Sagar Drugs & Pharmaceuticals Pvt. Ltd., Ahmedabad V. DCIT, Circle-4(1)(2), Ahmedabad

ITA 2945/AHD/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 9445 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 28-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R R MAKWANA
• Keywords: Business income; Rule of consistency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT) BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 2945/AHD/2017 (ASSESSMENT YEAR: 2013-14) SAGAR DRUGS & PHARMACEUTICALS PVT. LTD. SAGAR, OPP. KAMDHENU COMPLEX, NR. SAHAJANAND COLLEGE, AMBAWADI, AHMEDABAD-380015 VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE-4(1)(2), AHMEDABAD PAN NO. AADCS9311E ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : MS. URVASHI SODHAN, AR RESPONDENT BY : SHRI R. R. MAKWANA, SR. DR DATE OF HEARING 0 4 . 0 1 .20 2 1 DATE OF PRONOUNCEMENT 06.01.2021 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER DATED 24.10.2017 PASSED BY THE COMMISSIONER O F INCOME TAX (APPEALS) 8, AHMEDABAD ARISING OUT OF THE ORDER DA TED 25.1.2016 PASSED BY THE DCIT, CIRCLE-4(2)(1), AHMEDABAD UNDER SECTIO N 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO T HE ACT) FOR ASSESSMENT YEAR 2013-14. ITA NO.2945/AHD/2017 SAGAR DRUGS & PHARMACEUTICALS PVT. LTD. VS. DCIT ASST.YEAR 2013-14 - 2 - 2. THE EFFECTIVE FIRST GROUND RELATES TO DISALLOWAN CE OF DIRECTORS FOREIGN TRAVEL EXPENSES OF RS. 16,68,842/- I.E. 50% OF THE TOTAL EXPENSES OF RS. 33,37,683/- ON THE GROUND THAT THE SAME WAS NOT BEING INCURRED FOR BUSINESS PURPOSES. THE DIRECTORS OF THE ASSESSEE COMPANY VISITED DUBA I, SINGAPORE, U.S.A., THAILAND AND BANGKOK WHERE EXPENSES OF RS. 33,37,683/- WAS INCURRED ON SEARCH FOREIGN TRAVEL. THE LD. AO DISA LLOWED THE SAME. IN APPEAL THE LD. CIT(A) ALLOWED ONLY THE 50% OF THE T OTAL EXPENSES ON THE GROUND THAT THE ASSESSEE HAS NO BUSINESS TRANSACTIO N WITH THE DUBAI AND U.S.A. AND BANGKOK. THE ASSESSEES CASE IS THIS TH AT THE DIRECTORS OF THE COMPANIES VISITED THOSE PLACES TO ATTEND MEETING AN D TRADE FAIR. IT IS RELEVANT TO MENTION THAT THE ASSESSEES BUSINESS IS OF MANUFACTURING OF DYE INTERMEDIATE AND CHEMICALS. IN DUBAI THEY ATTE NDED THE BEAUTY WORLD EXPO. IN U.S.A. THEY ATTENDED A MEETING AND DISCUSSED BUSINESS PROPOSAL AT TRADE FARE. IN THAILAND THEY ATTENDED MEETING OF YPO CHAPTER RETREAT. ALL THE RELEVANT DOCUMENTS IN SUP PORT OF SUCH TOURS INDICATING THE BUSINESS PURPOSES OF THE ASSESSEE CO MPANY WERE DULY SUBMITTED BEFORE THE AUTHORITIES BELOW AS IT APPEAR S FROM THE ORDER IMPUGNED AS WELL AS THE PAPER BOOK FILED BEFORE US. APART FROM THAT THE CASE OF THE ASSESSEE ON IDENTICAL ISSUE HAS BEEN AL LOWED FOR A.Y. 2012-13 AND 2014-15, THE LD. AR DREW OUR ATTENTION TO THE A PPELLATE ORDER FOR A.Y. 2012-13 AT PAGE 83 OF THE PAPER BOOK FILED BEF ORE US AND THE ASSESSMENT ORDER FOR A.Y. 2014-15 AT PAGE 99 OF THE PAPER BOOK. UPON PURSUANT OF THE SAME WE FIND THAT THE ISSUE IS DULY COVERED INFAVOUR OF ITA NO.2945/AHD/2017 SAGAR DRUGS & PHARMACEUTICALS PVT. LTD. VS. DCIT ASST.YEAR 2013-14 - 3 - THE ASSESSEE AND HENCE WE DELETE THE ADDITION MADE BY THE AUTHORITIES BELOW. 