M/s. Apex Laboratories Ltd., CHENNAI V. DCIT, CHENNAI

ITA 2046/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4907 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 06-12-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B SRINIVAS
• Assessee Lawyers: V S MANOJ
• Keywords: Gift; Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B CHENNAI BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER I.T.A.NO. 2046/MDS/2010 ASSESSMENT YEAR : 2007-08 M/S. APEX LABORATORIES LTD., (NOW APEX LABORATOREIS PVT. LTD.), NO.38, CP RAMASWAMY ROAD, ALWARPET, CHENNAI-600 018. PAN AAACA 5174 G VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, LTU, NO.1775, JAWAHARLAL NEHRU INNER RING ROAD, ANNA NAGAR (WESTERN EXTENSION) CHENNAI 600 101. (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI V.S.MANOJ RESPONDENT BY : SHRI B. SRINIVAS O R D E R PER DR. O.K. NARAYANAN, VICE-PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2007-08. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), LTU, CHENNAI DATED 30.9.2010 AND ARISES OUT OF THE ORDER PASSED UNDER SEC.115WE(3) OF THE INCOME-TAX ACT, 1961, LEV YING FRINGE BENEFIT TAX (FBT) ON THE ASSESSEE-COMPANY. ITA 2046/10 :- 2 -: 2. THE ASSESSEE COMPANY BEING A MANUFACTURER OF PHARMACEUTICAL PRODUCTS HAD DISTRIBUTED CERTAIN COM PLIMENTS TO THE DOCTORS. THE COMPLIMENTS WERE IN THE NATURE OF WRITING PADS, DOCTORS CALL CARDS, RAIN COVERS, PAPER WEIGHT, COMP LIMENTARY BAGS, TRAYS ETC. THE ASSESSEE RETURNED THE TAX LI ABILITY ON THESE ITEMS TREATING THE SAME AS PART OF ITS ADVERTISEMEN T EXPENSES. BUT THE ASSESSING OFFICER HAS TREATED THESE EXPENSE S AS IN THE NATURE OF GIFTS WITH NO DIRECT CONNECTION WITH THE BUSINESS CARRIED ON BY THE ASSESSEE AND LEVIED TAX AT 50% OF THE SAI D EXPENDITURE. THIS ADJUSTMENT HAS BEEN CONFIRMED BY THE COMMISSIO NER OF INCOME-TAX (APPEALS). THAT IS WHY, THE ASSESSEE HA S COME BEFORE US IN SECOND APPEAL. 3. WE HEARD BOTH SIDES IN DETAIL. THE ITEMS DISTRI BUTED TO THE DOCTORS ARE IN FACT, COMPLIMENTS FOR THEIR PERSONAL USE AND NOTHING TO DO WITH THE ADVERTISEMENT ACTIVITIES OF THE ASSESSEE- COMPANY TO MARKET ITS PRODUCTS. IN THAT WAY A DOCT OR MAY BE SUPPORTING THE SALE OF A PARTICULAR PRODUCT BUT THE CLINIC CANNOT BE CONSIDERED AS A MARKETING CENTRE SO AS TO HOLD THAT THE COST OF THE COMPLIMENTS DELIVERED AT SUCH A CLINIC COULD BE IN THE NATURE OF ADVERTISEMENT EXPENSES. THE EXPENSES ARE REALLY IN THE NATURE ITA 2046/10 :- 3 -: OF GIFTS; THAT IS SOMETHING SPECIAL THAN THE ORDINA RY BUSINESS EXPENDITURE. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS PASSED BY THE LOWER AUTHORITIES. 4. IN RESULT, THIS APPEAL FILED BY THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 15 TH DAY OF JUNE, 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) (DR.O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI, DATED THE 15 TH JUNE, 2011 MPO* COPY TO : APPELLANT/RESPONDENT/CIT/CIT(A)/DR