Short Summary
The Revenue filed tax appeals under Section 260A of the Income Tax Act, 1961, challenging the common order dated 24.08.2022 passed by the Income Tax Appellate Tribunal, D-Bench Ahmedabad, for Assessment Years 2013-2014 and 2012-2013. The Revenue raised multiple substantial questions of law regarding the assessee's claim for deduction under Section 80IE, including issues relating to the authenticity of documents for purchase of plant and machinery, splitting/reconstruction of existing business, rejection of books of accounts, and apportionment of various expenses. The Gujarat High Court dismissed the tax appeals, relying on its earlier decision of even date in Tax Appeal Nos. 183 and 184 of 2020 for the same assessee covering Assessment Years 2010-2011 and 2011-2012, where identical issues had been dismissed.
Detailed Summary
The Principal Commissioner of Income Tax 1, Vadodara (the Revenue) filed two tax appeals — Tax Appeal No. 452 of 2023 and Tax Appeal No. 459 of 2023 — before the Gujarat High Court under Section 260A of the Income Tax Act, 1961. The respondent was M/s Sun Pharma Sikkim, a partnership firm engaged in pharmaceutical manufacturing. The appeals were directed against the common judgment and order dated 24.08.2022 passed by the Income Tax Appellate Tribunal (ITAT), D-Bench, Ahmedabad, in ITA No. 1468/Ahd/2018 for Assessment Year 2013-2014 and ITA No. 1397/Ahd/2017 for Assessment Year 2012-2013.
The Revenue raised several substantial questions of law in Tax Appeal No. 452/2023, primarily contesting the assessee's claim for deduction under Section 80IE of the Act. The key issues included:
- Whether the ITAT erred in allowing the Section 80IE deduction based on journal entries generated in a computer, which the Assessing Officer contended were not authentic documents for establishing purchase of plant and machinery, and whether the assessee firm was constituted by reconstruction of the existing business of M/s Sun Pharma Industries.
- Whether the condition of using less than 20% of old/used machinery was fulfilled by the assessee, given that the firm was allegedly formed by splitting up and reconstruction of the existing business.
- Whether the ITAT erred in upholding the CIT(A)'s view that rejection of books of accounts was not legally tenable since the Assessing Officer did not carry out assessment under Section 144 of the Act.
- Whether the ITAT erred in deleting disallowances under Section 80IE(6) read with Section 80IA(10) regarding apportionment of selling and distribution expenses, research and development expenses, and management fees, which were allegedly debited only to Sun Pharma Industries Ltd. (SPIL) without allocation to the assessee units.
- Whether the ITAT erred in deleting the disallowance on remuneration to the working partner of Rs. 86,63,97,628/-, particularly with regard to the assessee's reliance on a supplementary partnership deed for inflating profits to claim higher deduction.
The Gujarat High Court, presided over by Justice Bhargav D. Karia and Justice Pranav Trivedi, noted that it had on the same date dismissed Tax Appeal No. 183 of 2020 and Tax Appeal No. 184 of 2020 for Assessment Years 2010-2011 and 2011-2012 respectively, which were also preferred by the Revenue against the very same assessee on identical issues. Relying on that earlier decision, the Court dismissed both Tax Appeal No. 452 of 2023 and Tax Appeal No. 459 of 2023.
Practitioner Note
This case demonstrates the evidentiary and procedural standards applied in patent matters before Gujarat High Court. Understanding the court's reasoning in The Principal Commissioner of Income Tax 1, Vadodara vs M/s Sun Pharma Sikkim is valuable context for structuring arguments or assessing risk in similar proceedings.
Related Cases
Bristol-Myers Squibb Holdings Ireland Unlimited CompanyvsZee Laboratories Limited & Ors.
The plaintiffs filed a suit seeking an ad interim injunction against the defendants for allegedly infringing Indian Patent Nos. 247381, which covers the subject matter related to Apixaban. The court granted the ad interim injunction, restraining the defendants from dealing in or advertising the infringing generic products 'Apixaz' and 'Apiquis', and ordered the permanent delisting of such advertisements.
Krishan Lal BansalvsUnion Of India
The Rajasthan High Court ruled in favor of the petitioner, Krishan Lal Bansal, who challenged the Registrar of Trademarks for incorrectly showing his 'Ganesh Chap' trademark status as 'Removed'. The court found that the initial registration was flawed—issued years late but confined to a past date (03.02.1996). Furthermore, the court emphasized that even if renewal was neglected, the Respondent failed in its duty by not issuing proper notices before cancellation. Consequently, the Registrar was mandated to issue a renewed trademark certificate with future validity.
Nandamuri Sri Lakshmi BhavanivsDeputy Controller of Patents
The appellant, Nandamuri Sri Lakshmi Bhavani, filed a Civil Miscellaneous Appeal (Patents) challenging an order passed by the Deputy Controller of Patents on January 20, 2025, seeking to allow her Indian Patent Application Number 201941026810. During the hearing, the appellant's counsel informed the court that she would withdraw this appeal and file a new appeal against an earlier order dated February 2, 2023.
Lacoste S.A.vsSheetal Fabrics
Lacoste S.A. filed a suit against Sheetal Fabrics alleging infringement of its trademark LACOSTE, passing off, and violation of copyrights in relation to garments and accessories. The court found that the defendant adopted and used trademarks deceptively similar to Lacoste's, causing loss to the plaintiff's reputation.
Novartis A.G.vsYY
The Plaintiffs, Novartis A.G. and its affiliate, filed a suit seeking permanent injunction against the Defendant for infringing Indian Patent No. 419280. The court granted several interlocutory orders, including an interim injunction and exemption from mandatory pre-litigation mediation.
Dealing with a patent challenge?
Whether it's a Section 3(d) rejection, a post-grant opposition, or a FRAND dispute, Arctic's patent litigation team has handled it. Get a strategy call.
Disclaimer: This page contains an automated summary based on publicly available judicial records. The content is generated for informational purposes only and does not constitute legal advice. Always verify details against the original source judgment before relying on this information for any legal purpose. If you believe any information is inaccurate, please contact us.