ACIT CIR 6(1), MUMBAI V. BOOTS PIRAMAL HEALTH CARE LTD ( NOW KNOWN AS M.S, NICHOLAS PIRAMAL CONSUMER PRODUCTS P. LTD), MUMBAI

ITA 1054/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100590 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Department
• Bench Allotted: G
• Next Hearing Date: 21-05-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 04-02-2011
• Court: TRIBUNAL
• Department Lawyers: RAKESH KUMAR AGRAWAL SR
• Assessee Lawyers: RONAK G DOSHI
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND AMIT SHUKLA, JUDICIAL MEMBER I.T.A. NO. 1054/M/2011 (AY:2006 - 2007 ) ACIT, CIR. 6(1), R.NO. 506, 5 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20. / VS. M/S. BOOTS PIRAMAL HEALTH CARE LTD., (NOW KNOWN AS M/S. NICHOLAS PIRAMAL CONSUMER PRODUCTS PVT. LTD), PENISULA CORPORATE PARK, NICHOLAS PIRAMAL TOWER, GANPATRAO KADAM MARG, LOWER PAREL, MUMBAI - 13. ./ PAN : AAACB 5803 B ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI RAKESH KUMAR AGRAWAL, SR. AR / RESPONDENT BY : MR. RONAK G. DOSHI / DATE OF HEARING : 20.07.2015 / DATE OF PRONOUNCEMENT : 12 .08.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 4.2.2011 IS AGAINST THE ORDER OF THE CIT (A) - 14, MUMBAI DATED 29.11.2010 FOR THE ASSESSMENT YEAR 200 - 2007. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUND WHICH READS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN HOLDING THAT ADVERTISEMENT EXPENDITURE OF RS. 1,87,12,487/ - PAID TO NICHOLAS PIRAMAL INDIA LIMITED AND RS. 3,91,447/ - PAID TO MR. NERULKAR, EMPLOYEE OF NICHOLAS PIRAMAL INDIA LIMITED, IS NOT LIABLE TO TDS. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL LOS S OF RS. 4,91,93,795/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE TOTAL LOSS WAS DETERMINED AT RS.1,15,40,961/ - WHICH INCLUDES THE ADDITION OF RS. 1,91,03,934/ - . AGGRIEVED WITH THE SAID DECISION OF THE AO, ASSESSEE CARRIED THE MATTER IN APPE AL BEFORE THE FIRST APPELLATE AUTHORITY. 2 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) PARTLY ALLOWED THE APPEAL. AGGRIEVED WITH THE SAID DECISION OF THE CIT (A), REVENUE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUND. 4. DURING THE PROCEEDINGS BEFORE US, AT THE OUTSET, EXPLAINING THE ABOVE GROUND, LD DR FOR THE REVENUE SUBMITTED THAT ASSESSEE CLAIMED THE FOLLOWING EXPENDITURE VIZ; RS. 1,87,12,487/ - ON AC COUNT OF ADVERTISEMENT EXPENSES AND RS. 3,91,447/ - ON ACCOUNT SALARY EXPENDITURE PAID TO MR. NERURKAR, AN EMPLOYEE OF NICHOLAS PIRAMAL INDIA LIMITED (NPIL). THE CASE OF THE REVENUE IS THAT THE SAID EXPENDITURE WAS INCURRED BY THE GROUP COMPANY OF THE ASSE SSEE IE NPIL. THESE EXPENSES WERE ACTUALLY INCURRED BY THE SAID COMPANY AND RECOVERED THE SAME FROM THE ASSESSEE. THE AO DID NOT ALLOW THE CLAIM OF THE ASSESSEE ON THESE TWO ACCOUNTS BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT FOR FAILURE OF THE ASSESSEE TO MAKE TDS ON THE SAID PAYMENTS. SIMILAR ADDITION WAS MADE IN THE PAST IE AY 2005 - 06. IN THIS REGARD, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE IDENTICAL ADDITION WAS MADE IN THE PAST AND THE MATTER WAS TRAVELLED TO THE TRIBUNAL VID E THE APPEAL ITA NO.3123/M/2009 AND OTHERS FOR THE AYS 2004 - 05 AND 2005 - 06, ORDER DATED 18.2.2015, THE ISSUE WAS ADJUDICATED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. BRINGING OUR ATTENTION TO PARA 26 OF THE SAID ORDER OF THE TRIB UNAL (SUPRA), LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TRIBUNAL HELD THAT IN RESPECT OF THE PAYMENTS BY WAY OF REIMBURSEMENT, THE PROVISIONS OF SECTION 40(A)(IA) DO NOT APPLY FOR FAILURE TO MAKE TDS. THE DECISION WAS TAKEN BY THE TRIBUNAL ACTUALLY I N RESPECT OF ADVERTISEMENT EXPENSES. FURTHER, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN PRINCIPLE THE SIMILAR RATIO APPLIES WIT H EQUAL FORCE TO THE SALARY OF MR. NERULKAR , WHICH IS REIMBURSED BY THE ASSESSEE TO THE NPIL. CONSIDERING THE SIGNIFICA NCE OF THE AND ALSO FOR THE SAKE OF COMPLETENESS OF THIS ORDER, THE SAID PARA 26 OF THE TRIBUNAL (SUPRA) IS EXTRACTED AS UNDER: 26. BEFORE US, THE LD DR SUPPORTED THE ASSESSMENT ORDER, THE LD COUNSEL FOR THE ASSESSEE REITERATED THE SAME FACTS WHAT HAS BEE N STATED BEFORE THE LOWER AUTHORITIES. IT IS AN UNDISPUTED FACT THAT THE ADVERTISEMENT EXPENSES HAVE BEEN INCURRED BY THE NPIL. IT IS ALSO AN UNDISPUTED FACT THAT THE ASSESSEE HAS SIMPLY CREDITED IT TO THE ACCOUNT OF NPIL AS REIMBURSEMENT OF THE EXPENDIT URE. IT IS FURTHER FOUND THAT NPIL HAS MADE TDS ON THE ADVERTISEMENT EXPENSES. ALL THAT BEING THE FACTS OF THE MATTER, WE DO NOT FIND 3 ANY REASON TO INTERFERE WITH THE FINDING OF THE LD CIT (A). THE GROUND NO.3 IS ACCORDINGLY DISMISSED. 5. CONSIDERING T HE ABOVE, WE ARE OF THE OPINION THERE IS NO DISPUTE ON THE FACT THAT THE PAYMENTS IN QUESTION ARE THE REIMBURSEMENTS. IN THAT CASE, WE ARE OF THE OPINION CONSIDERING THE ABOVE SETTLED LEGAL POSITION IN LAW, THIS IS NOT A FIT CASE FOR INVOKING THE PROVISIO NS OF SECTION 40(A)(IA) OF THE ACT. AS SUCH, THE REIMBURSEMENTS DID NOT ATTRACT TDS PROVISIONS AS THEY DO NOT HAVE ANY PROFIT ELEMENT. ACCORDINGLY, GROUND RAISED BY THE REVENUE IS DISMISSED. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNC ED IN THE OPEN COURT ON 1 2 T H AUGUST, 2015. S D / - S D / - (AMIT SHUKLA) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 2 .8 .2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI