GALDERMA INDIA P.LTD, MUMBAI V. DCIT 9(1)(1), MUMBAI

ITA 1139/MUM/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7066 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 04-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Assessee Lawyers: ROMIT RAKA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI C.N. PRASAD , JM ITA NO. 1139 / MUM/20 16 ( ASSESSMENT YEAR : 2012 - 13 ) M/S. GALDERMA INDIA PVT. LTD., LOTUS CORPORATE PARK, D WING, UNIT 801 & 802 GRAHAM FIRTH STEEL COMPOUND WESTERN EXPRESS HIGHWAY GOREGAON EAST MUMBAI 400 063 VS. DCIT 9(1)(1) MUMBAI PAN/GIR NO. AAACG8660M APPELLANT ) .. RESPONDENT ) ITA NO. 1524 /MUM/20 16 ( ASSESSMENT YEAR : 2012 - 13 ) ACIT 9(3)(2) MUMBAI VS. M/S. GALDER MA INDIA PVT. LTD., LOTUS CORPORATE PARK, D WING, UNIT 801 & 802 GRAHAM FIRTH STEEL COMPOUND WESTERN EXPRESS HIGHWAY GOREGAON EAST MUMBAI 400 063 PAN/GIR NO. AAACG8660M APPELLANT ) .. RESPONDENT ) ASSESSEE BY MS. MANSHI PADHIAR & MR. ROMIT RAKA REVENUE BY SHRI V. VIDHYADHAR DATE OF HEARING 31 / 05 /201 8 DATE OF PRONOUNCEMENT 31 / 05 /201 8 ITA NO. 1 139/MUM/2016 M/S. GALDERMA INDIA PVT. LTD., 2 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE CROSS APPEALS FILED BY ASSESSEE AND REVENUE AGAINST THE ORDER OF CIT(A) - 16, MUMBAI DATED 28/12/2015 FOR THE A.Y.2012 - 13 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. GRIEVANCE OF ASSESSEE AND REVENUE RELATES TO DISALLOWANCE OF EXPENDITURE INCURRED ON SALES PROMOTION. 3. AT THE OUTSET, LEARNED AR PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y.2011 - 12 DATED 02/04/2018, WHEREIN SIMILAR ADDITION MADE BY THE AO WA S DELETED BY THE TRIBUNAL IN ENTIRETY. 4. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECORD WE FOUND THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY. IT IS ENGAGED IN THE BUYING AND DISTRIBU TION OF PHARMACEUTICALS. THE ASSESSEE E - FILED ITS RETURN OF INCOME ON 29/11/2012 DECLARING TOTAL INCOME OF RS.11,93,31,790 / - . THE LEARNED DY. COMMISSIONER OF INCOME TAX HAS DISALLOWED A SUM OF RS.3,28,79,269 / - FROM SALES PROMOTION EXPENSES. 5. BY THE IMPUG NED ORDER, CIT(A) DELETED THE PART OF THE DISALLOWANCE. 6. AGAINST THE ORDER OF CIT(A), BOTH ASSESSEE AND REVENUE ARE IN FURTHER APPEAL BEFORE US. WE HAVE CONSIDERED RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALSO THE ITA NO. 1 139/MUM/2016 M/S. GALDERMA INDIA PVT. LTD., 3 ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE A.Y.2011 - 12, WHEREIN DISALLOWANCE ON SIMILAR EXPENDITURE WAS DELETED BY THE TRIBUNAL AFTER HAVING THE FOLLOWING OBSERVATION: - 9. ON APPRAISAL OF THE ABOVE MENTIONED ORDER, WE NOTICED THAT THE CIT(A) DISALLOWED THE CLAIM OF THE ASSESSEE ON THE BASIS OF THE DECISION OF HON'BLE HIGH COURT OF ALLAHABAD IN THE CASE OF CTT VS. FT. VISHWANATH SHARMA (2009) 316 ITR 0419 AND ON THE BASIS OF THE CIRCULAR NO.5 OF 2012 DATED 01.08.2012 ISSUED BY THE CENTRA L BOARD OF DIRECT TAXES, NEW DELHI VIDE RNO.225/142/20 J20 - ITA - 11. THE CONTENTION OF THE LD. REPRESENTATIVE OF THE ASSESSEE IS THAT THE JUDGMENT PASSED BY THE HON'BLE HIGH COURT ALLAHABAD IN (HE CASE OF CJT VS. FT. VISHWANATH SHARMA (2009) 31TF ITR 0419 IS CONNECTION WITH THE PAYMENT OF COMMISSION WHEREAS THE FACTUAL POSITION IN THE PRESENT CASE IS TOTALLY DIFFERENT WHICH NOWHERE DEALS THE COMMISSION PAID TO THE DOCTOR. IT IS ALSO CONTENDED THAT THE PRESENT ASSESSMENT YEAR IS THE A.Y, OF 2011 - 12 AND THE CIR CULAR NO.5 OF 2012 DATED 01.08.2012 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, NEW DELHI VIDE F.NO.225/142/20120 - JTA - L 1 IS PROSPECTIVE IN NATURE AND IS NOT LIABLE TO BE APPLICABLE IN THE CASE OF THE ASSESSEE RETROSPECTIVELY. IN THIS REGARD, THE LD. REP RESENTATIVE OF THE ASSESSEE HAS PLACED RELIANCE UPON THE LAW SETTLED IN DCIT VS. PHL PHARMA (P.) LTD. (2017) 163 1TD 10 (MUM. TRIB.), MACLEODS PHARMACEUTICAL LTD. VS. ADIT (2016) 161 1TD 291 (MUM. TRIB.), SYEOM FORMULATIONS INDIA LTD. (ITA NO. 6429/M/2012 (MUM. TRIB.) & UCB INDIA PVT. LTD. VS. ITO (ITA NO. 6681 & 5454/M/2013) (MUM. TRIB.) HOWEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMENT HAS REFUTED THE SAID CONTENTION. THE ASSESSEE RAISED THE CLAIM OF SALE PROMOTION EXPENSES WHICH HAS BE EN DECLINED FULLY BY THE ASSESSING OFFICER WHILE PASSING THE ORDER DATED 08.03.2014. HOWEVER, THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE TO THE EXTENT OF RS.97,93,9967 - WHICH WAS BELONGING TO THE PAYMENT MADE TO IADVL NEW YEAR OF RS.31,12,488/ - , IADVL OF RS.27,62,350/ - , STATE IADVL OF RS.14,86,648/ - AND OTHER CONFERENCE OF RS,24,32,510/ - TOTAL TO THE TUNE OF RS.97,93,996/ - . THE CIT(A) WAS OF THE VIEW THAT THESE FEES ARE FOR PARTICIPATION FEES AND INSTALLATION OF STALL WHICH WAS NOT PROHIBITED BY THE ITA NO. 1 139/MUM/2016 M/S. GALDERMA INDIA PVT. LTD., 4 MEDIC AL COUNCIL ACT. SO FAR AS THE REMAINING CLAIM OF THE ASSESSEE IS IN CONNECTION WITH THE EXPENSES OF RS.1,98,47,412/ - IS CONCERNED, THE CLAIM OF THE ASSESSEE IS THAT THE SAID EXPENSES IS NOT REQUIRED TO BE ALLOWED ON THE BASIS OF THE CIRCULAR NO.5 OF 2012 D ATED 01.08.2012 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES, NEW DELHI VIDE F.NO.225/142/20120 - ITA - LLWHICH WAS PROSPECTIVE IN NATURE. IT IS NOT IN DISPUTE THAT THE PRESENT ASSESSMENT YEAR IS FOR THE A.Y. 2011 - 12 CIRCULAR NO. 5 AND OF 2012 DATED 01.08.2012 ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES. NEW DELHI VIDE F.NO.225/142/20120~ITA - L1 AND WAS APPLICABLE PROSPECTIVELY FOR THE A.Y. 2013 - 14 ONWARDS. AS DISCUSSION ABOVE, THE ORDER PASSED BY THE ALLAHABAD HIGH COURT (SUPRA) IS ONLY DEALS WITH THE COMMISSIO N EXPENSES WHEREAS NO SUCH ISSUE IS IN QUESTION IN THE PRESENT CASE. NOW, COMING TO THE APPLICABILITY OF THE CIRCULAR DATED 01.08.2012 IS CONCERNED, WE ARE OF THE VIEW THAT THE SAME IS NOT APPLICABLE RETROSPECTIVELY AND IN THIS REGARD WE ARE ALSO FINDING S UPPORT IN LAW SETTLED IN DCIT VS, PHL PHARMA (P.) LTD. (2017) 163 ITD 10 (MUM. TRIB.), MACLEODS PHARMACEUTICAL LTD. VS. ADIT (2016) 161 ITD 291 (MUM. TRIB.), SYEOM FORMULATIONS INDIA LTD. (ITA NO. 6429/M/2012 (MUM. TRIB.) & UCB INDIA PVT. LTD. VS. ITO (ITA NO. 6681 & 5454/M/2013) (MUM. TRIB.), ACCORDINGLY, WE ARE OF THE VIEW THAT THE EXPENSES ARE ALLOWABLE, THEREFORE, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE 7. THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SA ME AND THE CBDT CIRCULAR NO.5/2012 DATED 01/08/2012 IS PROSPECTIVE IN NATURE, THEREFORE, NOT APPLICABLE FOR THE A.Y.2012 - 13 UNDER CONSIDERATION. WE ALSO FOUND THAT SAME VIEW HAS BEEN TAKEN BY THE CO - ORDINATE BENCH IN THE FOLLOWING DECISIONS, WHEREIN IT WAS HELD THAT CIRCULAR IS PROSPECTIVE IN NATURE. DCIT VS. PHL PHARMA (P.) LTD. (2017) 163 ITD 10 (MUM. TRIB.) SOLVAYPHARMA INDIA LTD. VS. PCIT(2018) 169 1TD 13 (MUM. TRIB.) MACLEODSPHARMACEUTICALSLTD. VS, ADIT (2016) 161 ITD 291 (MUM. TRIB.) SYCOM FORMULATION S INDIA LTD. (ITA NO. 6429/MUM/2012) (MUM. TRIB.) UCB INDIA PVT. LTD. VS.ITO (ITA NO. 6681 & 6454/MUM/2013) (MUM. TRIB.; ITA NO. 1 139/MUM/2016 M/S. GALDERMA INDIA PVT. LTD., 5 SUNFLOWER PHARMACY VS. ITO (ITA NO. 2546/MUM/2015) (AHD. TRIB.) (SMC) 8. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR ARE SAME, RESP ECTFULLY FOLLOWING THE ORDER IN ASSESSEES OWN CASE, VIS - - VIS, OTHER JUDICIAL PRONOUNCEMENTS CITED ABOVE, WE DO NOT FIND ANY MERIT FOR THE DISALLOWANCE SO MADE BY THE AO. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED WHEREAS APPEAL OF THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 / 05 /201 8 SD/ - ( C.N. PRASAD ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 31 / 05 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//