The Dy. CIT, Circle-4(1)(1), Ahmedabad V. Sundyota Numandis Pharmaceuticals Pvt. Ltd., Ahmedabad

ITA 2194/AHD/2015

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5693 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 23-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: T P HEMANI; P B PARMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH (BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 2194/AHD/2015 & C.O. NO. 172/AHD/15 (ASSESSMENT YEAR: 2011-12) DY. COMMISSIONER OF INCOME TAX, CIRCLE-4(1)(1), AHMEDABAD SUNDYOTA NUMANDIS PHARMACEUTICALS PVT. LTD. DYOTA NUMANDIS HOUSE, 705-708, SAFAL PROFITAIR, TOWER-A, 100FT. RING ROAD, PRAHLADNAGAR, AHMEDABAD-380015 V/S V/S SUNDYOTA NUMANDIS PHARMACEUTICALS PVT. LTD. DYOTA NUMANDIS HOUSE, 705-708, SAFAL PROFITAIR, TOWER-A, 100FT. RING ROAD, PRAHLADNAGAR, AHMEDABAD-380015 DY. COMMISSIONER OF INCOME TAX, CIRCLE-4(1)(1), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AABCD 8132C APPELLANT BY : SHRI S. K. DEV, SR. D.R. RESPONDENT BY : SHRI T.P. HEMANI & P.B. PARMAR, AR ( )/ ORDER DATE OF HEARING : 19 -09-201 8 DATE OF PRONOUNCEMENT : 30 -11-2018 ITA NO. 2194 /AHD/2015 & C.O. NO. 17 2/AHD/2015 . A.Y. 2011-12 2 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAIN ST THE DELETION OF ADDITION OF RS. 70,71,329/- MADE ON ACCOUNT OF SALES PROMOTI ON AND C.O. HAS BEEN PREFERRED BY THE ASSESSEE AND HAS TAKEN FOLLOWING G ROUNDS: 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS OF THE CASE IN CONFIRMING DISALLOWANCE OF INTEREST EXPENSES OF RS.3,75,6007- U/S 36(L)(III) OF THE ACT. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FAC TS OF THE CASE IN CONFIRMING DISALLOWANCE IN RESPECT OF SALES PROMOTION EXPENSES TO THE EXTENT OF RS. 16,60,451/- OUT OF TOTAL DISALLOWANCE OF RS.87,31,7 80/-. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF TRADING IN MEDICINES. AND IN SCRUTINY ASSESSMENT , DISALLOWANCE U/S. 36(1)(III) TO THE TUNE OF RS. 3,75,600/- WAS MADE A ND DISALLOWANCE OF SALES PROMOTION EXPENSES OF RS. 87,31,780/- WAS MADE. 3. SO FAR DISALLOWANCE U/S 36(1)(III) IS CONCERNED, AS SESSEE COMPANY HAD ADVANCED A SUM OF RS. 93,88,125/- FOR FACTORY LAND AND GUEST HOUSE. NO SPECIFIC BORROWINGS WERE MADE FOR MAKING SUCH ADVANCES. AND ASSESSEE COMPANY HAD CAPITAL AND RESERVE IN EXCESS OF AMOUNT ADVANCED AN D ASSESSEE RELIED THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS . RELIANCE UTILITIES AND POWER LTD. 178 TAXMANN.COM 135 WHEREIN IT IS HELD I N SUCH CIRCUMSTANCES, NO DISALLOWANCE CAN BE MADE. WE ARE IN AGREEMENT WITH THE ASSESSEE THAT ASSESSEE HAS MADE ADVANCE FOR THE BUSINESS PURPOSE AND SUCH IN CIRCUMSTANCES INTEREST WAS PAID FOR PURPOSE OF BUSINESS IS ALLOWABLE EXPEN SES. THEREFORE, WE ALLOW THE OBJECTIONS OF THE ASSESSEE. ITA NO. 2194 /AHD/2015 & C.O. NO. 17 2/AHD/2015 . A.Y. 2011-12 3 4. NOW WE COME TO THE ISSUE OF OBJECTION FILED BY THE ASSESSEE THAT AN AMOUNT OF RS. 16,60,451/- SHOULD NOT HAVE BEEN DISALLOWED BY THE LD. CIT(A). 5. AS WE CAN SEE, THESE DISALLOWANCES WERE MADE ON ACC OUNT OF CBDT CIRCULAR NO. 5/2012 HAS BEEN ISSUED ON 01.08.2012 WHEREAS TH E YEAR UNDER CONSIDERATION IS ASSESSMENT YEAR 2011-12 AND FINANC IAL YEAR 2010-11 THAT IS PERIOD PRIOR TO THE ISSUANCE OF CONCERNED CIRCULAR. THE SAID CIRCULAR IS NOT RETROSPECTIVE IN THE NATURE. THEREFORE, IN OUR CONS IDERED OPINION, IN SUCH CIRCUMSTANCES, NO DISALLOWANCE CAN BE MADE ON THE B ASIS OF ABOVE SAID CIRCULAR. THEREFORE, WE ALLOW OBJECTION OF THE ASSESSEE. 6. SO FAR DELETING THE ADDITION OF RS. 70,71,329/- IS CONCERNED, SAME HAS ALSO BEEN MADE ON THE BASIS OF ABOVE SAID CIRCULAR. SINCE, TH E SAID CIRCULAR IS NOT APPLICABLE IN THE CASE OF ASSESSEE. THUS, WE DISMIS S THIS GROUND OF APPEAL OF REVENUE. 7. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMI SSED AND CROSS OBJECTION FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30- 11- 2018 SD/- SD/- (PRAMOD KUMAR) (MAHAVIR PRASAD) VICE PRESIDENT TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 30/11/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. ITA NO. 2194 /AHD/2015 & C.O. NO. 17 2/AHD/2015 . A.Y. 2011-12 4 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD