GLAXOSMITHKLINE ASIA PRIVATE LIMITED,GURGAON V. JAO- DCIT/ACIT CIR 1(1), CHANDIGARH

SA 18/CHANDI/2026

AI Insights

The case involves Glaxo Smithkline Asia P.Ltd., which filed a stay application against an outstanding tax demand of Rs.69,76,44,080 for the assessment year 2022-23. The primary issues in dispute were related to transfer pricing and the disallowance of advertisement expenses, which the assessee argued had been previously ruled in their favor in earlier years. The Income Tax Officer had made significant additions to the assessee's income, which the Tribunal considered in light of past decisions and the specific circumstances of the current assessment. The Tribunal's decision to grant a stay was influenced by the assessee's compliance with previous rulings and the partial payment of advance taxes.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 839746 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 day(s)
• Appeal Type: Stay Application
• Pronouncement Date: 25-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2022-2023
• Appeal Filed On: 19-02-2026
• Other Referred Cases: ITA No.2453/Del/2016 & ITA No. 532/CHD/2014
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK VARDHAN
• Assessee Lawyers: AJAY VOHRA; NEERAJ JAIN
• Keywords: Transfer pricing; Tax effect; Application of stay
• Section: 143(3)

Judgement Text

"आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘A’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ S.A.No. 18/CHD/2026 in ITA No. 316/CHD/2026 Ǔनधा[रण वष[ / Assessment Year: 2022-23 Glaxo Smithkline Asia P.Ltd., 10th Floor, One Horizon Center, Sector 43, DLF Phase-5, Golf Course Road, Chakkarpur, Gurgaon. Vs The DCIT/ACIT, Circle 1, Chandigarh. èथायी लेखा सं./PAN NO: AABCS3237R अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Assessee by : Shri Ajay Vohra, Sr.Advocate with Shri Neeraj Jain and Shri Dhruv Seth, Advocates Revenue by : Shri Vivek Vardhan, Sr.DR Date of Hearing : 25.02.2026 Date of Pronouncement : 25.02.2026 HYBRID HEARING O R D E R PER RAJPAL YADAV, VP The present Stay Application is directed at the instance of the assessee for grant of ad-interim stay of the outstanding demand amounting to Rs.69,76,44,080/-. 2. The brief facts of the case are that assessee has filed its return of income on 30.11.2022 declaring total income at Rs.3,21,03,17,237/-. The assessment order has been passed on 29.01.2026 u/s 143(3) read with Section 144C(xiii) and 144B of the Income Tax Act. The ld. AO has Printed from counselvise.com SA 18/CHD/2026 in ITA 316/CHD/2026 A.Y. 2022-23 2 determined the taxable income of the assessee at Rs.5,22,94,62,826/-. The ld. counsel for the assessee while taking us through the record drew our attention towards page No. 1 of the Paper Book, wherein he has complied necessary details in tabular form exhibiting the additions made by the AO on different issues, tax effect resulted on account of those issues and how certain issues are covered in favour of the assessee by the earlier orders of the ITAT. In order to appreciate the facts and circumstances in more scientific manner, we deem it appropriate to take note of these details, which read as under and also annexed as Annexure- A to this order : Printed from counselvise.com SA 18/CHD/2026 in ITA 316/CHD/2026 A.Y. 2022-23 3 3. The ld. counsel for the assessee submitted that perusal of the above chart would indicate that as far as transfer pricing issues are concerned, these are being treated by the assessee as uncovered issues which may be fresh issues for the year under consideration. He pointed out that the major addition which has given rise to the demand is the disallowance of 1/3rd expenditure out of advertisement expenses. On this account, an addition of Rs. 1,73,17,35,100/- has been made which has resulted in a demand of Rs.59.83 Cr. According to the ld. counsel for the assessee, this issue is being raised on year to year basis and the Tribunal has decided this issue in favour of assessee. He drew our attention towards page No. 2 of the Paper Book where copy of the Tribunal’s order for assessment years 2005-06 and 2006-07 have been placed on record. He took us through the finding of the Tribunal in Ground No. 2 on page 13 of the Paper Book. The findings in ITA No.2453/Del/2016 & ITA No. 532/CHD/2014 read as under : “11. We have heard both the parties. We are convinced with the arguments of the Ld. Counsel for the assessee that there was no reason/basis at all for holding that the advertisement /promotion expenses benefited the parent AE and hence a portion of it was liable to be disallowed as having not been incurred wholly and exclusively for the purpose of the business of the assessee. There is clear distinction between brand building and advertising i: marketing. While the end purpose of both may be the same, i.e increasing sales/turnover, but the approach is definitely different. While advertising only communicates what a business has to offer, reaching out to the end customer and impacting immediate sales, brand building exercise on the other hand