ACIT, CHENNAI V. Tamilnadu Medical Services Corporation Limited, CHENNAI

ITA 1556/CHNY/2015

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96054 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 06-07-2015
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: K MEENATCHI SUNDARAM
• Keywords: Business expenditure
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , ! , ' #$ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ] ./ I.T.A.NOS.1553 TO 1558/MDS/2015 / ASSESSMENT YEARS : 2006-07 TO 2011-12 THE ASSTT. COMMISSIONER OF INCOME-TAX CORPORATE CIRCLE 3(1) CHENNAI VS. M/S TAMILNADU ME DICAL SERVICES CORPORATION LTD NO.417, PANTHEON ROAD EGMORE, CHENNAI 600009 [PAN AAACT 3400 E] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI P. RADHAKRISHNAN, JCIT /RESPONDENT BY : SHRI K. MEENATCHI SUNDARAM, CA / DATE OF HEARING : 25 - 08 - 2015 / DATE OF PRONOUNCEMENT : 04 - 09 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER ALL THESE APPEALS OF THE REVENUE ARE DIRECTED AGA INST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME-TA X (APPEALS)-11, CHENNAI, FOR ASSESSMENT YEARS 2006-07 TO 2011-12. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN ALL THE APPEALS, WE HEARD THEM TOGETHER AND DISPOSE OF THE SAME BY THIS COMMON ORD ER. ITA NOS. 1553 TO 1558/15 :- 2 -: 2. SHRI P. RADHAKRISHNAN, LD. DEPARTMENTAL REPRESENTAT IVE SUBMITTED THAT THE ASSESSEE IS A WHOLLY OWNED COMPA NY OF GOVERNMENT OF TAMILNADU. THE ASSESSEE-COMPANY WAS PROCURING AND DISTRIBUTING DRUGS AND MEDICINES TO GOVERNMENT HOSP ITALS ON BEHALF OF GOVERNMENT OF TAMILNADU. THE ASSESSEE CLAIMED DED UCTION DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN RESPECT OF DAMAGED DRUGS, UNUSABLE DRUGS AND DRUGS CONSUMED FOR QUALITY CONTR OL. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE WAS MAINT AINING SEPARATE SYSTEM OF ACCOUNTING WHICH IS OUTSIDE BOOKS OF ACCO UNT IN RESPECT OF DAMAGED DRUGS AND UNUSABLE DRUGS AND DRUGS CONSUMED FOR QUALITY CONTROL. REFERRING TO THE ASSESSMENT ORDER, THE LD . DR POINTED OUT THAT THE ASSESSEE WAS NOT REQUIRED TO ACT AS A DRUG/MEDI CINE TESTING AGENCY. THE EXPENDITURE ON DAMAGED DRUGS, ACCORDIN G TO THE LD. DR, IS NOT INCIDENTAL TO ITS BUSINESS. THE LD. DR POI NTED OUT THAT NO MATERIAL WAS PRODUCED BEFORE THE LOWER AUTHORITIES TO SUPPORT THE CLAIM OF DAMAGED/UNUSABLE DRUGS. THE LD. DR FURTHE R POINTED OUT THAT WHILE DESTROYING THE DAMAGED DRUGS, THE ASSESSEE H AS NOT FOLLOWED THE PROCEDURE PRESCRIBED BY FDA. IN THE ABSENCE OF ANY MATERIAL ON RECORD TO SUPPORT THE CLAIM OF THE ASSESSEE WIT H REGARD TO DAMAGED DRUGS, UNUSABLE DRUGS AND DRUGS CONSUMED FOR QUALIT