Laboratoires Griffon Pvt. Ltd., Kolkata V. DCIT, CIR-10(1), KOLKATA, Kolkata

CO 15/KOL/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3717 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 20 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-04-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 21-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARJEE
• Keywords: Gift; Business income; Business expenditure; Principle of natural justice; Non-deduction of tax; Accommodation entries
• Section: 194C

Judgement Text

1 ITA NO.133/KOL/2016 & CO NO.15/CAL/2016 LABORATORIES GRIFFON PVT. LTD., AY- 2011-12 , D , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: KOL KATA () BEFORE . , /AND . . , ) [BEFORE SHRI J. SUDHAKAR REDDY, AM & SHRI A. T. VA RKEY, JM] I.T.A. NO. 133/KOL/2016 ASSESSMENT YEAR: 2011-12 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-10(1), KOLKATA VS. M/S. LABORATORIES GRIFFON PVT. LTD. (PAN: AAACL4591N) APPELLANT RESPONDENT & C.O. NO.15/KOL/2016 IN I.T.A. NO. 133/KOL/2016 ASSESSMENT YEAR: 2011-12 M/S. LABORATORIES GRIFFON PVT. LTD. VS. DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-10(1), KOLKATA CROSS OBJECTOR RESPONDENT DATE OF HEARING 23.01.2018 DATE OF PRONOUNCEMENT 11.04.2018 FOR THE REVENUE SHRI ARINDAM BHATTACHARJEE, ADDL. C IT, SR. DR FOR THE RESPONDENT SHRI RAVI TULSIYAN, FCA ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL FILED BY THE REVENUE AND THE CROSS OBJE CTION FILED BY THE ASSESSEE ARE AGAINST THE ORDER OF LD. CIT(A)-10, KOLKATA DATED 1 0.11.2015 FOR AY 2011-12. SINCE BOTH THE APPEAL AND THE CROSS OBJECTION HAVE BEEN HEARD TOGETHER, WE DISPOSE OF THE SAME BY THIS CONSOLIDATED ORDER. 2. FIRST WE TAKE UP REVENUES APPEAL. GROUND NO. 1 OF REVENUES APPEAL IS AGAINST THE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION O F RS.6,50,610/- BEING INTEREST ON LOAN DISALLOWED BY THE AO. THE ASSESSEE HAS CLAIMED TO HAVE PAID INTEREST ON LOAN OF RS.9,20,283/-. THE AO NOTED THAT THE ASSESSEE IN T HE PREVIOUS YEAR HAD PAID ONLY INTEREST OF RS.2,69,673/- WHEN THE TURNOVER OF THE COMPANY WAS AT RS.22,81,48,862/- WHEREAS IN THIS YEAR, THE ASSESSEES TURNOVER CAME DOWN TO ONLY RS. 20,92,31,782/- AND IT HAS CLAIMED 2 ITA NO.133/KOL/2016 & CO NO.15/CAL/2016 LABORATORIES GRIFFON PVT. LTD., AY- 2011-12 ABNORMAL AMOUNT OF RS.9,20,283/- WHICH WAS NOT ACCE PTABLE TO HIM. SO, HE COMPARED THE INCREASE IN INTEREST PAYMENT CLAIMED IN THIS RELEVA NT ASSESSMENT YEAR, WITH THAT OF THE INTEREST ON LOAN PAID IN THE LAST YEAR AND WAS OF T HE OPINION THAT EXCESS INTEREST PAID ON LOAN THIS YEAR HAS TO BE DISALLOWED AND HE DISALLOWED RS .6,50,610/- (RS.9,20,283RS.2,69,673/-) SINCE THE ASSESSEE FAILED TO SHOW THE UTILIZATION O F THE NEW LOAN FOR THE PURPOSE OF BUSINESS. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO WAS PLEASED TO ALLOW THE CLAIM OF THE ASSESSEE. AGGRIEVED, REVENUE IS BEFORE US. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE AO HAS MADE THE ADDITION ON THE SOLE REASON THAT THE INTEREST OUTGO WAS MORE THAN WHAT WAS IN THE IMMEDIATE PRECEDING Y EAR AND HE NOTED THAT THE TURNOVER WAS MORE THAN THE LAST PRECEDING YEAR WHEREAS THE TURNO VER IN THE RELEVANT ASSESSMENT YEAR UNDER CONSIDERATION WAS LOW AND THAT THE ASSESSEE F AILED TO PROVE THE UTILIZATION OF THE NEW LOAN WAS FOR THE PURPOSE OF THE BUSINESS. IT WAS E XPLAINED BY THE ASSESSEE THAT THE PURPOSE OF BORROWING ADDITIONAL FUNDS/LOAN WAS THAT THERE WERE ADDITION TOWARDS CAPITAL FOR WORK IN PROGRESS OF RS.2,47,76,337/- DUE TO RENOVATION AND MODERNIZATION IN ASSESSEES FACTORY PREMISES. THE LD. CIT(A) HAS NOTED AFTER GOING THR OUGH THE AUDITED P&L ACCOUNT AND THE BALANCE SHEET WHEREIN IT WAS DISCERNIBLE THAT THE A SSESSEE HAD RENOVATED AND MODERNIZED THE FACTORY, WHICH FACT COULD NOT BE CONTROVERTED B Y THE LD. DR BEFORE US AND SINCE THE AMOUNT OF LOAN HAS BEEN UTILIZED FOR THE PURPOSE OF BUSINESS