Ita/991/2006 Of M/S Biocon India Limited v. The Joint Commissioner Of Income-Tax

IN THB HIGH COURT OF KARNATAKA AT BANGALOREDATHKRD THIS THE DAY OF JULY 2012 PRESENT: THR HON’BLE MR.JUSTICKH K.SRBBDHAR RAO AND THR HON’BLE MR.JUSTICE B.MANOHAR | #INCOME TAX APPEAL No.991/2006 (1IT) BRBETWRB M/s. BIOCON INDIA LIMITEDAO KM, ~HOSUR ROAD,HEBBAGODI,BANGALORE - 561 229REPRESEBENIBD BY ITVICK PRESIDENTGROUP-FINANCE,sri M.B.CHINNAPPA,SON OF SRI BHEMAIAH M.B.AGED ABOUT 38 YBARS. _. APPBLLANT| (By Sri S PARTHASARATHI, Adv.) PITA 9911/2006 P ANT) THER JOINT COMMISSIONER|OF INCOME-TAX.SPECIAL RANGE -4,UNITY BUILDING ANNEXE, MISSION ROALDBANGALORE - 560 027 _. RESPONDENT (By Sri G KAMALADHAR, Adv.) This I.T.A. is filed under Section 260-A of I.T.Act,|1961 arising out of order dated 23-02-2006 passed in ITANos.1280 & 1281/Bang/2003 for the Assessment Years1997-98 & 1998-99, praying that this Hon'ble Court maybe pleased to: i. formulate the substantial questions of law statedtherein, ii. allow the appeal and set aside the orders of the)ITAT, bearing ITA Nos.1280 & 1281/Bang/2003 dtd: 23-02-2006, in the interest of justice and equity. | This Appeal coming on for hearing, on this day,|SREEDHAR RAO, J., delivered the following: ,ITA 9911/2006 JU DGMENT The appeal pertains to the assessment years.1997-98 and 1998-99 of the appellant. The|appellant is a manufacturer of Pharmaceuticalproducts and exports the products abroad and are.also sold in India. The appellant also offers technical|services to other business institutions outside [Indiaand also in India. The appellant by its business.earns a large profit made by foreign exchange by its.export business rendered outside India. D2 The appellant, for the assessment years|1997-98 and 1998-99 made a claim for deduction|under Section 80HHC and 80O(O) towards the profitmade by foreign exchange. The Assessing Authority|rejected the claim in respect of the income relating to. ResearchandDevelopmentasinadmissiblededuction. In respect of exemption under SectionSO(O), the Assessing Officer held that the assessee is_entitled to relief not on the gross income but on the.net income. The CIT (Appeals) confirmed the order ofthe Assessing Officer. The Tribunal has also upheld.the order of the Authorities and dismissed the appeal of the assessee. Hence, this appeal. 30°It is the contention of the learned counsel|for the respondent that, an appeal is filed by the.appellant in ITA No.263/2004 and this Court allowed the appeal of the assessee partly and remanded the.matter to the Tribunal to consider only the eligibility|of exemption under Section 80HHC for the relevant.assessment years 1993-94. 4The tollowing substantial questions of law|were raised in ITA No.263/2004: (ITA 9911/2006 UWhether on the facts, the Tribunal wasright in upholding the exclusion of 90%of Research and Development fee andMiscellaneous Income for the purpose ofcomputing the relief under SectionSOHHC of the Income Tax Act?| i)Whether the Tribunal was right inholding that Research and Developmentfee and Miscellaneous Income wouldfall within the ambit of Explanation(baa) to Section SOHHC of the Act andconsequently, 90% of the receipts wererequired to be excluded from businessprofit for the purpose of computation ofrelief under Section SOHHC of the Act? ut)Whether the receipts to be excludedfrom the profits of the business asprovided under Explanation (baa) tosection SOHHC of the Act representgross receipts of such source of incomeor the net receipts after exclusion fromgross receipts related to the expenses which had been charged off in the profitand loss account? WwWWhether the Tribunal was justified inholding that deduction under SectionSO(O) of the Act is required to be givento the net income out of the Researchand.Developmentfeewithoutconsidering the precedence being theorder of the Tribunal in the case ofM.N.Dastur and Co. delivered by thesame Bench as approved by the Hon’bleHigh Court ofKarnataka? ut)Whether the receipts to be excludedfrom the profits of the business asprovided under Explanation (baa) tosection SOHHC of the Act representgross receipts of such source of incomeor the net receipts after exclusion fromgross receipts related to the expenses which had been charged off in the profitand loss account? WwWWhether the Tribunal was justified inholding that deduction under SectionSO(O) of the Act is required to be givento the net income out of the Researchand.Developmentfeewithoutconsidering the precedence being theorder of the Tribunal in the case ofM.N.Dastur and Co. delivered by thesame Bench as approved by the Hon’bleHigh Court ofKarnataka? 5 |Thequestionsinvolved inITANo.263/2004 and the questions involved in the.present appeal are similar, without any scope of any.sort of distinction. In that view, the order of the|Tribunal is to be set aside. The matter is to be!remanded to re-consider the eligibility of exemptionunder Section 80HHC. In respect of the order passed under Section 80(O), the order has been confirmed to.the effect that, the net income is to be taken for|deduction and not the gross income. In that view of,the matter, the appeal is partly allowed. The.Appellate Tribunal shall consider the case only under.section SOHHC and the appeal in respect of.exemption under Section 8QO(O) is rejected. The.questions of law are answered accordingly in favour.of the appellant. ah* od/- JUDGE od/-. JUDGE