Sun Pharma Laboratories Ltd Vs DCIT (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad, disposed of the cross appeals filed by the assessee and the Revenue against the order of the Commissioner of Income-tax (Appeals) [CIT(A)] for Assessment Year 2017-18. The assessee challenged the disallowance under Section 14A read with Rule 8D, while the Revenue challenged the relief granted by the CIT(A) in respect of deduction under Section 80-IE, amortization of intangibles under Section 115JB, and treatment of Debenture Redemption Reserve while computing book profit under Section 115JB.
The assessee, engaged in manufacturing and trading pharmaceutical products with manufacturing units in Jammu & Kashmir, Sikkim and Guwahati, had filed its return declaring nil income under the normal provisions and book profit under Section 115JB. Following scrutiny assessment under Sections 143(3) read with 144B, the Assessing Officer made several additions and disallowances. The CIT(A) granted partial relief, leading to cross appeals before the Tribunal.
In the assessee’s appeal, the only surviving issue related to disallowance of Rs. 62,45,631 under Section 14A read with Rule 8D. The Tribunal noted that the assessee’s investments in tax-free bonds were held only for three months and involved no major buying or selling activity. It also recorded that the assessee possessed sufficient own funds for making the investments and that the CIT(A) had sustained only a disallowance of 15% of salary paid to employees involved in investment activities. The Tribunal observed that identical issues had already been decided in the assessee’s own cases for earlier assessment years and that the Revenue had accepted the CIT(A)’s orders for certain intervening years. Finding no change in facts or law, the Tribunal followed the consistent view adopted in earlier years and declined to interfere with the CIT(A)’s order. Accordingly, the assessee’s ground on Section 14A was allowed, while the consequential ground relating to enhanced deduction under Sections 80-IB/80-IE was treated as infructuous.