WHICH QUALIFIES TO BE ALLOWED U/S. 36(1)(III)/SEC. 37 OF THE ACT AND, THEREFORE, THE LD. CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE WHICH DOES NOT CALL FOR ANY INTERFE RENCE FROM OUR PART AND, THEREFORE, WE DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 4. GROUND NO.2 OF THE REVENUES APPEAL IS AGAINST T HE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.28,75,927/- WHICH WAS C LAIMED ON ACCOUNT OF LEGAL AND PROFESSIONAL EXPENSES WHICH WAS DISALLOWED BY THE A O. ON THIS ISSUE ALSO THE AO COMPARED THE EXPENSES INCURRED BY THE ASSESSEE IN T HE IMMEDIATE PRECEDING YEAR WHICH WAS TO THE TUNE OF RS.14,08,257/- AND WHEREAS FOR THIS ASSESSMENT YEAR THE ASSESSEE HAS CLAIMED LEGAL AND PROFESSIONAL CHARGES OF RS.28,75,927/- WH ICH ACCORDING TO AO WAS DOUBLE WHEN THE EXPENDITURE COMPARED TO THAT OF THE LAST YEAR. SINCE ACCORDING TO AO, SATISFACTORY EXPLANATIONS COULD NOT BE GIVEN, HE DISALLOWED RS.2 8,75,927/-. AGGRIEVED, THE ASSESSEE 3 ITA NO.133/KOL/2016 & CO NO.15/CAL/2016 LABORATORIES GRIFFON PVT. LTD., AY- 2011-12 PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHICH WA S ALLOWED BY THE LD. CIT(A) AGAINST WHICH THE REVENUE IS BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE IN THIS YEAR HAS C LAIMED EXPENDITURE ON ACCOUNT OF LEGAL AND PROFESSIONAL CHARGES TO THE TUNE OF RS.28,75,927/- WHICH ACCORDING TO THE AO WAS DOUBLE THE EXPENDITURE FOR THIS PURPOSE, WHEN COMPARED TO THAT OF THE LAST ASSESSMENT YEAR WHICH WAS ONLY OF RS.14,08,257/-. ACCORDING TO AO, THE A SSESSEE FAILED TO GIVE COGENT REASON OR EXPLANATION FOR INCURRING SUCH A HUGE AMOUNT FOR LE GAL AND PROFESSIONAL CHARGES WHEN THE TURNOVER HAS COME DOWN FROM RS.22 CR. TO RS.20 CR. AND ON BEING ASKED, THE ASSESSEE EXPLAINED THAT DUE TO RETIREMENT OF FEW TOP MANAGEM ENT OFFICIALS WHO WERE HANDLING LEGAL, HR, ETC. OF THE ASSESSEE COMPANY, AND IN THEIR POSI TION SINCE THE ASSESSEE COMPANY COULD NOT FIND ANY EXPERTS IN THIS FIELD TOOK A DECISION TO RETAIN THE SERVICES OF RETIRED PROFESSIONALS WHO HANDLED THE ASSESSEES PROFESSION AL WORK IN THESE FIELDS ON RETAINER BASIS WITH A VIEW THAT YOUNG RECRUITS CAN BE TRAINED UND ER THEIR EXPERIENCE AND EXPERTISE FOR FUTURE RUNNING OF THE ASSESSEES COMPANY. WE NOTE THAT FOLLOWING PROFESSIONALS WERE ENGAGED ON RETAINER BASIS. I) SHRI B. S. JOSHI RETAINER ON PERSONNEL MATTERS II) SHRI S. LOBO RETAINER ON CANTEEN MATTERS III) SHRI G. R. MEHTA RETAINER ON ACCOUNTS MATTERS IV) SHRI J. P. MEHTA RETAINER ON FACTORY REGULATORY M ATTERS 6. ON APPEAL, THE LD. CIT(A) HAS TAKEN NOTE THAT TH ESE ENGAGEMENT OF PROFESSIONALS ON RETAINER BASIS WAS WITH THE INTENT TO INCREASE THE TURNOVER AND CONSOLIDATE THE MARKET SHARE, AND TOOK INTO CONSIDERATION OF THEIR PROFESSIONAL Q UALIFICATIONS, EXPERIENCE AND KNOWLEDGE IN DIFFERENT FIELDS. THE LD. CIT(A) WAS OF THE OPIN ION THAT WHERE THE PAYMENTS WERE VERIFIABLE, AND THE ASSESSEE HAS SUBMITTED THE NECE SSARY VERIFIABLE DETAILS SUCH AS THE PAN, AMOUNTS PAID AND TDS THEREON, (COPIES OF TDS CERTIF ICATES), AND EXPLAINED THE NATURE OF PAYMENTS, IT WAS INCUMBENT UPON THE AO TO MAKE FURT HER VERIFICATION BEFORE DRAWING ADVERSE CONCLUSIONS, AND THEREBY ERRED IN DISALLOWI NG THE ENTIRE PROFESSIONAL PAYMENTS WHICH REASONING WE AGREE. ANOTHER REASON GIVEN BY T HE AO TO DISALLOW THE EXPENDITURE 4 ITA NO.133/KOL/2016 & CO NO.15/CAL/2016 LABORATORIES GRIFFON PVT. LTD., AY- 2011-12 WAS BECAUSE OF THE INABILITY OF THE ASSESSEE COMPAN Y TO SHOW THAT LITIGATION WAS GOING ON IN COURT OF LAW FOR WHICH EXPENDITURE WAS INCURRED, WA S REPELLED BY THE LD. CIT(A) ON THE REASONING THAT LEGAL EXPERTS ARE EMPLOYED NOT ONLY FOR LITIGATION IN COURT OF LAW. WE NOT THAT LEGAL PROFESSIONALS ARE NOT ONLY ENGAGED FOR LITIGA TION RELATED WORK BUT ALSO FOR ADVISING THE COMPANY IN VARIOUS FIELDS WHEREIN STRICT STATUTORY COMPLIANCES ARE REQUIRED TO BE FULFILLED LIKE, COMPANIES ACT, SALE OF GOODS ACT, CONTRACT