Case Law Details
PCIT Vs. Medley Pharmaceuticals Ltd. (Bombay High Court)
The Revenue rejected the claim on two grounds. Firstly, on the ground that the assessee had utilised old machinery, valuation of which was in excess of 20% of the total installed machinery. Secondly, that the Unit-2 was a mere extension of the existing Unit-1 and was not an independent manufacturing unit.
The Tribunal, however, in a detailed discussion contained in the impugned judgment, had rejected the contention. The Tribunal had taken into account the valuation of the existing machinery used at Daman and the valuation of the written down value of the machinery transferred from Aurangabad to come to the conclusion that the same did not exceed 20% of the total value of the machinery. The entire issue is thus based on factual consideration and on appreciation of evidence on record. No question of law arises.
The Revenue’s second objection flows from the first condition contained in sub-section (3) of section 80-IA of the Act. This objection is confined to the Unit 2 at Daman. The Revenue argues that the said Unit is nothing but an extension of the existing unit and the assessee desired to extend the benefits of section 80-IA beyond the prescribed statutory period of 10 years.
High Court states that the operations of Unit-1 at Daman started in A.Y. 1995-1996 and the operations of the Unit-2 at Daman started during the period relevant to the Assessment Year 1999-2000. It was further noted that the products manufactured at both the Units were different, though some of the pharmaceutical formulations may be common. The Tribunal noted that in Unit-1, the assessee was manufacturing oral liquids only, whereas at the Unit-2, the assessee had started manufacturing tablets, capsules as well as certain orally administered liquids. The assessee had also commenced for the first time manufacturing activity of certain antibiotics. The Tribunal, therefore, came to the conclusion that the formation of Unit-2 at Daman cannot be seen as a mere extension of the assessee’s existing unit-1. The Tribunal has discarded the Revenue’s contention that both the Units shared common amenities and common central excise registration and, therefore, cannot be seen as a separate industry, was rejected by the Tribunal. The assessee had presented full details of purchase of new plot, efforts made for obtaining separate excise registration for the new industry as well as for obtaining of a separate electric connection. Again, the Tribunal has examined the relevant factors and come to the conclusion which does not given rise to any substantial question of law. Therefore, the appeal filed by the revenue is dismissed.
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