMBAI BENCH ‘C’
Cipla Ltd.
versus
Deputy Commissioner of Income-tax
IT APPEAL NO. 5812 (MUM.) OF 2011
[ASSESSMENT YEAR 2004-05]
OCTOBER 17, 2012
ORDER
D. Karunakara Rao, Accountant Member
This appeal filed by the assessee on August 17, 2011 is directed against the order of the Commissioner of Income-tax (Appeals)-36, Mumbai dated February 24, 2011 in relation to the assessment year 2004-05.
2. In this appeal, the assessee raised the following grounds :
“1. The learned Commissioner of Income-tax (Appeals) has erred in confirming that the receipts on account of insurance claims, sale of scrap, miscellaneous receipts and technology transfer fees are required to be reduced from the profits of business in terms of Explanation (baa) to section 80HHC of the Income-tax Act.
2. Without prejudice to the generality, the learned Commissioner of Income-tax (Appeals) has erred in giving the findings beyond the limited ambit of the directions of the Tribunal in the order dated December 22, 2009 in I. T. A. No. 4007/Mum/2006.”
3. Briefly stated the relevant facts of the case are that the assessee is engaged in the business of manufacturing of drugs and pharmaceuticals, filed its return of income declaring total income at Rs. 145.66 crores and the same was scrutinised and assessed income was determined at Rs. 255.20 crores. The determination of eligible deduction under section 80HHC, with regard to the issues of insurance claims, sale of scrap, technology transfer fees and miscellaneous receipts, is one disputed issue which led to the reduction of deduction claimed by the assessee. In the first round, the Tribunal remanded the issue to the files of the Assessing Officer vide I.T.A. No. 4008/Mum/2006 dated December 22, 2009. Ground No. 6 of the appeal was adjudicated vide paragraph 15 and the Tribunal restored the matter for deciding the issue afresh in the light of the jurisdictional High Court judgment in the case of CIT v. Bangalore Clothing Co.[2003] 260 ITR 371. In remand proceedings, the Assessing Officer examined the above disputed issues, i.e., insurance claims, sale of scrap, technology transfer fees and miscellaneous receipts and held that the said receipts would not constitute operational income as held by the said jurisdictional High Court judgment in the case of Bangalore Clothing Co. (supra) Further, the Assessing Officer held that the receipts on account of insurance claims, sale of scrap, technology transfer fees and miscellaneous receipts are to be reduced from the profit of the business in terms of Explanation (baa) to section 80HHC of the Act. Paragraphs 5 and 6 of the assessment order are relevant in this regard. Aggrieved with the above, the assessee filed appeal before the Commissioner of Income-tax (Appeals).