Y CONTROL, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSE SSEE. HOWEVER, ON APPEAL BY THE ASSESSEE, THE CIT(A) FOUND THAT THE ACCOUNTS OF THE ITA NOS. 1553 TO 1558/15 :- 3 -: ASSESSEE WAS SUBJECTED TO AUDIT BY COMPTROLLER & AU DITOR GENERAL OF INDIA U/S 619(3)(B) OF THE COMPANIES ACT, 1956 AND THEY HAVE NOT MADE ANY COMMENTS. ON THE BASIS OF THE CERTIFICATE ISSUED BY THE C&AG, THE CIT(A) DELETED THE ADDITION WITHOUT MAKIN G ANY INVESTIGATION. THE LD. DR FURTHER SUBMITTED THAT T HE CERTIFICATE SAID TO BE ISSUED BY THE C&AG WAS NOT AVAILABLE BEFORE THE ASSESSING OFFICER. ACCORDING TO THE LD. DR, IN THE ABSENCE OF ANY MATE RIAL AVAILABLE ON RECORD, THE CLAIM OF THE ASSESSEE WITH REGARD TO DAMAGED DRUGS, UNUSABLE DRUGS AND DRUGS CONSUMED FOR QUALITY CONTR OL, CANNOT BE ALLOWED AS DEDUCTION. 3. THE LD. DR FURTHER POINTED OUT THAT FOR ASSESSMENT YEAR 2010-11, THE REVENUE HAS RAISED ONE MORE GROUND WIT H REGARD TO EXPENDITURE INCURRED BY THE ASSESSEE TO THE EXTENT OF ` 6,45,741/- TOWARDS CUSTOMER CARE EXPENSES FOR SUPPLY OF BLOOD PRESSURE CHECKING APPARATUS TO THE MEMBERS OF THE STATE LEGISLATIVE A SSEMBLY. ACCORDING TO THE LD. DR, THE COST OF BLOOD PRESSURE CHECKING APPARATUS WHICH WERE SUPPLIED TO THE MEMBERS OF THE STATE LEG ISLATIVE ASSEMBLY CANNOT BE TREATED AS A BUSINESS EXPENDITURE. REFER RING TO THE ASSESSMENT ORDER, THE LD. DR POINTED OUT THAT THE ASSESSEES BUSINESS IS PROCURING AND SUPPLYING OF DRUGS, MEDICINES ETC. TO GOVERNMENT HOSPITALS IN THE STATE OF TAMILNADU. IN FACT, THE ASSESSEE WAS ACTING AS AN AGENT FOR GOVERNMENT OF TAMILNADU FOR SUPPLYI NG OF MEDICINES. ITA NOS. 1553 TO 1558/15 :- 4 -: THEREFORE, SUPPLY OF BLOOD PRESSURE CHECKING APPARA TUS TO THE MEMBERS OF THE STATE LEGISLATIVE ASSEMBLY CANNOT BE TREATED AS A BUSINESS EXPENDITURE OF THE ASSESSEE-COMPANY. ACCO RDING TO THE LD. DR, THIS EXPENDITURE IS REQUIRED TO BE MADE BY THE GOVERNMENT OF TAMILNADU AND NOT BY THE ASSESSEE-COMPANY. 4. ON THE CONTRARY, SHRI K. MEENATCHI SUNDARAM, LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS CLAIMING THE COST OF DAMAGED DRUGS, UNUSABLE DRUGS, AND THE DRUGS CONSUMED FOR QUALITY CONTROL AS EXPENDITURE REGULAR LY FROM ASSESSMENT YEAR 2004-05. IN ASSESSMENT YEAR 2004-05, THE ASSE SSING OFFICER HIMSELF ALLOWED THE CLAIM OF THE ASSESSEE BY AN OR DER PASSED U/S 143(3) OF THE ACT. SIMILARLY, FOR ASSESSMENT YEAR 2005-06, EVEN THOUGH THE ASSESSING OFFICER DISALLOWED THE CLAIM O F THE ASSESSEE, ON APPEAL BY THE ASSESSEE, THE CIT(A) ALLOWED THE CLA IM OF THE ASSESSEE AND THE DEPARTMENT HAS NOT FILED ANY APPEAL AGAINST THE ORDER OF THE CIT(A). FOR THE ASSESSMENT YEAR 2006-07, SIMILAR D ISALLOWANCE WAS MADE BY THE ASSESSING OFFICER AND ON APPEAL, THE CI T(A) ALLOWED THE CLAIM OF THE ASSESSEE. THEREFORE, ACCORDING TO TH E LD. REPRESENTATIVE, THE COST OF DAMAGED DRUGS, UNUSABLE DRUGS AND DRUGS USED FOR QUALITY CONTROL HAS TO BE TREATED AS EXPENDITURE WHILE COMP UTING THE TOTAL INCOME. ON A QUERY FROM THE BENCH WHAT IS THE NATU RE OF UNUSABLE DRUGS, THE LD. REPRESENTATIVE CLARIFIED THAT SURGIC AL MATERIAL, NAPKINS ITA NOS. 1553 TO 1558/15 :- 5 -: ETC. COULD NOT BE USED AFTER SOMETIME, THEREFORE, T HESE WERE TREATED AS UNUSABLE DRUGS. HOWEVER, THE ASSESSEE WAS CLAI MING LIQUIDITY DAMAGES FROM THE RESPECTIVE COMPANIES. AS AND WHEN THE ASSESSEE RECEIVED LIQUIDITY DAMAGES FOR DAMAGED DRUGS AND UN USABLE DRUGS, THE SAME WAS TAKEN AS INCOME IN THE PROFIT & LOSS ACCOU NT. 5. REFERRING TO THE CONTENTION OF THE LD. DR THAT THE ASSESSEE IS NOT REQUIRED TO ACT AS A DRUG/MEDICINE TESTING AGEN CY, THE LD. REPRESENTATIVE POINTED OUT THAT THE ASSESSEE IS A STATE GOVERNMENT COMPANY. THE ACTIVITY OF THE ASSESSEE WAS PROCURI NG AND SUPPLYING DRUGS AND TO PROVIDE DIAGNOSTIC FACILITIES TO GOVER NMENT HOSPITALS IN THE STATE OF TAMILNADU. BESIDES, THE ASSESSEE W AS ALSO MANAGING CT AND MRI SCANNING. REFERRING TO THE DIRECTORS R EPORT, THE LD. REPRESENTATIVE POINTED OUT THAT THE ASSESSEE-COMPAN Y HAS ESTABLISHED A QUALITY CONTROL SECTION TO ENSURE QUALITY OF DRUG S PROCURED. IN FACT, SAMPLES ARE DRAWN FROM EACH BATCH OF SUPPLY AND TES TED IN EMPANELLED ANALYTICAL LABORATORIES IN ORDER TO ENSU RE THE QUALITY OF DRUGS. ACCORDING TO THE LD. DR, ONLY AFTER CHECKIN G THE QUALITY OF THE DRUGS PROCURED, THE SAME WILL BE SUPPLIES TO THE GO VERNMENT HOSPITALS. IN VIEW OF THE ABOVE, IT MAY NOT BE COR RECT ON THE PART OF THE ASSESSING OFFICER TO SAY THAT THE ASSESSEE WAS NOT REQUIRED TO ACT AS A TESTING AGENCY. THEREFORE, THE CIT(A) HAS RIG HTLY ALLOWED THE CLAIM OF THE ASSESSEE ON THE BASIS OF THE CERTIFIC ATE ISSUED BY C&AG. ITA NOS. 1553 TO 1558/15 :- 6 -: 6. REFERRING TO THE COST OF BLOOD PRESSURE CHECKING AP PARATUS SUPPLIED TO THE MEMBERS OF THE STATE LEGISLATIVE AS SEMBLY, THE LD. REPRESENTATIVE POINTED OUT THAT THE ASSESSEE-COMPAN Y IS DISTRIBUTING QUALITY DRUGS AND PROVIDING HIGH-TECH DIAGNOSTIC FA CILITIES AT A VERY NOMINAL FEE, MAKING AWARENESS IN THE PUBLIC ABOUT T HE NEW HEALTH SCHEMES LAUNCHED BY THE HEALTH DEPARTMENT OF GOVERN MENT OF TAMILNADU. THE ASSESSEE HAS TO INCUR MINIMAL EXPEN DITURE IN MARKETING ITS PRODUCTS. IN THE COURSE OF MARKETING ITS PRODUCTS, THE ASSESSEE HAS SUPPLIED BLOOD PRESSURE CHECKING APPAR ATUS TO THE MEMBERS OF THE STATE LEGISLATIVE ASSEMBLY. ON A QU ERY FROM THE BENCH, THE LD. REPRESENTATIVE VERY FAIRLY CLARIFIED THAT THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER AFTER PLACING RELIANCE ON THE DECISION OF THIS TRIBUNAL IN ASSES SEES OWN CASE FOR ASSESSMENT YEAR 1999-2000 IN I.T.A.NO. 1716/MDS/200 8 DATED 29.10.2010. THE LD. REPRESENTATIVE HAS FILED A COP Y OF THE ABOVE ORDER OF THIS TRIBUNAL AND CLARIFIED THAT THIS ISSU E OF SUPPLY OF BLOOD PRESSURE CHECKING APPARATUS TO THE MEMBERS OF THE STATE LEGISLATIVE ASSEMBLY WAS NOT CONSIDERED BY THIS TRIBUNAL. HOWE VER, THE LD. REPRESENTATIVE CLARIFIED THAT IT IS A MARKETING EXP ENDITURE THEREFORE, IT HAS TO BE ALLOWED WHILE COMPUTING THE TOTAL INCOME. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADM ITTEDLY, THE ITA NOS. 1553 TO 1558/15 :- 7 -: ASSESSEE-COMPANY IS WHOLLY OWNED BY THE GOVERNMENT OF TAMILNADU. THE COMPANY WAS FORMED FOR PROCURING AND SUPPLYING DRUGS, PROVIDING DIAGNOSTIC FACILITIES, PROCURING AND SUPPLYING OF H IGH END MEDICAL EQUIPMENTS TO GOVERNMENT HOSPITALS, MANAGEMENT OF C T AND MRI SCANS ETC. DURING THE COURSE OF ITS ACTIVITY, THE ASSESSEE HAS PROCURED VARIOUS DRUGS, EQUIPMENTS, SURGICAL MATERIALS, NAPK INS ETC. FOR SUPPLYING TO THE GOVERNMENT HOSPITALS IN THE STATE OF TAMILNADU. IN THE COURSE OF ITS BUSINESS ACTIVITY, THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT SOME OF THE DRUGS WERE DAMAG ED AND SOME OF THEM BECAME UNUSABLE. THE ASSESSEE HAS ALSO CONSU MED CERTAIN DRUGS FOR QUALITY CHECK. THE ASSESSING OFFICER DIS ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE SALE PRICE OF THE DRUGS ARE NOT BROUGHT IN THE BOOKS OF ACCOUNT. THE ASSESSING OFFI CER FOUND THAT THE ASSESSEE-COMPANY WAS ACTING AS AN AGENT FOR DISTRIB UTION OF MEDICINES TO GOVERNMENT HOSPITALS, THE ASSESSEE WAS NOT REQU IRED TO ACT AS A DRUG/MEDICINE TESTING AGENCY, THEREFORE, THE EXPEND ITURE CLAIMED BY THE ASSESSEE ON DAMAGED DRUGS IS NOT INCIDENTAL TO THE BUSINESS OF THE ASSESSEE. THE ASSESSING OFFICER ALSO FOUND TH AT THE ASSESSEE HAS NOT FILED ANY EVIDENCE WITH REGARD TO DAMAGED DRUGS AND UNUSABLE DRUGS. THE SO CALLED DAMAGED DRUGS WERE NOT DESTRO YED BY FOLLOWING FDA PROCEDURE. ADMITTEDLY, THE ASSESSEE WAS ENTRU STED BY THE GOVERNMENT OF TAMILNADU TO PROCURE MEDICINES, SURGI CAL MATERIALS, ITA NOS. 1553 TO 1558/15 :- 8 -: NAPKINS, MEDICAL EQUIPMENTS ETC. THE ASSESSEE BEI NG A GOVERNMENT COMPANY, IS EXPECTED TO ENSURE SUPPLY OF QUALITY DR UGS TO THE GOVERNMENT HOSPITALS. THEREFORE, IT MAY NOT BE COR RECT TO SAY THAT THE ASSESSEE WAS NOT REQUIRED TO ACT AS A DRUG/MED ICINE TESTING AGENCY. THE ASSESSEE BEING A GOVERNMENT COMPANY, PROCURING MEDICINES FOR THE ENTIRE