3. THE DISALLOWANCE OF INTEREST EXPENSES OF RS. 12, 27,149/- FOR PROVIDING INTEREST FREE LOAN FOR SUBSIDIARY COMPANY UNDER SECTION 36(1)(III) OF THE ACT HAS BEEN CHALLENGED BEFORE US . THE ISSUE HAS ALREADY BEEN FINALIZED IN FAVOUR OF THE ASSESSEE FOR A.Y. 2010-11 AS APPEARING AT PAGE 67 OF THE PAPER B OOK FILED BEFORE US. THE INVESTMENT AND/OR ADVANCES OF ITS SUBSIDIARY CO MPANIES HAD BEEN CONSIDERED FOR BUSINESS PURPOSES; THE COMMERCIAL EX PEDIENCY INVOLVED IN THE SAID TRANSACTIONS WERE ALSO OBSERVED BY THE LD. CIT(A). THE LD. AR DREW OUR ATTENTION TO THE ORDER PASSED BY THE LD. C OMMISSIONER APPEAL FOR A.Y. 2012-13 APPEARING AT PAGE 80 AND 81 OF THE PAPER BOOK FILED BEFORE US. THE SAID ISSUE WAS SETTLED IN VIEW OF T HE JUDGMENT AND ORDER PASSED BY THE HONBLE SUPREME COURT IN THE CASE OF SA BUILDERS LTD. VS. CIT, REPORTED IN 2007 158 TAXMANN.COM 74 WHEREBY AN D WHEREUNDER IT WAS DECIDED THAT IN THE EVENT THE FUND IS UTILIZED BY SISTER CONCERNS FOR BUSINESS PURPOSES IT WAS ALLOWABLE. SINCE WE DO NO T FIND ANY DEVIATION IN THE FACTS AS AVAILABLE ON RECORD BEFORE US WE FI ND SUBSTANCE IN ASSESSEES COUNSELS SUBMISSION AND THUS ALLOW THE GROUND BY DELETING THE DISALLOWANCE OF INTEREST EXPENSES OF RS. 12,27, 149/-. 4. ASSESSMENTS OF SHORT TERM CAPITAL GAIN ON SALE O F MUTUAL FUNDS OF RS. 24,93,962/- TREATING IT AS BUSINESS INCOME HAS BEEN CHALLENGED BEFORE US. ITA NO.2945/AHD/2017 SAGAR DRUGS & PHARMACEUTICALS PVT. LTD. VS. DCIT ASST.YEAR 2013-14 - 4 - AT THE ONSET OF THE HEARING, THE LD. COUNSEL APPEA RING FOR THE ASSESSEE SUBMITTED BEFORE US THAT ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE FROM A.Y. 2003-04 TO 2012-13 WHICH IS ALSO EVIDENT FROM THE ORDER PASSED BY THE LD. CIT(A) AT PAGE 18 AND 19. 5. THE LD. DR FAILED TO CONTROVERT SUCH SUBMISSION MADE BY THE LD. AR. KEEPING IN VIEW THE IDENTICAL FACTS AND IN VI EW OF THE RULE OF CONSISTENCY WE FIND NO REASON IN DISALLOWING SUCH S ALE OF MUTUAL FUNDS TO THE TUNE OF RS. 24,93,962/- AS STCG AND HENCE WE DELETE THE SAME. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 06/01/2021 SD/- SD/- (WASEEM AHMED) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 06/01/2021 TANMAY, SR. PS TRUE COPY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)- 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 04.01.2021 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 05.01.2021 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 05.01.2021 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .01.2021 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 06 .01.2021 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 06 .01.2021 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER