Commissioner of Income Tax V. Glaxo SmithKline Consumer Healthcare Ltd.

ITA/265/2009

AI Insights

The case involves the Commissioner of Income Tax as the appellant, contesting various decisions made by the ITAT regarding the treatment of certain expenditures and deductions under the Income Tax Act, 1961. The respondent, M/S Glaxo SmithKline Consumer Healthcare Ltd., was the assessee in these matters. The appellant challenged the ITAT's decisions on issues such as the classification of product development expenditure, the inclusion of excise duty in total turnover for computing deductions under section 80HHC, and the nature of expenses related to new machinery and ERP implementation. The High Court of Punjab and Haryana at Chandigarh reviewed these issues in light of previous judgments and found no basis to overturn the ITAT's decisions.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 834732 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 05-02-2026
• Assessment Year: misc
• Other Referred Cases: ITA-267-2009, ITA-645-2008, ITA-269-2009, ITA-271-2009, ITA 62 to 65 of 1995
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: ROHIT JAIN; ABHISHEK SHARMA
• Assessee Lawyers: URVASHI DHUGGA; VAIBHAV GUPTA; KAVITA
• Keywords: Capital expenditure; Deduction; Excise Duty; Revenue expenditure; Valuation of closing stock; ERP package
• Section: 80HHC; 260A; 80-I

Judgement Text

" IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH **** 204 ITA-265-2009 (O&M) Date of Decision: 05.02.2026 COMMISSIONER OF INCOME TAX ...Appellant Vs. M/S GLAXO SMITHKLINE CONSUMER HEALTHCARE LTD. …Respondent CORAM:- HON'BLE MR. JUSTICE JAGMOHAN BANSAL HON'BLE MR. JUSTICE AMARINDER SINGH GREWAL Present:- Ms. Urvashi Dhugga, Sr. Standing Counsel with Mr. Vaibhav Gupta, Jr. Standing Counsel and Ms. Kavita, Advocate for Income Tax Mr. Rohit Jain, Advocate (through V.C.) and Mr. Abhishek Sharma, Advocate for the assessee *** JAGMOHAN BANSAL, J. (ORAL) 1. The appellant through instant appeal under Section 260A of the Income Tax Act, 1961 (for short ‘1961 Act’) is seeking setting aside of order dated 21.03.2007 passed by Income Tax Appellate Tribunal, Chandigarh (for short ‘ITAT’). 2. The appellant has raised following questions for adjudication by this Court:- i. Whether on facts and in the circumstances of the case, the ITAT is right in law in treating the expenditure incurred on product development as revenue expenditure, when the purpose of the expenditure & its intended reality is to obtain benefit of enduring nature? ii. Whether on the facts and in the circumstances of the case, the Printed from counselvise.com DEEPAK BISSYAN 2026.02.09 12:43 I attest to the accuracy and integrity of this document ITA-265-2009 -2- ITAT was right in holding that Excise Duty will not form part of \"total turnover\" while computing deduction u/s 80HHC? iii. Whether on the facts and in the circumstances of the case the ITAT was right in law in allowing the deduction u/s 80-I of the 1961 Act, in as much as the machinery had been installed in the same iv. Whether on the facts and in the circumstances of the case, the ITAT is correct in law in holding that interest on capital borrowed for acquisition of new machinery and overhead expenses incurred during trial run period in expansion of its existing business are expenses of revenue nature? v. Whether on the facts and in the circumstances of the case, the ITAT is correct in law in holding that expenditure incurred on implementation of the new ERP package, an input to take business decisions and which results into carrying on business more efficiently and smoothly, cannot be said to be an advantage accruing in the capital field? vi. Whether on the facts and in the circumstances of the case, the ITAT was right in law in upholding the order of the CIT (A) in deleting the addition made on account of change in the method of valuation of closing stock in respect of excise duty? 3. Learned counsel for the parties are ad idem that question No.1 raised by appellant stands answered by this Court vide order dated 04.02.2026 passed in ITA-267-2009, question No.2 is covered by order dated 27.01.2026 passed in ITA-645-2008, questions No.3 and 4 are covered by order dated 19.01.2026 passed in ITA-269-2009, question No.5 is covered by Printed from counselvise.com DEEPAK BISSYAN 2026.02.09 12:43 I attest to the accuracy and integrity of this document ITA-265-2009 -3- order dated 05.02.2026 passed in ITA-271-2009 and question No.6 is covered by order dated 27.11.2025 passed in ITA 62 to 65 of 1995. 4. The questions raised by appellant are answered in terms of aforesaid orders of this Court. 5. Pending application(s), if any, stands disposed of. (JAGMOHAN BANSAL) JUDGE (AMARINDER SINGH GREWAL) JUDGE February 05, 2026 Deepak DPA Whether Speaking/reasoned Yes/No Whether Reportable Yes/No Printed from counselvise.com DEEPAK BISSYAN 2026.02.09 12:43 I attest to the accuracy and integrity of this document "