GOVERNMENT HOSPITALS IN TH E STATE OF TAMILNADU IS DUTY BOUND TO MAINTAIN QUALITY CONTROL , THEREFORE, IT HAS TO TEST THE QUALITY OF THE MEDICINES PURCHASED BEFO RE SUPPLYING THE SAME TO THE GOVERNMENT HOSPITALS. IN FACT, IN THE DIRECTORS REPORT, IT IS CLEARLY STATED THAT THE ASSESSEE-CORPORATION HA S ESTABLISHED A QUALITY CONTROL SECTION TO ENSURE QUALITY OF THE DR UGS PROCURED. IT IS ALSO STATED THAT THE SAMPLES DRAWN FROM VARIOUS BAT CHES ARE TESTED IN THE EMPANELLED ANALYTICAL LABORATORIES, WHICH WERE SELECTED THROUGH OPEN TENDER SYSTEM, TO ENSURE QUALITY OF DRUGS. IN VIEW OF THE ABOVE EVIDENCE PUT FORTH BY THE ASSESSEE-COMPANY, THE ASS ESSING OFFICER IS NOT JUSTIFIED IN MAKING OBSERVATION THAT THE ASSES SEE WAS NOT REQUIRED TO ACT AS A DRUG/MEDICINE TESTING AGENCY. THE ASSE SSING OFFICER HAS TO VERIFY THE EVIDENCE PRODUCED BY THE ASSESSEE AND F IND OUT WHETHER THE ASSESSEE HAS ACTED AS A TESTING AGENCY OR NOT. IT IS NOT FOR THE ASSESSING OFFICER TO COMMENT THAT THE ASSESSEE WAS NOT REQUIRED TO ACT AS A DRUG/MEDICINE TESTING AGENCY. SINCE THE M ATERIAL AVAILABLE ON RECORD CLEARLY SUGGEST THAT THE ASSESSEE HAS TESTE D THE QUALITY OF ITA NOS. 1553 TO 1558/15 :- 9 -: DRUGS PROCURED, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS THE D RUGS CONSUMED FOR QUALITY CONTROL HAS TO BE ALLOWED AS EXPENDITURE. 8. NOW COMING TO THE DAMAGED DRUGS AND UNUSABLE DRUGS, IN THE COURSE OF HANDLING OF DRUGS, IT IS NATURAL THAT SOME OF THE DRUGS MAY BE DAMAGED AND SOME OF THE MATERIALS LIKE SURGI CAL MATERIAL AND NAPKINS CANNOT BE USED AFTER EXPIRY OF THE PRESCRIB ED PERIOD. THESE ARE THE ITEMS THE COST OF WHICH HAS TO BE DEDUCTED WHILE COMPUTING THE TOTAL INCOME. THE ASSESSEE ALSO CLAIMS THAT L IQUIDATED DAMAGES RECEIVED FROM RESPECTIVE COMPANIES FROM WHOM THE DR UGS WERE PROCURED WAS CREDITED IN THE PROFIT & LOSS ACCOUNT AS INCOME. THEREFORE, THE COST OF THE DAMAGED DRUGS AND UNUSAB LE DRUGS ALSO TO BE ALLOWED AS EXPENDITURE WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE. 9. THE OTHER OBJECTION OF THE DEPARTMENT IS THAT WHIL E DESTROYING THE DAMAGED DRUGS, THE PROCEDURE LAID DO WN BY FDA WAS NOT FOLLOWED. THE INCOME-TAX ACT, 1961 DOES NOT RE QUIRE THE ASSESSEE TO DESTROY THE DAMAGED DRUGS AS PER THE FD A PROCEDURE. WHAT IS TO BE SEEN IS WHETHER THE COST OF THE DAMAG ED DRUGS AND UNUSABLE DRUGS WAS TO BE ALLOWED AS DEDUCTION OR NO T. SUPPOSE, INSTEAD OF DESTROYING THE DRUGS, IF THE ASSESSEE KEEPS THE SAME IN ITA NOS. 1553 TO 1558/15 :- 10 -: THEIR GODOWN STILL THE COST OF SUCH DRUGS HAS TO BE ALLOWED AS DEDUCTION SINCE THE DAMAGED GOODS AND UNUSABLE GOOD S CANNOT BE USED FOR SUPPLYING TO THE GOVERNMENT HOSPITALS. TH EREFORE, IRRESPECTIVE OF THE PROCEDURE LAID DOWN BY FDA FOR DESTROYING THE DAMAGED DRUGS, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE COST OF THE DAMAGED DRUGS AND UNUSABLE DRUGS HAS TO BE ALLOWED AS DEDUCTION. 