DAHYABHAI LALJIBHAI PATEL,MEHSANA V. THE ITO, WARD-1, MEHSANA

ITA 1521/AHD/2025

AI Insights

The case involves an appeal by Dahyabhai Laljibhai Patel against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, which sustained a disallowance of Rs.25,88,504 on sales promotion/distribution expenses paid to Welable Pharma. The disallowance was based on the grounds that the expenses were beyond the market limit. The Tribunal examined the compensation details paid to Welable Pharma over several financial years and found that the method of profit declaration by the assessee was consistent and justified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 780625 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 01-08-2025
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHAKAR VERMA
• Assessee Lawyers: RUSHIN PATEL

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT Ms SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A. No.1521/Ahd/2025 (Assessment Year: 2018-19) Dahyabhai Laljibhai Patel, 222, GIDC-1, Modhera Road, Mehsana-384002. Gujarat [PAN :ABHPP5785 B] Vs. The Income Tax Officer, Ward-1, Mehsana. (Appellant) .. (Respondent) Appellant by : Shri Rushin Patel, AR Respondent by: Shri Sudhakar Verma, Sr. DR Date of Hearing 06.10.2025 Date of Pronouncement 08.10.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT:- The captioned appeal has been filed by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi, vide order dated 23.07.2025 relevant to the Assessment Year 2018-19. 2. The assessee has raised the following grounds of appeal: 1. The Ld. CIT(A) has erred in law and on facts of the case, in sustaining the disallowance of Rs.25,88,504/- made by way of restriction of sales promotion/distribution expenses paid to Welable Pharma, from 13.5% to 5% of sales. Printed from counselvise.com ITA No. 1521/Ahd/2025 Asst. Year : 2018-19 - 2– 2. The appellant craves leave to add, amend alter or delete the grounds of appeal at the time of hearing, if need arise. 3. The Assessing Officer disallowed the expenditure incurred by the assessee on the ground that the same was beyond the market limit. We have examined the details of the compensation paid to Welable Pharma, the particulars of which are as under: Compensation given to Welable Pharma Financial Year Sales of assesser's products by Welable Pharma Purchases of assessee's products by Welable Pharma Gross Margin before credit notes (in Rs.) Gross Margin before credit notes (in %) Compensation by way of credit Sales Promotion after credit notes Expense by assessee (in %) Total Compensation after credit notes (in%) 2014-15 3,91,18,821 2,79,49,780 1,11,69,041 28.55% 0% 28.55% 2015-16 3,43,21,070 2,73,28,092 69,92,978 20.38% 0% 20.38% 2016-17 4,12.33,056 3,34,10,836 78,22,222 18.97% 5% 23.97% 2017-18 3,57,79,620 3,04,52,988 53,26,632 14.89% 13.50% 28.39% 4. Considering the consistent method followed by the assessee, we find no reason to interfere with the profit declared. Accordingly, the appeal of the assessee is allowed. 5. In the result, the appeal of the assessee is allowed. The order is pronounced in the open Court on 08.10.2025. Sd/- Sd/- (SUCHITRA KAMBLE) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT (True Copy) Ahmedabad; Dated 08.10.2025 MV Printed from counselvise.com ITA No. 1521/Ahd/2025 Asst. Year : 2018-19 - 3– आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "