M/s. PROCTER & GAMBLE HOME PRODUCTS LTD., MUMBAI V. ACIT CIR-7(1), MUMBAI

ITA 1323/MUM/2008

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93177 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 02-07-2015
• Assessment Year: 2001-2002
• Appeal Filed On: 22-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Revenue expenditure
• Section: 37(1)

Judgement Text

F IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI A.D. JAIN, JM AND SHRI N.K. BILLAIYA, A M .. , . . , ./ I.T.A. NO. 1323 /MUM/2008 ( / ASSESSMENT YEAR : 2001-02 ./ I.T.A. NO. 5855 /MUM/2008 ( / ASSESSMENT YEAR : 2002-03 PROCTER & GAMBLE HOME PRODUCTS LTD., P&G PLAZA CARDINAL GRACIAS ROAD, CHAKALA, ANDHERI (E), MUMBAI 400 009. / VS. DY. COMMISSIONER OF INCOME TAX 7(1), AAYAKAR BHAVAN, MUMBAI 400 020. ./ PAN : AAACP4643H ( ! / APPELLANT ) .. ( '# ! / RESPONDENT ) A PPELLANT BY SHRI RAVI SAWANA R E SPONDENT BY : SHR I SUNIL KUMAR AGARWAL $ % & ' ( ) / DATE OF HEARING : 02-07-2015 *+,- ' ( ) / DATE OF PRONOUNCEMENT : 08-07-2015 [ . / O R D E R PER A.D. JAIN, J.M . : .. , THESE TWO ARE ASSESSEES APPEALS FOR ASSESSMENT YEA RS 2001-02 & 2002-03 AGAINST THE CONFIRMATION OF PENALTY LEVIED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961. 2. COMMON ISSUES ARE INVOLVED IN BOTH THESE APPEALS . THEREFORE, THESE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY TH IS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. ITA 1323/M/08 & 5855/M/08 2 3. AT THE OUTSET, THE LD. COUNSEL APPEARING ON BEHA LF OF THE ASSESSEE HAS CONTENDED THAT THE ISSUES QUA WHICH THE PENALTY IN QUESTION WERE LEVIED, ARE PRESENTLY THE SUBJECT MATTER OF ADJUDICATION BEFORE THE HONBLE BOMBAY HIGH COURT. 4. THE LD. D.R., ON THE OTHER HAND, STRONGLY RELIED ON THE IMPUGNED ORDERS. 5. THE A.O. MADE ADDITION OF PAYMENT TOWARDS CONFID ENTIALITY AGREEMENT AMOUNTING TO RS. 3 CRORES AND OF PROFESSIONAL FEES OF RS. 9,18,607/-, TOTAL AMOUNTING TO RS. 3,09,18,607/-. IT WAS ON THESE AD DITIONS, THAT THE PENALTY WAS LEVIED. THE HONBLE BOMBAY HIGH COURTS ORDER D ATED 12-3-2013 IN INCOME TAX APPEAL NO. 2038 OF 2011 FOR A.Y. 1997-98 HAS BEEN PLACED BEFORE US, WHEREIN, INTER ALIA, THE FOLLOWING QUESTION STA NDS ADMITTED, TO BE HEARD ON MERITS AS A SUBSTANTIAL QUESTIONS OF LAW:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE SUM OF RS. 3 CRORES BEING THE AMORTIZED PORTIO N OF THE PAYMENT OF RS. 21 CRORE UNDER THE SAFEGUARD CONFIDENTIALITY AG REEMENT IS REVENUE EXPENDITURE? THIS HAS BEEN ORDERED TO BE HEARD ALONG WITH I.T. A PPEAL NO. 2155 OF 2011, WHEREIN, THIS VERY QUESTION WAS ADMITTED TO BE HEAR D AS A SUBSTANTIAL QUESTION OF LAW, FOR A.Y. 1999-00 AND 2000-01, VIDE ORDER DATED 25-2-2013. FOR A.Y. 1998-99 ALSO, VIDE ORDER DATED 27-02-2013, IN I.T. APPEAL NO. 2037 OF 2011, THIS QUESTION WAS ADMITTED AND ORDERED TO BE HEARD ALONG WITH THE APPEAL FOR A.Y. 1999-2000. 6. THE ISSUE AS TO WHETHER THE TRIBUNAL WAS JUSTIF IED IN HOLDING THAT THE LEGAL FEES FOR BRAND PROTECTION AND TRADEMARK INFRI NGEMENT WAS AN ALLOWABLE EXPENDITURE WITHIN THE MEANING OF SECTION 37(1) OF THE ACT, AS RAISED BY THE DEPARTMENT BEFORE THE HONBLE BOMBAY HIGH COURT, IN TER ALIA, IN I.T. APPEAL ITA 1323/M/08 & 5855/M/08 3 NOS. 1321 AND 1322 OF 2012, FOR ASSESSMENT YEARS 20 02-03 AND 2003-04, IS AS FOLLOWS:- WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE LEGAL FE ES OF RS. 9,18,607/- FOR BRAND PROTECTION AND TRADEMARK INFRINGEMENT WAS AN ALLOWABLE EXPENDITURE WITHIN THE MEANING OF SECTION 37(1) OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE WAS NOT THE OWNER OF SUCH BRAND AND/OR TRADEMARK. 7. THIS QUESTION WAS DECLINED TO BE ENTERTAINED BY THE HONBLE BOMBAY HIGH COURT, VIDE ORDER DATED 12-3-2013, THEREBY CON FIRMING THE NON- LEVIABILITY OF PENALTY QUA ON THIS ISSUE. 8. THEREFORE, IN THE ABOVE DISCUSSED FACTS AND CIRC UMSTANCES, WE DO NOT FIND THE LEVY OF PENALTY ON BOTH COUNTS TO BE SUSTA INABLE AND THE SAME IS HEREBY DELETED IN BOTH THE CASES. 9. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESASEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JULY, 2015 . ' *+,- $ /0 1 2 8 TH JULY + ' 3& SD/- SD/- (N.K. BILLAIYA) (A.D. JAIN ) ACCOUNTANT MEMBER /J UDICIAL MEMBER / $ & MUMBAI ; 1 DATED [ %.../ R.K. R.K. R.K. R.K. , SR. PS ITA 1323/M/08 & 5855/M/08 4 ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '# ! / THE RESPONDENT. 3. $ ?( () / THE CIT(A)- 32, MUMBAI 4. $ ?( / CIT- CITY-= 21, MUMBAI 5. B%C 3 '(DE , ) DE- , / $ & / DR, ITAT, MUMBAI G BENCH 6. 3 F G & / GUARD FILE. ! ( / BY ORDER, # B( '( //TRUE COPY// )/(* + ( DY./ASSTT. REGISTRAR) , / $ & / ITAT, MUMBAI