Commissioner of Income Tax vs Win Laboratories P. Ltd.

In this appeal we are concerned with the assessment year 1988-89. The Ratlam unit of the company manufactured bulk drugs which were sold to the Generic Division. The latter division prepared drugs formulations. The Rat-lam unit sold the goods to the Generic Division at market value. The Assessing Officer and the Commissioner of Income Tax valued them at cost. The Assessing Officer/Commissioner of Income Tax accordingly found that deductions were wrongly inflated by the company. The Income Tax Appellate Tribunal reversed the decision. Hence, this appeal. In this connection, it was argued by the Department that the Assessing Officer has invoked Section 80HH(7).

We do not find merit in the above contentions. Section 80HH(7) has no application. It does not deal with intra-unit transfer. The Assessing Officer has not invoked Section 80HH(7). Moreover, Section 80HH(6) directs the Assessing Officer to value the goods at market value. This has been done by the company. Here the company has not inflated the deduction u/s 80HH. Moreover, in this case the total deduction claimed by the company is Rs. 91,938. The Assessing Officer granted deductions of Rs. 61,844. Hence, the appeal is dismissed. No costs.