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TMI Blog2012 (4) TMI 743X X X X Extracts X X X X X X X X Extracts X X X X ..... chnical in nature, but was only a commercial service. Consisting with the view taken therein, we up-hold the finding of the first appellate authority and dismissed this ground of revenue. In the result the appeal of the revenue is allowed in part. Thus, the appeal of the assesse is dismissed and that of revenue is allowed in part. - Shri J. Sudharkar Reddy, Accountant Member And Shri R.S. Padvekar, Judicial Member For Assessee : Shri R.R. Vora For Department : Shri Pavan Ved (CIT DR) ORDER PER J. SUDHARKAR REDDY, A.M. These cross appeals are directed against the order of the Commissioner of Income Tax (Appeals) 37, Mumbai for the assessment year 2005-06. 2. Facts in brief: The assessee is a company and is in the business of manufacturing and trading of pharmaceutical products. It filed its return on Income Tax on 31-10-2005. The Assessing Officer passed an order u/s. 143 on 28-12-2007 determining the income at ₹ 25,41,48,274 under the normal provisions of the Act and book profits at ₹ 240,33,35,526/-. The Assessing Officer made certain additions and disallowances. These were disputed in appeal and the First Appellate Authority vide impugned order granted part relief. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept Pharmaceuticals (supra) is a wrong view. We are not persuaded by this argument. The issue is whether the assessee get 100% deduction of the expenses, or 150% deduction of the expenses incurred in in-house research and development facility. The issue has been discussed at length in the case of concept Pharmaceuticals (supra). The ration of this decision applies to other expenses such as consultancy charges etc., We agree with the view of the coordinate Bench and respectfully follow the same. We do not see sufficient reason to refer this case to a Special Bench. Thus, we dismiss this ground of the assessee for the A.Y. 2004-05. Consistent with this view, we allow this ground of appeal of the revenue for A.Y. 2002-03 and 2003-04 . Respectfully following the same ground No.1 is dismissed. 8. Ground No.2 is covered against the assessee, by the judgment of the Hon ble Supreme Court in the case of Rolta India Ltd., 330 ITR 470. Respectively following the same, we dismissed this ground No.2 of the assessee. In the result, assessee s appeal is dismissed. 9. We now taken up the departmental appeal. The grounds read as follows: 1. On the facts and in the circumstances of the case and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is for a specific purpose and there is no dispute in incurring of expenses for the specific purpose i.e., in the field of medical science etc., The expenditure incurred on R D were not related to business of any existing units of the company or to the products manufactured by any of its unit in which the assessee has claimed deduction u/s. 80IB. The Research and Development Institute is a statutory institute of the assessee company which is situated at Aurangabad which deals with global research. There is no doubt that assessee s units got benefit from the research work done by the research at Aurangabad. Further the contention of the Assessing Officer that some part of the expenditure are liable to be considered in the units in which the deduction u/s. 80IB has been claimed, in our considered view, is not tenable. The details of Research Institute has been prepared separately and they have shown separately and thus expenditure are nothing to do with the activity of the unit on which the deduction u/s. 80IB has been claimed. Similarly, the interest which was paid was claimed in the Head Office A/c. as the interest borrowed by the assessee were borrowed by the Head Office for runni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced the allowance u/s. 80HH and u/s. 80I. The CIT(A)also agreed with the Assessing Officer. Before the Tribunal, it was submitted that the new unit was functioning as an independent unit, and all the expenses relating to the said unit were debited to the separate profit and loss account prepared for that unit. It was submitted that the said unit was separately managed as it had a separate managerial staff and other officers were employed for the management of the unit and separate administrative expenses were incurred for that unit. The Assessing Officer was not justified in reducing from the profit of the new unit proportionate administrative expenses. It was also submitted that a provision in a statute granting incentive for promoting growth and development should be construed liberally. It was accordingly held that the debtor-company Hind Cycles Ltd., became a unit and was therefore taken over by the government. The assessee could not recover any amount from that company till 1994. The debts were also legally time-barred. Whether the debt has become bad or not is a decision which the businessman has to take keeping in mind all the relevant facts. Since the assess was not able t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore uphold the impugned order of the Id. CIT (A) giving relief to the assessee on this issue and dismiss the appeal filed by the Revenue . 13. The Hon ble Bombay High Court in the case of CAT Vs. Kotak Securities ltd., 62 DTR (BOM) 339 held that transaction charges paid by the assessee to the stock exchange constituted fee for technical services covered u/s. 194 (J). It further held that from the year 1995 to the year 2005, the assessee as well as the revenue, proceeded on the footing that the assessee is not liable to deduct tax at source and hence no fault can be found with the assessee for not deducting tax at source, as it was under a bonafide belief that no tax need be deducted at source on this payment. In the case on hand, the assessee paid charges for testing at laboratories of CRO which used their own skills and equipments etc., to prepare the report. The Tribunal came to conclusion that there is no parting of skills or know-how by CRO and hence the service is not technical in nature, but was only a commercial service. Consisting with the view taken therein, we up-hold the finding of the first appellate authority and dismissed this ground of revenue. In the result the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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