AC T ETC AND THEREFORE COMPANYS INVOLVEMENT IN LITIGATION CANNOT BE A GROUND TO DIS ALLOW THE CLAIM OF THE PROFESSIONAL EXPENSES CLAIMED BY THE ASSESSEE, WHICH WE AGREE WI TH THE LD. CIT(A). WE NOTE THAT THE ASSESSEE HAS RETAINED THE SERVICE OF FOUR PERSONS, WHO HAD EXPERTISE IN AUDIT, LAWS (PERTAINING TO STATUTORY COMPLIANCES OF FACTORIES E TC.), MANAGEMENT ETC. SO, THE AO ERRED IN HOLDING THAT SINCE THERE WAS NO LITIGATION, NO EXPE NDITURE COULD HAVE BEEN INCURRED BY THE ASSESSEE ON THIS ACCOUNT CANNOT BE COUNTENENCED. I T HAS TO BE KEPT IN MIND THAT NOMENCLATURE OF ANY ACTIVITY GIVEN BY ASSESSEE SHAL L NOT DETERMINE THE CHARACTER OF THE ACTIVITY. WE AGREE WITH THE LD. CIT(A) THAT THE PR OFESSIONALS APPOINTED WERE EXPERTS IN THEIR RESPECTIVE FIELDS, AND THAT THEIR SERVICES WE RE RETAINED TO GROOM AND TRAIN THE NEW RECRUITS AS NO SUITABLE REPLACEMENT WAS READILY AVA ILABLE. WE NOTE THAT THE ASSESSEE HAS DISCHARGED THE INITIAL ONUS CASTED UPON IT TO CLAIM THE EXPENDITURE BY SUBMITTING THE NAME, ADDRESS, PAN ETC, (OF THE PROFESSIONALS) THE AO COU LD NOT HAVE ADDED THE AMOUNTS BACK WITHOUT FURTHER VERIFICATION AND OUGHT NOT TO HAVE CASTED ANY DOUBT ABOUT THE GENUINENESS OF THE EXPENDITURE WITHOUT BRINGING ANY ADVERSE MATERI AL AGAINST THE ASSESSEE. AND SINCE THE EXPENDITURE WAS FOR BUSINESS PURPOSE THE EXPENDITUR E CLAIMED ON THIS COUNT NEEDS TO BE ALLOWED AND IT WAS RIGHTLY ALLOWED BY THE LD. CIT(A ), WHICH WE AGREE AND THEREFORE, WE ARE INCLINED NOT TO INTERFERE IN THE ORDER OF LD. CIT(A ) WHICH WE CONFIRM. 7. NEXT GROUND IS IN RESPECT TO DELETION OF ADDITIO N OF RS.9,90,545/- DISALLOWED BY THE AO ON ACCOUNT OF FOREIGN TOUR EXPENSES CLAIMED BY T HE ASSESSEE. 8. BRIEF FACTS ARE THAT THE ASSESSEE CLAIMED FOREIG N TOUR EXPENSES FOR WHICH THE AO ASKED FOR DETAILS. THE ASSESSEE REPLIED THAT FOREI GN TOUR EXPENSES HAVE BEEN INCURRED BY MRS. ZHU XINTIAN, THEIR RESEARCH MANAGER, IN CONNEC TION WITH HER VISIT TO CHINA, PARIS & HONG KONG/BANGKOK FOR EXPLORING NEW SOURCES OF RAW MATERIALS & PACKING MATERIALS AND TO FIND OUT NEW EVOLVING TECHNOLOGIES WORLDWIDE. TH E FOREIGN TRIP WAS UNDERTAKEN WITH THE OBJECTIVE OF PROMOTING THE EXPORT SALE OF THE C OMPANY AND CLAIMED TOTAL EXPENDITURE ON 5 ITA NO.133/KOL/2016 & CO NO.15/CAL/2016 LABORATORIES GRIFFON PVT. LTD., AY- 2011-12 FOREIGN TOUR AS RS.9,90,545/-, WHICH WAS INCURRED W HOLLY & EXCLUSIVELY FOR BUSINESS PURPOSE. THE AO DID NOT ACCEPT THE CONTENTION OF A SSESSEE ON THE REASONING THAT THE CLAIM IS NOT SUBSTANTIATED BY THE PRESENT OR FUTURE BUSIN ESS ACTIVITIES CONDUCTED BY THE ASSESSEE AND THAT ASSESSEE FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCES LIKE THE PLACES VISITED AND TO WHOM SHE MET AND WHAT WERE THE DISCUSSION (MINUTES OF THE MEETING) SO WAS CONSIDERED BY THE AO AS PERSONAL IN NATURE AND NOWHERE CONNECTED WITH THE BUSINESS OF THE ASSESSEE AND SO DISALLOWED THE CLAIM OF RS.9,90,545/-. ON APPEA L, LD. CIT(A) GAVE PARTIAL RELIEF AND SUSTAINED ONLY 20% OF THE AMOUNT I.E. RS.1,26,000/- . AGGRIEVED BY THE PARTIAL RELIEF GRANTED TO ASSESSEE, REVENUE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT ASSESSEE DEPUTED ITS RESEARCH MA NAGER MRS. ZHU XINTIAN TO VISIT CHINA, PARIS & HONGKONG/BANGKOK WITH THE OBJECTIVE OF PROM OTING THE EXPORT SALE OF THE COMPANY AND FOR EXPLORING NEW SOURCE OF RAW MATERIALS, PACK ING MATERIALS, PHARMACEUTICALS MANUFACTURING MACHINES ETC. WE NOTE FROM A PERUSAL OF PAPER BOOK PAGE NO. 63 WHICH IS A CHART SHOWING THE INCREASE IN EXPORT TURNOVER IN TH E SUCCEEDING YEARS. WE NOTE THAT THE EXPORT TURNOVER OF RS.11,13,816/- FOR THE INSTANT A Y, INCREASED TO RS.1,33,72,874/- FOR AY 2014-15. THOUGH GRADUAL, THERE IS CERTAINLY INCRE ASE IN EXPORT TURNOVER. INVOICE COPIES KEPT FROM PAGE 64 TO 78 OF PAPER BOOK REVEALS THE I MPORT OF VARIOUS PHARMACEUTICAL MANUFACTURING MACHINES WHICH ARE PURSUANT TO THE VI SIT OF THE RESEARCH SCHOLAR AND THESE MACHINERIES ARE REQUIRED TO UP-GRADE THE MANUFACTUR ING MACHINES WITH ADVANCED TECHNOLOGY AND COMPETE IN THE BUSINESS WITH OTHERS WHO ARE ENG AGED IN THE SAME KIND OF BUSINESS. THE LD. CIT(A) HAS ALLOWED THE TRAVELLING EXPENSE I.E. AIR TICKET OF RS.3,60,545/-, HOWEVER, RESTRICTED THE CLAIM OF RS.6,39,000/- WHICH WAS CL AIMED TO HAVE BEEN EXPENDED ON ACCOUNT OF BOARDING AND LODGING. THE LD. CIT(A) TAKING INT O ACCOUNT THE ELEMENT OF PERSONAL EXPENDITURE SUSTAINED 20% OF THE DISALLOWANCE WHICH WORKS OUT TO RS.1,26,000/- AND THUS ASSESSEE GOT A RELIEF OF RS.8,64,545/-. AGAINST THE ACTION OF LD. CIT(A) ONLY REVENUE IS IN APPEAL. CONSIDERING THE DISCUSSION GIVEN ABOVE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT MRS. ZHU XINTIAN THE RESEAR CH MANAGER HAVING VISITED FOREIGN COUNTRIES WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPO SES OF THE ASSESSEE COMPANY IS ENTITLED TO CLAIM THE EXPENDITURE AND WE DO NOT WANT TO INTE RFERE IN THE ORDER OF THE LD. CIT(A), WHICH IS HEREBY UPHELD. THIS GROUND OF REVENUE APP EAL IS DISMISSED. 6 ITA NO.133/KOL/2016 & CO NO.15/CAL/2016 LABORATORIES GRIFFON PVT. LTD., AY- 2011-12 10. GROUND NO. 4 IS AGAINST THE ACTION OF LD. CIT(A ) DELETING ADDITION OF RS.58,77,566/- ADDED BY AO DISALLOWING CLAIM OF THE ASSESSEES EXP ENSES ON ACCOUNT OF PUBLICITY EXPENSES. 11. BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE HAS CLAIMED RS.58,77,566/- UNDER THE HEAD PUBLICITY EXPENSES ON ACCOUNT OF PURCHASE OF P HYSICIAN SAMPLES FROM M/S STP PHARMACEUTICALS PVT. LTD, AND DEBITED THE SAID EXPE NSE IN THE PROFIT AND LOSS ACCOUNT TO DERIVE THE NET PROFIT FROM THE BUSINESS. WHEN THE A O ASKED THE ASSESSEE TO FURNISH THE DETAILS OF SUCH EXPENSES WITH REASON FOR CLAIMING T HE SAME WAS ANSWERED BY THE ASSESSEE THAT IT HAD PURCHASED PHYSICIAN SAMPLES FROM M/S ST P PHARMACEUTICALS PVT. LTD., AMOUNTING TO RS.58,77,566/- TO BE SUPPLIED FREE TO PHYSICIANS AS SAMPLES. IT WAS BROUGHT TO THE KNOWLEDGE OF AO THAT DISTRIBUTION AND DISBURSAL OF PHYSICIAN SAMPLES IS A MARKETING STRATEGY TO BOOST SALES OF MAJOR PRODUCTS AND OTHER PROMOTIONAL MEASURES ARE UNDERTAKEN FOR THE GROWTH OF TURNOVER OF PARTICULAR PRODUCT. AND S INCE THE ASSESSEES OWN FACTORYS CAPACITY WAS NOT GOOD ENOUGH, A CONTRACT WAS EXECUT ED BETWEEN ASSESSEE AND M/S. STP PHARMACEUTICALS LTD. ON A PRINCIPLE TO PRINCIPLE BA SIS TO PRODUCE TABLET CALLED SORBILILE. AND SINCE M/S. STP PHARMACEUTICALS W AS SITUATED AT STATE OF SIKKIM, THE COST OF PRODUCTION WAS LESS AND BY DISBURSING THE S AMPLE TABLETS TO THE PHYSICIANS, ACCORDING TO ASSESSEE COMPANY, THE TURNOVER OF THIS PRODUCT I NCREASED MANIFOLD. SO, ASSESSEE TRIED TO JUSTIFY ITS CLAIM WHICH WAS NOT ACCEPTABLE TO AO. T HE AO TOOK NOTE OF THE FACT THAT ASSESSEE AS CONSIGNOR HAS EXECUTED A CONTRACT WITH M/S. FR ANCO INDIAN PHARMACEUTICALS AS CONSIGNEE FOR EFFECTING CONSIGNMENT SALE WITH ALL KIND OF ACCOUNTABILITY TO EFFECT THE SALES AND FOR UNDERTAKING SUCH RESPONSIBILITY COMMISSION OF RS.15,95,355/- HAS BEEN PAID BY THE ASSESSEE TO M/S. FRANCO INDIAN PHARMACEUTICALS. SO , ACCORDING TO AO, THE ASSESSEE VIOLATED THE PRINCIPAL NORM OF BUSINESS AND CLAIMED EXPENDIT URE FOR THE BUSINESS AS A MANUFACTURER CUM TRADER (SELLER) AND NOT AS A CONSIGNOR. ANOTHE R DEFAULT THE AO NOTED WAS THAT ANY WAY THE CLAIM OF EXPENSE OF PAYMENT OF RS.58,77,566/- T O M/S. STP PHARMACEUTICALS CANNOT BE ALLOWED BECAUSE IT IS HIT BY SEC. 40(A)(IA) OF THE ACT FOR NON-DEDUCTION OF TAX U/S. 194C(1) OF THE ACT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPE AL BEFORE THE LD. CIT(A) WHO WAS PLEASED TO ALLOW IT. AGGRIEVED, THE REVENUE IS BEF ORE US. 12. WE HAVE HEARD BOTH PARTIES AND PERUSED THE RECO RDS. WE HAVE ALREADY NOTED THE GIST OF THE REASONS GIVEN BY AO FOR NOT ALLOWING THE CLA IM OF THE ASSESSEE, SO THE SAME IS NOT REPEATED FOR THE SAKE OF BREVITY. WE NOTE THAT THE ASSESSEE IN THE CAPACITY AS CONSIGNOR HAS 7 