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TMI Blog2013 (11) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... 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." 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the insurance claim being the loss of stock-in-trade is not allowable in view of the jurisdictional High Court judgment in the case of CIT v. Pfizer Ltd. [2011] 330 ITR 62 (Bom). Regarding miscellaneous receipts, sale of scrap and technology transfer fee receipts, the Commissioner of Incometax (Appeals) dismissed the grounds of the assessee relying on the judgment of the Bombay High Court in the case of CIT v. Dresser Rand India P. Ltd. [2011] 330 ITR 453 (Bom). Aggrieved with the above decision of the Commissioner of Income-tax (Appeals), the assessee filed the present appeal before us. Regarding the applicability of the jurisdictional High Court judgment in the case of CIT v. Pfizer Ltd. [2011] 330 ITR 62 (Bom), Shri S.R. Bhandari, lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmediate nexus between the activity of export and developmental work. Therefore, the said receipts are not to attract Explanation (baa) and they are to be held as "profits of the business" for the purposes of deduction under section 80HHC of the Act. It was also argued that all these receipts are intimately connected to the business activities of the assessee and in that sense, they constitute operational income of the assessee. Further, he mentioned that the order of the Commissioner of Income-tax (Appeals) is not a speaking order as evident from the face of the impugned order. On the other hand, the learned Departmental representative relied on the order of the Revenue authorities and vehemently argued that the impugned order does not ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of the Commissioner of Income-tax (Appeals) in this regard revealed that the Commissioner of Income-tax (Appeals) has not adjudicated the issue properly after considering the judgment of Pfizer Ltd. [2011] 330 ITR 62 (Bom) which distinguishes another judgment of the same High Court in the case of Dresser Rand India P. Ltd. [2011] 330 ITR 453 (Bom). In our opinion, there is a need for the Commissioner of Income-tax (Appeals) to segregate the receipts and examine them in depth as to indicate if all the said receipts stand covered by the ratio of the judgment in the case of Pfizer Ltd. For this purpose, the issues need to go to the files of the Commissioner of Income-tax (Appeals) for redeciding the issue afresh. Therefore, this part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services rendered by way of these developmental work, the assessee has been given the benefit of deductions under section 80-O of the Act. The receipt of considera- tion from a foreign enterprise is not in dispute. From the very same business that the assessee is carrying on, he is having an income under two heads and therefore, it is not a case where any independ- ent income unrelated to or unconnected with the business carried on by the assessee is sought to be included in the profits of the business. In these circumstances, the Tribunal was justified in holding that the said consideration received for developmental work is not liable to be deducted under clause (baa) in computing the profits of the business. The said order is legal and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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