10. WE HAVE ALSO GONE THROUGH THE ORDER OF THE CIT(A). THE CIT(A) HAS ALLOWED THE CLAIM OF THE ASSESSEE ON TH E BASIS OF THE CERTIFICATE SAID TO BE ISSUED BY THE C&AG U/S 619( 3)(B) OF THE COMPANIES ACT, 1956. IT IS NOT IN DISPUTE THAT THI S CERTIFICATE WAS NOT AVAILABLE BEFORE THE ASSESSING OFFICER. A PERUSAL OF THE CIT(A)S ORDER SHOWS THAT THE C&AG HAS STATED NO COMMENT. THE C IT(A) WITHOUT ANY FURTHER DISCUSSION, BY PLACING RELIANCE ON THE CERTIFICATE SAID TO BE ISSUED BY THE C&AG ALLOWED THE CLAIM OF THE ASSESS EE. THE AUDIT CONDUCTED BY THE C&AG U/S 619(3)(B) OF THE COMPANI ES ACT, 1956, IS FOR A DIFFERENT PURPOSE I.E TO ENSURE THE GOVERNMEN T COMPANY TO MAINTAIN THE BOOKS OF ACCOUNT AS REQUIRED UNDER THE COMPANIES ACT. THE INCOME-TAX ACT, 1961 IS A SPECIAL ENACTMENT FOR THE PURPOSE OF COMPUTING THE TOTAL INCOME AND LEVYING TAX THEREOF AND COLLECTING TAXES. THEREFORE, THE AUTHORITIES ESTABLISHED UNDE R THE INCOME-TAX ACT, 1961 HAS TO EXAMINE THE MATERIAL AVAILABLE ON RECORD FOR THE ITA NOS. 1553 TO 1558/15 :- 11 -: PURPOSE OF COMPUTING THE TAXABLE INCOME. THE CERTI FICATE SAID TO BE ISSUED BY C&AG MAY BE ONE OF THE FACTORS THAT MAY B E RELEVANT FOR CONSIDERATION WHILE COMPUTING THE TOTAL TAXABLE INC OME. HOWEVER, THE CERTIFICATE ISSUED BY THE C&AG WOULD NOT CONCLUSIVE LY PROVE THE TAXABLE INCOME OF THE ASSESSEE. THEREFORE, THE EX PENDITURE CLAIMED BY THE ASSESSEE HAS TO BE INDEPENDENTLY EXAMINED B Y THE ASSESSING OFFICER IN THE LIGHT OF THE MATERIAL THAT MAY BE FI LED BY THE ASSESSEE. WHILE EXAMINING THE MATERIAL FILED BY THE ASSESSEE , THE ASSESSING OFFICER HAS ALSO TO TAKE INTO CONSIDERATION THE CER TIFICATE ISSUED BY THE C&AG. IN THE CASE BEFORE US, THE CIT(A) SIMPLY DEL ETED THE ADDITION WITHOUT EXAMINING THE MATERIAL AVAILABLE ON RECORD. EVEN THOUGH THE CLAIM OF THE ASSESSEE TOWARDS THE DAMAGED DRUGS, U NUSABLE DRUGS, DRUGS CONSUMED FOR QUALITY CONTROL IS ALLOWABLE WHI LE COMPUTING THE TOTAL INCOME, THE ASSESSEE HAS TO PRODUCE NECESSA RY EVIDENCE TO SUPPORT THE CLAIM BEFORE THE ASSESSING OFFICER. TH E ASSESSEE HAS NOT PRODUCED ANY EVIDENCE TO SUPPORT THE CLAIM EITHER B EFORE THE ASSESSING OFFICER OR BEFORE THE CIT(A). MOREOVER, NO EVIDENCE IS AVAILABLE BEFORE THIS TRIBUNAL OTHER THAN THE CERTI FICATE ISSUED BY THE C&AG. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDER ED OPINION THAT THE ASSESSING OFFICER HAS TO EXAMINE THE MATTER AFRESH AFTER CONSIDERING THE NECESSARY MATERIAL THAT MAY BE FILED BY THE AS SESSEE TO SUPPORT THE CLAIM OF DAMAGED DRUGS, UNUSABLE DRUGS AND DRUG S CONSUMED FOR ITA NOS. 1553 TO 1558/15 :- 12 -: QUALITY CONTROL. IN OTHER WORDS, THE ASSESSEE HAS TO PRODUCE NECESSARY DETAILS WITH REGARD TO DAMAGED DRUGS, UNU SABLE DRUGS AND DRUGS CONSUMED FOR QUALITY CONTROL, LIQUIDATED DAMA GES, IF ANY, CLAIMED FROM THE RESPECTIVE COMPANIES FOR THE DAMAG ED AND UNUSABLE DRUGS. IN VIEW OF THE ABOVE DISCUSSION, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ENTIRE CLAIM OF D AMAGED DRUGS, UNUSABLE DRUGS AND DRUGS CONSUMED FOR QUALITY CONTR OL IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASS ESSING OFFICER SHALL RE-EXAMINE THE MATTE AFRESH IN THE LIGHT OF THE MAT ERIAL/DETAILS THAT MAY BE FILED BY THE ASSESSEE WITH REGARD TO DAMAGE D DRUGS, UNUSABLE DRUGS AND DRUGS CONSUMED FOR QUALITY CONTROL AND TH EREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING A REAS ONABLE OPPORTUNITY TO THE ASSESSEE. 11. NOW COMING TO THE CLAIM OF THE ASSESSEE TO THE EXT ENT OF ` 6,45,741/- BEING THE COST OF BLOOD PRESSURE CHECKIN G APPARATUS SAID TO BE SUPPLIED TO THE MEMBERS OF THE STATE LEGISLAT IVE ASSEMBLY, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE COST OF BLOOD PRESSURE CHECKING APPARATUS CANNOT BE CONSIDERED TO BE A MAR KETING EXPENSE. THE ASSESSEE-COMPANY WAS EXPECTED TO PROCURE THE DR UGS, MEDICINES, EQUIPMENTS ETC. AND SUPPLY THE SAME TO THE GOVERNME NT HOSPITALS. SUPPLY OF ANY MACHINERY OR EQUIPMENT INCLUDING BLO OD PRESSURE CHECKING APPARATUS TO THE MEMBERS OF THE STATE LEGI SLATIVE ASSEMBLY ITA NOS. 1553 TO 1558/15 :- 13 -: OR TO ANY OF THE OFFICERS OF THE GOVERNMENT, IN THE IR INDIVIDUAL CAPACITY CANNOT BE CONSIDERED AS MARKETING EXPENSES, THEREFO RE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE EXPENDITURE O F ` 6,45,741/- CANNOT BE ALLOWED AS CUSTOMER CARE EXPENSES FOR THE ASSESSMENT YEAR 2010-11. ACCORDINGLY, THE ORDER OF THE CIT(A) ON T HIS ISSUE FOR ASSESSMENT YEAR 2010-11 IS SET ASIDE AND THAT OF TH E ASSESSING OFFICER IS RESTORED. 12. IN THE RESULT, THE APPEALS OF THE REVENUE IN I.T.A .NOS.1553, 1554, 1555, 1556 AND 1558/MDS/2015 ARE ALLOWED FOR STATISTICAL PURPOSES WHEREAS I.T.A.NO.1557/MDS/2015 FOR ASSESSM ENT YEAR 2010- 11 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH OF SEPTEMBER, 2015, AT CHENNAI. SD/- SD/- ( ! ) (CHANDRA POOJARI) ' / ACCOUNTANT MEMBER ( . . . ! ) (N.R.S. GANESAN) / JUDICIAL MEMBER '# / CHENNAI $% / DATED: 4 TH SEPTEMBER, 2015 RD %&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ),-' . / DR 3. ' +'/! / CIT(A) 6. -0'1 / GF