ITA NO.133/KOL/2016 & CO NO.15/CAL/2016 LABORATORIES GRIFFON PVT. LTD., AY- 2011-12 EXECUTED A CONTRACT WITH M/S. FRANCO INDIAN PHARMAC EUTICALS ON 27.02.2001 (PAPER BOOK 108-111) AS A CONSIGNEE, FOR CONSIGNMENT SALE WITH ALL KIND OF ACCOUNTABILITY TO EFFECT SALES AND FOR UNDERTAKING SUCH RESPONSIBILITY COMMISSION TO THE TUNE OF RS.15,95,355/- WAS PAID BY THE ASSESSEE TO IT. IN ORDER TO BOOST THE SALES OF SORBILINE, THE ASSESSEE DECIDED TO GIVE PHYSICIAN SAMPLE OF THIS PRODUCT. REALISING THAT I TS FACTORY DID NOT HAD THE CAPACITY TO PRODUCE THE PHYSICIAN SAMPLE AND FOR WATER SHORTAGE IN ITS PLANT, THE ASSESSEE GOT INTO AN AGREEMENT WITH M/S. STP PHARMACEUTICALS ON 22.02.20 10 (PB PAGE 80-88) TO MANUFACTURE SORBILINE AND SELL THE SAME TO THE ASSESSEE ON P RINCIPAL TO PRINCIPAL BASIS. WE NOTE FROM A PERUSAL OF INVOICE THAT M/S. STP SUFFERED CE NTRAL SALES TAX (PB PAGE 91-106) FOR THE PRODUCT MANUFACTURED BY IT. THE ASSESSEE TOOK INTO CONSIDERATION THE ADVANTAGE OF THE UNIT OF M/S. STP WHICH WAS LOCATED AT SIKKIM AND COST OF PRODUCTION OF PHYSICIAN SAMPLE WAS COMPARATIVELY VERY LESS AND THERE WAS NO SCARCITY O F WATER. THE DECISION TO DISBURSE PHYSICIAN SAMPLE WAS TO BOOST THE SALE OF SORBILIN E IN THE MARKET AND IT GAVE RESULTS. WE NOTE THAT TOTAL SALES OF SORBILINE COMES TO RS.13 ,65,19,553/- WHEREAS THE EXPENDITURE INCURRED ON PHYSICIANS SAMPLES AMOUNT TO RS.5,81,77 ,566/- WHICH REPRESENTS 4.3% ONLY TOWARDS PROMOTIONAL MEASURES AND ASSESSEE HAS JUSTI FIED ITS CLAIM FOR THE EXPENDITURE INCURRED WHICH WAS WHOLLY AND EXCLUSIVELY FOR BUSIN ESS PURPOSES AND THUS QUALIFIES FOR BUSINESS EXPENDITURE, WHICH HAS BEEN RIGHTLY ALLOWE D BY THE LD. CIT(A). COMING TO THE OTHER REASON OF AO TO DISALLOW THE CLAIM OF EXPENDI TURE FOR NON-DEDUCTION OF TDS U/S. 194C OF THE ACT FOR THE PAYMENT MADE BY ASSESSEE TO M/S. STP, WE FIRST OF ALL REPRODUCE SEC. 194C OF THE ACT 'SEC. 194C(1)- ANY PERSON RESPONSIBLE FOR PAYING AN Y SUM TO ANY RESIDENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE CONTRACTOR) FOR CARRYING OUT ANY WORK (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK) IN PURSUANCE OF A CONTRA CT BETWEEN THE CONTRACTOR AND A SPECIFIED PERSON SHALL, AT THE TIME OF CREDIT OF SUCH SUM TO THE ACCOUNT OF THE CONTRACTOR OR AT THE TIME OF PAYMENT THEREOF IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, DEDUCT AN AMOUNT EQUAL TO- (I) ONE PER CENT. WHERE THE PAYMENT IS BEING MADE O R CREDIT IS BEING GIVEN TO AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY; (II) TWO PER CENT. WHERE THE PAYMENT IS BEING MADE OR CREDIT IS BEING GIVEN TO A PERSON OTHER THAN AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY, OF SUCH SUM AS INCOME-TAX ON INCOME COMPRISED THEREIN. .. .. EXPLANATION -- FOR THE PURPOSES OF THIS SECTION,- 8 ITA NO.133/KOL/2016 & CO NO.15/CAL/2016 LABORATORIES GRIFFON PVT. LTD., AY- 2011-12 (IV) 'WORK' SHALL INCLUDE- (A) ADVERTISING; (B) BROADCASTING AND TELECASTING INCLUDING PRODUCTI ON OF PROGRAMMES FOR SUCH BROADCASTING OR TELECASTING, (C) CARRIAGE OF GOODS OR PASSENGERS BY ANY MODE OF TRANSPORT OTHER THAN BY RAILWAYS; (D) CATERING; (E) MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL PURCHASED FROM SUCH CUST OMER, BUT DOES NOT INCLUDE MANUFACTURING OR SUPPLYING A PRODUCT ACCORDING TO T HE REQUIREMENT OR SPECIFICATION OF CUSTOMER BY USING MATERIAL PURCHASED FROM A PERSON, OTHER THAN SUCH CUSTOMER.' 13. SEC.194C OF THE ACT STIPULATES THAT WHEN THE AS SESSEE IN PURSUANCE OF A CONTRACT BETWEEN THE ASSESSEE AND THE CONTRACTOR CARRY OUT A NY WORK THROUGH A CONTRACTOR (INCLUDING SUPPLY OF LABOUR FOR CARRYING OUT ANY WORK), MAKES THE PAYMENT TO THE CONTRACTOR SHALL DEDUCT TAX AT SOURCE AS SPECIFIED IN THE SECTION. DEFINITION OF WORK FOR THE PURPOSE OF THIS SECTION IS IMPORTANT TO ASCERTAIN THE LEGISLATIVE I NTENT. 