PR. COMMISSIONER OF INCOME TAX- 15versusZYDUS NYCOMED HEALTHCARE PVT LTD.

                                                                   15-ITXA-2892-2018.DOC




                                                                                Rekha Patil


                           IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                              ORDINARY ORIGINAL CIVIL JURISDICTION


                                INCOME TAX APPEAL NO. 2892 OF 2018

                   Pr. Commissioner Of Income Tax- 15                 …Appellant
                         Versus
                   Zydus Nycomed Healthcare Pvt Ltd.                  …Respondent

                   Mr. Akhileshwar Sharma (through V.C.) for the Appellant-
                         Revenue.
                   Mr. B. V. Zhaveri with Ms. Bhargavi Raval, for the Respondent.

                                       CORAM:        SUMAN SHYAM &
                                                     GAUTAM A. ANKHAD, JJ.
                                       DATED:        8th OCTOBER, 2026.
                   PC:-
                   1.     Heard Mr. Akhileshwar Sharma, learned Counsel appearing

                   (through V.C.) for the Appellant.     Also heard Mr. B. V. Zhaveri

                   learned Counsel appearing for the Respondent.


                   2.     This Appeal, preferred under Section 260A of the Income

                   Tax Act, 1961, is directed against the Judgment and Order dated

                   14th March, 2018, passed by the learned Income Tax Appellate

                   Tribunal (for short ‘ITAT), Mumbai, in Income Tax Appeal No.
REKHA
PRAKASH            2670/Mum/2016 (Assessment Year 2007-2008).
PATIL
Digitally signed
by REKHA
PRAKASH PATIL
Date: 2026.10.09
11:09:14 +0530




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3.        The Department has proposed the following Substantial

Questions of Law:-


      “ A. Whether the computation of the fair selling price
              of drug intermediate by the Income Tax Appellate
              Tribunal for the purpose of section 10B(7) read
              with section 80-IA(10) is in accordance with law?

       B.     Whether the claim of exemption u/s 10B of the
              Income-tax Act 1961 allowed by the Income Tax
              Appellate Tribunal is in accordance with law?

4.    Mr. B. V. Jhaveri, learned Counsel appearing for the

Respondent has opposed the admission of the Appeal, primarily by

contending that those are neither substantial questions of law nor

do they arise for consideration by this Court in the present Appeal.

According to Mr. Jhaveri, the projected question(s) of law have

already     been   answered    by   this     Court   in   the   cases   of

i)Commissioner of Income-tax-7 vs. Schmetz India (P.) Ltd. 1,

ii)Pragati Aroma Oil Distillers (P.) Ltd. vs. Deputy Commissioner of

Income-tax2


5.    Mr. Jhaveri     has     further argued that by following the

aforementioned decisions, another Division Bench of this Court
1     [2012] 26 taxmann.com 336 (Bom.)
2     [2026] 187 taxmann.com 31 (Bombay)




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has recently dismissed the Appeal of the Department, raising

identical issues, by the order passed in Principal Commissioner of

Income-tax vs. Persistent Systems (P.) Ltd.3. Therefore, this Appeal

is also liable to be dismissed.


6.    After going through the record and upon considering the

submissions made by the learned Counsel for the Parties, we have

observed two things; firstly, the questions projected by the

Department are effectively questions of facts in disguise. Those, in

our considered opinion, cannot be treated as Substantial Questions

of Law. It is no doubt correct that perversity is question of law.

However, in order to per-take the character of “Substantial

Questions of Law”, even a question of perversity will have to be

raised by laying down the proper foundational facts, indicating the

factual background, based on which the same arise in the Appeal,

which is absent in the present Appeal.


7.    In the present case, save and except, proposing a bald

question, as to whether the decision of the learned Tribunal is

perverse, there is no other projection made by the learned




3     [2026] 188 taxmann.com 859 (Bombay)




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Departmental Counsel so as to convince us that any substantial

questions of law would in fact arise in this Appeal.


8.    Secondly, even if it is accepted that the factual projections in

Appeal would warrant further scrutiny of the legal issues by this

Court, even then, those legal issues appear to have been

conclusively dealt with by this Court in the decisions rendered in

Schmetz India (P.) Ltd.(supra) and Pragati Aroma Oil Distillers

(supra).


9.    As noted above, by taking note of the decisions in the case of

Schmetz India (P.) Ltd.(supra) and Pragati Aroma Oil Distillers

(supra), this Court had passed an order in Persistent Systems (P.)

Ltd.(supra). The observations made in paragraph Nos. 5, 6 and 7

of the said decision are reproduced herein-below for ready

reference.


      “5.    The decision in Schmetz India (P) Ltd. (supra) was
      followed in Pragati Aroma Oil Distillers Private Ltd. v/s.
      Deputy    Commissioner     of   Income        Tax   [(2026)   187
      taxmann.com 31(Bombay)] and the appeal was admitted on
      the following substantial question of law :


              “Whether in the facts and circumstances of the case
              and in law, the Appellate Tribunal was justified in




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             comparing and adopting net profit      margin of sister
             concern Pragati Aroma Oil       Distillers Pvt. Ltd. (as
             existed during the relevant Assessment Year), even in
             the absence of any arrangement as contemplated in
             Section 10B (7) read with section 801A (10) of the
             Income Tax Act, 1961?"


             The said substantial questions of law have been
             answered by this Court against the Revenue and in
             favour of the Assessee.”


      6.     After going through the decision of the Coordinate
      Bench in the case of Pragati Aroma Oil Distillers Private Ltd.
      (supra), more particularly, the observations in paragraph Nos.
      24 and 25 of the said decision, we find ourselves in agreement
      with the submission of Mr. Lala, learned Counsel for the
      Respondent. Mr. Khanchandani, learned Counsel for the
      Appellant has also, in all fairness, submitted that the issue is
      covered under the decision of this Court in Pragati Aroma Oil
      Distillers Private Ltd.(supra).


      7.     In view of the above, there is no substantial question of
      law which arises for consideration of this Court in the present
      Appeal. The Appeal therefore, stands dismissed by affirming
      the Judgment and Order dated 12th July, 2017 passed by the
      learned Income Tax Appellate Tribunal, Pune Bench.”


10.   For the foregoing reasons, we are of opinion that, viewed

from any angle, the projections of “substantial questions of law”

made in the Appeal filed by the Department, do not merit further




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consideration by this Court. Therefore, we do not find any good

ground to admit the Appeal.


11.   The Appeal is, therefore, dismissed.



(GAUTAM A. ANKHAD, J.)                       (SUMAN SHYAM, J.)
                                                                  {




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