creates an identity/perception of the business, generating awareness about the business using strategies and campaigns with the goal of creating a unique and lasting image of the business in the market Printed from counselvise.com SA 18/CHD/2026 in ITA 316/CHD/2026 A.Y. 2022-23 4 place. Brand building creates a customer base establishing long term relationship with the customer. With this clear distinction between the two expenses, the onus to establish incurrence of either of the expenses is on the party claiming so. The Revenue claiming that the assessee has incurred brand building expenses, the onus is on the Revenue to establish the said fact. It cannot simply be derived from the fact that assessee has incurred huge expenses on advertisement and sale promotion of products the brand of which belonged to another entity, considering the clear distinction in the end objective of the said expenses and the assessee consistently claiming that it had acquired the exclusive license to manufacture and sell the products in India and thus being the sole user of the brand name in India. These contentions of the assessee have remained uncontroverted. The entire benefit, in such circumstances, inured to the assessee alone as it alone was operating in the Indian market. Benefit if any to the AE was only incidental. And on account of such incidental benefit accruing to a third party it cannot be said that the expense was not wholly and exclusively for the benefit of the assessee. As long as the objective /purpose for incurring an expenditure is to benefit the assessee solely, the expenditure can be said to be incurred wholly and exclusively for the benefit of the assessee. Any incidental benefit accruing to a third party on account of the same, being beyond the control of the assessee, does not dilute the character of the expense. We do not find any reason or basis therefore for holding a part of the expense as pertaining to brand building. We therefore direct deletion of the disallowance made on account of brand building expenses amounting to Rs.8,94,33.333/-.” 4. The ITAT, after putting reliance upon large number of decisions referred on page No. 20 of the order held that there is a clear distinction between brand-building and advertisement or are marketing expenses. The ld. counsel for the assessee took us through the finding of the ITAT and submitted that if this demand is being excluded from the total demand on account of the issue covered by earlier years, then the total demand would remain Rs.9.35 Cr. The AO has not given credit of full payment of advance tax. The ld. counsel for the assessee while referring to the Printed from counselvise.com SA 18/CHD/2026 in ITA 316/CHD/2026 A.Y. 2022-23 5 above chart submitted that full payment of advance taxes was roughly Rs.104 Cr against which credit has been given by the AO qua Rs.99 Cr. If credit is being given of the above shortage of Rs.5.49 Cr contemplated in the Chart, then remaining demand would be only Rs.1.13 Cr. He further submitted that 20% of the balance is calculated, then demand would be only Rs.22,66,958/-. He also brought to our notice an order giving effect of assessment year 2010-11 whereby refund has been generated to the assessee. 5. The ld. Sr.DR on the other hand submitted that as far as inclusion of refund for assessment year 2010-11 is concerned, he is not possessing the complete data of all the assessment years as to how this refund could have been adjusted or has been adjusted by the AO. With regard to the Chart submitted by the ld. counsel for the assessee and reproduced by us, he submitted that at the time of considering, whether a stay deserves to be granted to the assessee or not, these aspects are not to be looked into. It is to be ascertained whether 20% of the demand has been paid or not. 6. On due consideration of the above facts and circumstances, we are of the view that assessee has a prima-facie case. In earlier year also, stay has been operating, namely, assessment year 2017-18, 2018-19 and 2020- 21 where identical TP issues are involved. Considering the complete facts and circumstances, we stay the demand subject to following conditions : Printed from counselvise.com SA 18/CHD/2026 in ITA 316/CHD/2026 A.Y. 2022-23 6 a) The total demand would remain stayed for 180 days or till the disposal of appeal, whichever event occurs first. b) The stay will be operational subject to the condition that assessee would make a payment of Rs.One Crore on or before 15.03.2026. c) The assessee will not seek adjournment unless unavoidable circumstances warrant so. The Paper Books etc. would be fled before the next date of hearing. d) The Registry is directed to list the appeal for hearing on 29.04.2026. 7. In the result, Stay Application is allowed. Order pronounced on 25th February, 2026. Sd/- Sd/- (KRINWANT SAHAY) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” Copy of the order forwarded to : 1. The Appellant 2. The Respondent 3. Concerned CIT 4. The CIT(A) 5. DR, ITAT, Chandigarh. Assistant Registrar Printed from counselvise.com "