14. AS PER CLAUSE (E) OF EXPLANATION (IV) OF SEC. 1 94C OF THE ACT, ITSELF EXCLUDES MANUFACTURE OR SUPPLY OF A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER ( ASSESSEE ) BY USING MATERIAL WHICH IS PURCHASED FROM A PERSO N OTHER THAN SUCH CUSTOMER ( ASSESSEE ), FROM THE AMBIT OF SECTION 194C. 15. WE NOTE THAT CLAUSE (E) AS INTRODUCED CONTAINS A POSITIVE AFFIRMATION THAT THE EXPRESSION 'WORK' WILL COVER MANUFACTURING OR SUPPL YING A PRODUCT, ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER, BY USIN G MATERIAL PURCHASED FROM SUCH A CUSTOMER. CLAUSE (E) HAS PLACED THE POSITION BEYOND DOUBT BY INCORPORATING LANGUAGE TO THE EFFECT THAT THE EXPRESSION 'WORK' SHALL NOT INCLUDE MANUFACTURE OR SUPPLY OF A PRODUCT ACCORDING TO THE REQUIREMENT OR SPECIFICATION OF A CUSTOMER BY USING MATERIAL WHICH IS PURCHASED FROM A PERSON OTHER THAN SUCH CUSTOMER. M EANING THEREBY, WHEN THE MATERIAL IS PURCHASED FROM THE CUSTOMER WHO ORDERS THE PRODUCT IT CONSTITUTES A CONTRACT OF WORK, RESULTANTLY SECTION 194C WILL BE ATTRACTED, WHILE O N THE OTHER HAND, WHERE THE MANUFACTURER HAS SOURCED THE MATERIAL FROM A PERSON OTHER THAN T HE CUSTOMER, IT WOULD NOT BE CLASSIFIED AS WORK, RESULTANTLY SECTION 194C WOULD NOT BE ATTRACT ED IN THE LATER CASE. SO TO ADJUDICATE THIS ISSUE LET US LOOK INTO THE RELEVANT CLAUSES OF THE AGREEMENT BETWEEN ASSESSEE AND M/S STP 9 ITA NO.133/KOL/2016 & CO NO.15/CAL/2016 LABORATORIES GRIFFON PVT. LTD., AY- 2011-12 REGARD, THE RELEVANT EXTRACTS OF THE SAID AGREEMENT DATED 22.02.2010 ( PAGE NOS. 80-88 OF THE PAPER-BOOK )ARE REPRODUCED AS UNDER: AND WHEREAS ON THE FAITH AND STRENGTH OF THE ABOVE REPRESENTATION AND WARRANTIES MADE AND GIVEN BY STP, LG HAS AGREED TO ENTER INTO THIS AGREEMENT FOR STP TO MANUFACTURE AND SELL THE SAME TO LG ON 'PRINCIPAL T O PRINCIPAL' BASIS, OR TO ANY OTHER PARTY WHO IS AUTHORIZED BY LG FROM TIME TO TI ME UPON AND SUBJECT TO THE TERMS AND CONDITIONS HEREINAFTER CONTAINED. 14) NOTHING IN THIS AGREEMENT SHALL CONSTITUTE OR B E DEEMED TO CONSTITUTE STP AS THE AGENT OF LG AS IT BEING AGREED AND UNDERSTOOD THAT THIS AGREEMENT IS ON A 'PRINCIPAL-TO-PRINCIPAL' BASIS. 16. FROM PERUSAL OF THE ABOVE, IT IS EVIDENT THAT T HE AGREEMENT WAS ENTERED INTO BY THE ASSESSEE ON PRINCIPAL TO PRINCIPAL BASIS AND WAS NO T A CONTRACT FOR CARRYING OUT ANY WORK SINCE M/S.STP PHARMACEUTICALS PVT. LTD HAS FOR THE PRODUCTION OF SORBILINE SOURCED THE MATERIAL FROM A PERSON OTHER THAN THE ASSESSEE. WE ALSO NOTE FROM PERUSAL OF PAGE 14 PB THAT ASSESSEES DOMESTIC TOTAL SALES WAS TO THE TUN E OF ONLY RS 20,92,31,782/ WHEN COMPARED TO THE EXPENDITURE FOR THE PRODUCTION OF SORBILINE FROM M/S.STP PHARMACEUTICALS PVT. LTD TO THE TUNE OF RS 58,77,566/ WHICH THEY MANUFAC TURED BY SOURCING THE MATERIAL FROM A PERSON OTHER THAN THE ASSESSE, DOESNT FALL IN THE KEN OF SEC 194C OF THE ACT. 17. IN THE INSTANT CASE, WE NOTE THAT LD. CIT(A) ON THIS ISSUE HAS MADE A FACTUAL FINDING. WE NOTE THAT DUE TO RESTRICTION OF PRODUCTION OF LI QUIDS IN THE FACTORY PREMISES BY THE LAND LORD OF THE ASSESSEE, DUE TO EFFLUENT WATER PROBLEM , THE PRODUCTION OF SORBILINE WAS SHIFTED TO BACKWARD AREA AS ANCILLARY COSTS FOR MAN UFACTURING THE SAID PRODUCT ARE LOW. IN THIS REGARD, THE ASSESSEE ENTERED INTO AN AGREEMENT WITH M/S.STP PHARMACEUTICALS PVT. LTD. ACCORDING TO WHICH M/S. STP WILL MANUFACTURE THE PH ARMACEUTICAL PRODUCTS IN THE BRAND NAME 'SORBILINE' BY USING MATERIALS FROM ITS OWN SO URCE AND SELL THE SAME TO THE ASSESSEE ON 'PRINCIPAL TO PRINCIPAL' BASIS. THEREFORE, UNDOU BTEDLY THE PROVISIONS OF CLAUSE (E) OF EXPLANATION (IV) OF SEC. 194C GETS ATTRACTED IN THE INSTANT CASE AND AS SUCH, THE ENTIRE EXPENDITURE OF RS.58,77,566/- BEING PAID TO M/S.STP PHARMACEUTICALS PVT. LTD FOR PURCHASE OF 'SORBILINE' DOES NOT COME UNDER THE AMBIT OF SEC . 194C, THEREFORE, THE AO ERRED ON THIS ISSUE, WHICH HAS BEEN RIGHTLY CORRECTED BY THE LD. CIT(A), WHICH CALLS FOR NO INTERFERENCE, SO WE CONFIRM THE ORDER OF LD. CIT(A). 10 ITA NO.133/KOL/2016 & CO NO.15/CAL/2016 LABORATORIES GRIFFON PVT. LTD., AY- 2011-12 18. COMING TO THE CO OF ASSESSEE. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF LD. CIT(A) IN CONFIRMING THE ADDITION OF RS.20,97,900/- CLAIME D BY THE ASSESSEE ON ACCOUNT OF PROMOTIONAL EXPENSES. THE ASSESSEE DURING THE RELE VANT FINANCIAL YEAR HAS DEBITED AN AMOUNT OF RS.20,97,900/- UNDER THE HEAD PUBLICITY EXPENSES ON ACCOUNT OF SALES PROMOTION. ACCORDING TO ASSESSEE COMPANY THE SAID E XPENDITURE WAS INCURRED BY THE ASSESSEE ON ACCOUNT OF DISTRIBUTION OF GIFT ARTICLE S AMONG THE DEALERS/DISTRIBUTORS AS PART OF ITS SALES PROMOTIONAL SCHEMES. HOWEVER, THE AO DISA LLOWED THE SAME ALLEGING THAT NEITHER THE ASSESSEE COULD PRODUCE COPY OF ANY AGREEMENT SH OWING THE BASIS FOR SUCH DISTRIBUTION NOR ANY CONFIRMATIONS FROM THE DEALERS/DISTRIBUTORS WERE FILED ACKNOWLEDGING SUCH RECEIPT. THE AO FURTHER OBSERVED THAT SINCE ALMOST THE ENTIR E SALES WAS MADE ON CONSIGNMENT BASIS THROUGH THE CONSIGNEE, M/S. FRANCO-INDIAN PHARMACEU TICALS PVT. LTD. AND SINCE THERE WAS DECREASE IN TURNOVER IN THE CURRENT FINANCIAL YEAR, THE CLAIM OF EXPENDITURE INCURRED ON ACCOUNT OF SALES PROMOTION IS NOT JUSTIFIED. MOREOV ER, THE AO WAS ALSO INFLUENCED BY THE INFORMATION RECEIVED BY WAY OF AN INTERNAL COMMUNIC ATION TO HIM FROM THE INVESTIGATION WING OF THE DEPARTMENT THAT IN CONSEQUENCE OF SURVE Y/SEARCH CONDUCTED AT THE BUSINESS PREMISES OF M/S. SUBBHIKSHA ENTERPRISES OF MUMBAI ( FROM WHICH PARTY PURCHASE OF GIFT ITEMS WERE MADE) AND THE STATEMENT RECORDED IN CONN ECTION THEREOF WHEREIN IT WAS CONFIRMED THAT THE ASSESSEE COMPANY HAS NOT MADE AN Y REAL PURCHASE OF GIFT MATERIALS OF RS.20,97,900/- AND THAT THE ASSESSEE IS ONLY THE BE NEFICIARY OF BOGUS ENTRIES BY THEM IN THEIR BOOKS. THEREFORE, AO DISALLOWED THE CLAIM WHICH WAS UPHELD BY THE LD. CIT(A). AGGRIEVED THE ASSESSEE IS BEFORE US. 19. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ASSESSEE COMPANY CLAIMED TO HAVE DISBURSED GIFT ARTICLES FOR AN AMOUNT OF RS.20,97,900/- TO THE DISTRIBUTORS/DEALER S FOR PROMOTION OF THE PHARMACEUTICALS PRODUCTS WHICH IT MANUFACTURES AND TRADES IN. THE C LAIM OF THE ASSESSEE WAS NOT ACCEPTABLE FOR THE AO FOR THE REASON THAT THE 98.18% OF THE TO TAL SALE OF THE PHARMACEUTICAL PRODUCTS OF THE ASSESSEE COMPANY WAS SOLD THROUGH THE CONSIGNEE M/S. FRANCO INDIAN PHARMACEUTICALS PVT. LTD. AND IN THIS ASSESSMENT YEAR THE TURNOVER HAS BEEN LESS AND, THEREFORE THE AO WAS NOT SATISFIED WITH THE CLAIM OF THE ASSESSEE. MORE OVER, HE TOOK NOTE OF THE FACT THAT OF AN INTERNAL INFORMATION HE RECEIVED FROM THE SURVEY/SE ARCH CONDUCTED AT THE BUSINESS PREMISES OF M/S. SUBHLAKSHMI ENTERPRISES OF MUMBAI CONFIRMED THAT THEY WERE PROVIDING 11 ITA NO.133/KOL/2016 & CO NO.15/CAL/2016 LABORATORIES GRIFFON PVT. LTD., AY- 2011-12 ACCOMMODATION ENTRIES AND, THEREFORE, THE ASSESSEE COMPANYS CLAIM THAT IT HAD PURCHASED GIFT MATERIAL (SS DINNER SETS) FROM M/S. SUBHLAKSHM I ENTERPRISES WORTH RS.20,97,900/- IS NOT REAL AND SO IS A BOGUS ENTRY. IN THE LIGHT OF THE SAID STATEMENT OF THE SELLER OF THE GIFT MATERIAL, THE AO CONCLUDED THAT THE ASSESSEE IS ON LY A BENEFICIARY OF THE BOGUS ENTRY GIVEN BY THE ACCOMMODATION PROVIDER AND THUS, HE DISALLOW ED THE CLAIM OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION OF THE AO. AGGRIEVED, THE ASSESSEE IS BEFORE US HAS ASSAILED THE DECISION OF THE LD. CIT(A) ON T HE GROUND THAT THE INTERNAL COMMUNICATION OF THE SELLER OF THE GIFT MATERIAL M/ S. SUBHLAKSHMI ENTERPRISES HAS NEVER BEEN CONFRONTED WITH THE ASSESSEE COMPANY AND THEY WERE KEPT IN DARK OF THE SAID STATEMENT WHICH HAS BEEN RECORDED BEHIND THE BACK OF THE ASSE SSEE COMPANY AND HAS BEEN RELIED ON FOR FORMING ADVERSE CONCLUSION WHICH HAS RAISED SUS PICION IN THE MIND OF THE AO/CIT(A). ACCORDING TO THE LD. AR, IF THE AO COMES ACROSS ANY ADVERSE MATERIAL AND IF HE DECIDES TO USE IT AGAINST THE ASSESSEE, THEN