1 itxa3930-09 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.3930 OF 2009 The Commissioner of Income Tax, Central-1 ..Appellant. V/s. M/s. IPCA Laboratories Ltd. ..Respondent. Mr. Suresh Kumar for appellant. Mr. F.V. Irani with A.K. Jasani for respondent. CORAM : J.P. DEVADHAR AND MRS. MRIDULA BHATKAR, JJ. DATED : 1ST FEBRUARY, 2011 P.C. :- 1. Admit on the following questions of law:- a) Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in deleting the order of CIT(A) and directing the A.O. to include the export incentives (duty drawback) for purposes of working out the eligible profits u/s.80IA of the I.T. Act, 1961 ? b) Whether in the facts and in the circumstances of the case and in law, the ITAT was justified in upholding the order of the CIT(A) admitting the additional ground of the assessee for determining the relief u/s.80HHC and further accepting the working as given by the assessee before the CIT(A) resulting into a positive profit and consequent deduction at Rs.61,89,212/- ? 2 itxa3930-09 c) Whether on the facts and in the circumstances of the case and in law, the ITAT was justified in law in upholding CIT(A)'s decision of allowing earlier years expenses as deduction in the year under consideration of Rs.7,59,026/- made to M/s. Emmar Pharma and Rs.4,29,550/- made to M/s.Prasad Pharma respectively without appreciating the fact that the assessee is maintaining books of accounts on mercantile basis and no provision for such expenditure has ever been made by the assessee in its books of accounts ? 2. By consent, the appeal is taken up for final hearing. 3. As regards the first question (a) is concerned, counsel for both sides agree that the said question is answered in favour of the Revenue by the Apex Court in the case of Liberty India V/s. CIT reported in (2009) 317 ITR 218 (S.C.). Accordingly, the first question is answered in favour of the Revenue and against the assessee. 4. As regards question (b) is concerned, the Commissioner of Income Tax as well as the Tribunal allowed additional ground so as to allow recomputation of the deduction under Section 80HHC in the light of the subsequent decision of the Tribunal in the case of Mangalya Trading and Investments Ltd. Even on merits, the view taken by the Tribunal in the case of Mangalya Trading and Investments Ltd. stands affirmed by the decision of the Apex Court in the case of Hero Exports V/s. CIT reported in (2007) 295 I.T.R. 454 (S.C.). In this view of the matter, the decision of the Tribunal in allowing the additional grounds raised by the 3 itxa3930-09 assessee cannot be faulted. Accordingly, the second question (b) is answered in the affirmative i.e. in favour of the assessee and against the revenue. 5. As regards question (c) is concerned, the Tribunal has recorded a finding of fact that in respect of the expenses incurred in the earlier year the assessee had received the debit note in the current assessment year and, therefore, the liability can be said to have accrued to the assessee in the year when the debit note was received. In this view of the matter the third question (c) is also answered in the affirmative i.e. in favour of the assessee and against the Revenue. 6. The appeal is disposed of accordingly with no order as to costs. (MRS. MRIDULA BHATKAR, J.) (J.P. DEVADHAR, J.)