Pr. Commissioner Of Income Tax -15 v. M/S. Strides Arcolab Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYO.O.C.J.INCOME TAX APPEAL NO. 376 OF 2017 Pr. Commissioner of Income Tax -15 ..Appellant Versus M/s. Strides Arcolab Ltd ..Respondent ................... Mr. Suresh Kumar for the Appellant Mr. Suresh Kumar for the Appellant Mr. Nitesh Joshi a/w Mr. Atul Jasani for the RespondentMr. Nitesh Joshi a/w Mr. Atul Jasani for the Respondent ................... CORAM : AKIL KURESHI & SARANG V. KOTWAL, JJ. DATE : MARCH 22, 2019. P.C.: 1.Revenue is in the appeal against the judgment of theIncome Tax Appellate Tribunal ("the Tribunal" for short)raising following questions for our consideration:- “(a) Whether on the facts and in the circumstances of the caseand in law, the Tribunal erred in directing the AO to grantthe benefit of deduction u/S. 35(2AB) when the approvalfor the R & D activities were given in the subsequentassessment years and not for assessment year underconsideration?and in law, the Tribunal erred in directing the AO to grantthe benefit of deduction u/S. 35(2AB) when the approvalfor the R & D activities were given in the subsequentassessment years and not for assessment year underconsideration? (b) Whether on the facts and in the circumstances of the caseand in law, the Tribunal was correct in deletingdisallowance u/S. 36(1)(va) being employee's contributionand in law, the Tribunal was correct in deletingdisallowance u/S. 36(1)(va) being employee's contribution to provident fund and ESI even though the same were notdeposited in the respective fund within the stipulatedtime?" (c) Whether on the facts and in the circumstances of the caseand in law, the Tribunal was justified in holding that theinterest on loans borrowed for advancing to its subsidiarycompanies in India and Overseas is allowable underSection 36(1)(iii) of the Income Tax Act when the factremains that the moneys borrowed were utilized forbusiness of the Indian and overseas subsidiary companyand not for the business of the assessee as such and theAO had made only proportionate disallowance at 10% ofthe interest expenditure?and in law, the Tribunal was justified in holding that theinterest on loans borrowed for advancing to its subsidiarycompanies in India and Overseas is allowable underSection 36(1)(iii) of the Income Tax Act when the factremains that the moneys borrowed were utilized forbusiness of the Indian and overseas subsidiary companyand not for the business of the assessee as such and theAO had made only proportionate disallowance at 10% ofthe interest expenditure? (d) Whether on the facts and in the circumstances of the caseand in law, the Tribunal was correct to direct the AO to treatexchange rate fluctuation as business income and not theincome from other source stating that similar relief wasgranted in AY 2002-03 when in the preceding year, thesame issue was set aside to the CIT(A) for freshconsideration and has not reached finality?"and in law, the Tribunal was correct to direct the AO to treatexchange rate fluctuation as business income and not theincome from other source stating that similar relief wasgranted in AY 2002-03 when in the preceding year, thesame issue was set aside to the CIT(A) for freshconsideration and has not reached finality?" 2. It is a common ground that Question Nos. (a) and (b) noted above have come up for consideration before thisCourt in Income Tax Appeal No. 1674 of 2016 concerning thisvery assessee. While dismissing the appeal by order dated4.2.2019, these two questions were considered as under:- "2.Question no. (i) relates to the Revenue's objection to theassessee's claim of deduction under Section 35(2AB) of theIncome Tax Act, 1961 ("the Act" for short) primarily on the ground 2. It is a common ground that Question Nos. (a) and (b) noted above have come up for consideration before thisCourt in Income Tax Appeal No. 1674 of 2016 concerning thisvery assessee. While dismissing the appeal by order dated4.2.2019, these two questions were considered as under:- "2.Question no. (i) relates to the Revenue's objection to theassessee's claim of deduction under Section 35(2AB) of theIncome Tax Act, 1961 ("the Act" for short) primarily on the ground that the approval for the research facility established by theassessee was granted by the competent authority subsequently.We notice that several High Courts have held that such researchand development activity once approved by the competentauthority, the approval would relate back to the date of application.Reference in this respect can be made to the decision of theDivision Bench of Gujarat High Court in the case of CIT Vs. ClarisLifesciences Ltd. (2008) 174 Taxman 113 and the decision of theDelhi High Court in case of CIT New Delhi Vs.Sandan Vikas(India) Ltd. 335 ITR 117. We are informed that thedecision ofDelhi High Court in case of Sandan Vikas (India) Ltd. (Supra) wascarried in appeal before the Supreme Court and the SLP came tobe dismissed by an order dated 09[th] January, 2012. This questionis therefore not entertained. 4.In relation to question nos. (iii) and (iv), we notice thatsimilar questions came up for consideration before this Court inIncome Tax Appeal (L) No. 2111 of 2012 in case of this veryassessee where by order dated 26[th] February, 2013 whiledismissing the Revenue's Appeal, these questions came up forconsideration. These questions in the present appeal, thereforeare not entertained." 3.In relation to Question No. (c), we notice that theTribunal has held that the assessee had sufÏcient owninterest free funds and therefore, the disallowance was notjustified. 4.With respect to Question No. (d), the issue is whetherthe additional proceeds of export sales due to foreignthe additional proceeds of export sales due to foreign exchange rate fluctuation would also qualify for deductionunder Section 80HHC of the Income Tax Act, 1961 ("the Act"for short". The Assessing OfÏcer was of the opinion that thesaid amount cannot be said to have arisen out of theassessee's export business. The CIT(A) and the Tribunal,however, reversed the decision of the Assessing OfÏcerholding that the amount in question was part of theassessee's export sales proceeds. This issue is consideredby this Court on earlier occasions in cases of CIT Vs. AmberExports (India)[1] and CIT Vs. Gem Plus Jewellery IndiaLtd[2] . 5.In view of above, the Income Tax Appeal is dismissed. [ SARANG V. KOTWAL, J. ] [ AKIL KURESHI, J ] 1[2010] 326 ITR 455 (Bom) 2[2011] 330 ITR 175 (Bom)