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Ajanta Pharma Ltd., Ajanta House, Charkop, Kandivili (West), Mumbai 400067 Vs. Asstt. Commissioner of Income Tax, Range 9(1) Mumbai-400020
November, 06th 2012
                                   SA No.252 to 255 of 2012 Ajanta Pharma Limited Mumbai

                     "A" Bench, Mumbai

       Before Shri B. Ramakotaiah, Accountant Member
            and Shri Amit Shukla, Judicial Member

                  SA No.252 to 255/Mum/2012
        (Arising out of ITA No.7888 to 7891/Mum/2011)
              (Assessment years: 2000-01 to 2003-04)

Ajanta Pharma Ltd., Ajanta       Vs.    Asstt. Commissioner of
House, Charkop, Kandivili               Income Tax, Range 9(1)
(West), Mumbai 400067                   Mumbai-400020
(Appellant)                                   (Respondent)

                  Assessee by:   Shri Madhur Agarwal,
                  Department by: Shri Mohit Jain, DR

                  Date of Hearing:       02/11/2012
                  Date of Pronouncement: 02/11/2012


Per B. Ramakotaiah, A.M.

      These stay petitions are filed by assessee seeking stay of
demand to an extent of `.1.97 crores in all the years. It was
submitted that the demand arose in view of the penalties levied
consequent to disallowance of commission paid to a foreign party on
the basis of Volcker committee report. Assessee paid commission to
M/s Galala & Co which was treated as `kickback' to the Iraqi
Government and therefore, not allowable as per Explanation to
Section 37(1). Further, the quantum appeals are pending before the
ITAT, whereas AO levied penalty on the amounts so disallowed.
2.   It was further submitted that the ITAT has taken different
stands in various cases depending on the facts and there are orders
from Kolkata `B' Bench allowing the expenditure, whereas the other
orders disallowing the commission expenditure. The issue is not
free from doubt and is debatable in nature. Therefore, penalty

                               Page 1 of 3
                                     SA No.252 to 255 of 2012 Ajanta Pharma Limited Mumbai

under section 271(1)(c) is not warranted. It was further submitted
that out of `.1.97 crores demand raised, assessee has already paid
`.1.00 crore in various assessment years and the unpaid amount is
only `.97.85 lakhs which is less than 50% of the demand raised. It
was further submitted that if the disallowance at all has to be made
on the basis of the Volcker Committee Report, as the report
indicates only an amount of US$ 1700 on the basis of Ministry of
Financial Data and projected ASSF levy on the basis of policy
document at US$ 197,507/-. In all the report mentions about US$
200,139/- which translates to `.88.06 lakhs. If these amounts were
to be considered, the penalty leviable may work out about `.34.00
lakhs, whereas assessee has already paid three times of that
amount being `.1.00 crores so far. In view of this it was submitted
that the balance amount may please be stayed.

3.    The learned DR, however, objected to the stay petitions.

4.    Considering the prima facie case made out by assessee and
also on the fact that only an amount of `.88.06 lakhs was reported
in the Volcker Committee Report as payments by assessee, there is
a prima facie case in favour of assessee. Considering the fact that
assessee discharged more than 50% of the penalty so levied so far,
we grant stay of the balance demand for a period of six months or
disposal of the appeal, whichever is earlier. Since quantum appeal
is already posted on 21.02.2013, these cases are also fixed on the
same day i.e. 21.02.203. Both the parties were informed accordingly
and issuance of separate notice is dispensed with.

5.    In the result stay applications filed by assessee are allowed.

      Order pronounced in the open court on 2nd November, 2012.

             Sd/                                    Sd/-
        (Amit Shukla)                         (B. Ramakotaiah)
     Judicial Member                         Accountant Member
Mumbai, dated 2nd November, 2012.

                                 Page 2 of 3
                                      SA No.252 to 255 of 2012 Ajanta Pharma Limited Mumbai


Copy to:

   1.   The   Appellant
   2.   The   Respondent
   3.   The   concerned CIT(A)
   4.   The   concerned CIT
   5.   The   DR, " A " Bench, ITAT, Mumbai

                                By Order

                          Assistant Registrar
                     Income Tax Appellate Tribunal,
                       Mumbai Benches, MUMBAI

                                  Page 3 of 3
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