FIRST OF ALL THE COPY OF THE ADVERSE MATERIAL SHOULD BE HANDED OVER TO THE ASSESSEE AND THEREAFTER, THE ASSESSEE S HOULD BE GIVEN AN OPPORTUNITY TO CROSS EXAMINE THE PERSON WHO HAS GIVEN ADVERSE MATERIAL/ EVIDENCE/DEPOSED AGAINST IT. FOR THE SAID PROPOSITION, THE ASSESSEE HAS RELIED ON THE DE CISION OF HONBLE SUPREME COURT IN THE CASE OF ANDAMAN TIMBER INDUSTRIES VS. COMMISSIONER OF CENTRAL EXCISE 62 TAXMAN.COM 3, WHEREIN THEIR LORDSHIPS HAVE HELD THAT THE FAILU RE TO GIVE THE ASSESSEE THE RIGHT TO CROSS- EXAMINE WITNESSES WHOSE STATEMENTS ARE RELIED UPON RESULTS IN BREACH OF NATURAL JUSTICE AND IT IS A SERIOUS FLAW WHICH RENDERS THE ORDER A NULL ITY. IT HAS ALSO BEEN BROUGHT TO OUR NOTICE THAT IN THE EARLIER YEARS, THE VERY SAME PRACTICE F OLLOWED BY THE ASSESSEE COMPANY TO DISBURSE THE GIFT MATERIAL TO THE DEALER/DISTRIBUTO R HAS ALWAYS BEEN ALLOWED AND, THEREFORE, ON THE GROUND OF CONSISTENCY, THE CLAIM HAS TO BE A LLOWED AND FOR THAT HAS RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF RADHASOMY SATSANG VS CIT 193 ITR 321 (SC) WHEREIN IT WAS HELD THAT WHEN THE FACTS AND TH E LAW PERMEATING IN THE EARLIER YEARS ARE THE SAME, THEN A DIVERGENT VIEW SHOULD NOT BE TAKEN AND CONSISTENCY MUST BE FOLLOWED. WE FIND CONSIDERABLE FORCE IN THE AFORESAID CONTENTION OF THE ASSESSEE ON THIS ISSUE. HOWEVER, WE TAKE NOTE OF THE FACT THAT THE ASSESSEES HAVE FA ILED TO GIVE THE LIST OF THE RECIPIENTS OF THE GIFT MATERIAL OR CONFIRMATION FROM THEM WHEN CALLED UPON BY THE AO/LD. CIT(A). WHEN A CLAIM OF EXPENDITURE IS CLAIMED THE ASSESSEE IS DUT Y BOUND TO PRODUCE THE VOUCHERS/BILLS AS WELL AS MATERIAL TO SHOW THE GENUINENESS OF THE CLA IM. HERE IN THIS CASE, THE ASSESSEE HAS PURCHASED THE MATERIAL THROUGH BANKING CHANNEL FROM M/S. SUBHALAKSHMI ENTERPRISES. 12 ITA NO.133/KOL/2016 & CO NO.15/CAL/2016 LABORATORIES GRIFFON PVT. LTD., AY- 2011-12 THOUGH IN ANOTHER PROCEEDING (SURVEY/SEARCH) WHICH HAPPENED IN RESPECT TO THE SELLER M/S. SUBHALAKSHMI ENTERPRISES OF GIFT ITEMS, WHEREIN THE SELLER HAS GIVEN A STATEMENT THAT IT IS PROVIDING ACCOMMODATION ENTRIES CANNOT BE THE ONLY MATERIAL WHICH CAN MAKE THE CLAIM OF THE ASSESSEE THAT IT HAS PURCHASED THE SS DINNER SE T FROM THEM AS BOGUS. SINCE THE ASSESSEE HAS PRODUCED BILLS AND INVOICES FOR PURCHASE OF THE SS DINNER SET FROM M/S. SUBHALAKSHMI ENTERPRISES AND HAS MADE THE PAYMENT THROUGH BANKIN G CHANNEL, THE PURCHASES CANNOT BE DISBELIEVED ON A STATEMENT RECORDED BEHIND THE BACK OF THE ASSESSEE AND WITHOUT CONFRONTING THE ASSESSEE COMPANY WITH THE ADVERSE MATERIAL AND UNLESS THE ASSESSEE HAD AN OPPORTUNITY TO CROSS EXAMINE THE PERSON WHO HAS DEPOSED ON BEHA LF OF M/S. SUBHALAKSHMI ENTERPRISE, THE INTERNAL COMMUNICATION RECEIVED BY THE AO CANNO T BE A GROUND TO FIND FAULT WITH THE VERACITY OF THE CLAIM/INVOICES/BILLS/BANK STATEMENT ETC. PRODUCED BY THE ASSESSEE TO DISCHARGE THE ONUS TO SHOW THAT IT HAS PURCHASED TH E GIFT (SS DINNER SET) FROM M/S. SUBHALAKSHMI ENTERPRISE. HAVING SAID SO, WE NOTE T HAT THE ASSESSEE HAS NOT GIVEN THE LIST OF RECIPIENTS OF GIFTS I.E. DISTRIBUTORS/DEALERS WHEN ASKED FOR BY THE LD. CIT(A)/AO, THEREFORE, WE ARE INCLINED TO DISALLOW 30% OF THE CLAIM. THE A O IS DIRECTED TO RESTRICT THE CLAIM TO 30% OF ITS CLAIM AND THE ASSESSEE GETS PARTIAL RELI EF. ACCORDINGLY, THIS GROUND OF CROSS OBJECTION OF ASSESSEE IS PARTLY ALLOWED. 20. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED A ND CO OF ASSESSEE IS PARTLY ALLOWED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 11TH APRI L, 2018 SD/- SD/- (J. SUDHAKAR REDDY) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 11TH APRIL, 2018 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT DCIT, CIRCLE-10(1), KOLKATA . 2 RESPONDENT M/S. LABORATORIES GRIFFON PVT. LTD., 40B, PRINCEP STREET, KOLKATA- 700 072. 3. THE CIT(A) KOLKATA. 4. 5. CIT KOLKATA DR, ITAT, KOLKATA. / TRUE COPY, BY ORDER, SR. PVT. SECRETARY