Reckitt Benckiser Healthcare India Private Ltd. Vs CIT (ITAT Ahmedabad)
ITAT Ahmedabad held that income from sale of scraps generated through production process reducing cost of product is eligible for deduction under section 80IC of the Income Tax Act. Accordingly, appeal of revenue dismissed.
Facts- The assessee-company is engaged in the business of manufacturing and marketing of pharmaceuticals & Cosmetic. The case of assessee was selected for scrutiny assessment and the assessment was subsequently framed by the Assessing Officer u/s 143(3) of the Act on 30.03.2015 determining total business income of the assessee at Rs.84,94,28,649/-, against the returned income of Rs.27,56,70,614/-, by making various additions/disallowances of Rs.13,19,12,485/- as capital gains under normal provisions of the Act and Rs.129,12,24,408/- as book profits u/s 115JB of the Act.
CIT(A) confirmed/deleted some of the additions/ disallowances made by AO. Being aggrieved, the present appeal is filed.
Conclusion- Held that it is also settled position of law that the scheme of demerger once approved by the Hon’ble Jurisdictional High Court, it cannot be re-visited by any statutory authority. At the same time, the provisions of Income-tax Act had prescribed the conditions under which the benefits can be accorded in the case of demerger which means that mere fact that ipso facto does not entitle an assessee to claim benefit. The Income-tax Act operates in its own arena in conjunction with the order of the Hon’ble High Court. The harmonious interpretation of the Corporate Law and Income-tax Law and the Orders of the Hon’ble High Court is sine qua non for the benefit of the tax payer as well as for the interest of the exchequer. The vary purpose of demerger which is for better conducting of the business cannot be curtailed by the Income-tax Department and the assessee would be eligible for business in accordance with the provisions of Section 2(19AA) Section 2(22)(a) & Section 47. In the instant case, the assessee failed to comply with the provisions of Section 2(19AA) (ii) & (iii). Hence, the order of the Ld. CIT(A) on these grounds are affirmed.
