ACIT, New Delhi V. M/s Panacea Biotec Ltd., New Delhi

ITA 3077/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52580 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 17-08-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 10-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Assessee Lawyers: SALIL AGGARWAL ADV SH R P MALL
• Keywords: Rule of consistency; Revenue expenditure

Judgement Text

ITA NO. 3077/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3077/DEL/2011 A.Y. : 2008-09 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-14(1), ROOM NO. 415, 4 TH FLOOR, CR BUILDING, NEW DELHI VS. M/S PANACEA BIOTEC LTD., B-1, EXTENSION G-3, MOHAN COOPERATIVE INDUSTRIAL ESTATE, MATHURA ROAD, NEW DELHI (PAN/GIR NO. : AAACP5335J) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. SALIL AGGARWAL, ADV. SH. R.P. MALL, ADV. DEPARTMENT BY : S MT. ANUSHA KHURANA, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 22.3.2 011 PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INC OME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF ` 1,12, 44,028/- OUT OF ` 1,40,55,035/- CLAIMED AS PRODUCT REGISTRATION EXPENS ES. 3. IN THIS CASE THE ASSESSEE COMPANY HAS CLAIMED AN AMOUNT OF ` 1,40,55,035/- AS PRODUCT REGISTRATION EXPENSES. T HE ASSESSING OFFICER OBSERVED THAT THE BENEFIT OF PRODUCT REGISTRATION IS AVAILABLE FOR A PERIOD OF 5 YEARS BUT THE ASSESSEE COMPANY CLAIMED T HE ENTIRE AMOUNT ITA NO. 3077/DEL/2011 2 DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE COMPANY SUBMITTED BEFORE THE ASSESSING OFFICER THAT EXPEND ITURE IS EITHER CAPITAL OR REVENUE; IN CASE IT IS REVENUE EXPENDITU RE THEN IT HAS TO BE ALLOWED IN THE YEAR WHEN IT HAS BEEN INCURRED AND I N THE PRESENT CASE, THE EXPENDITURE WAS INCURRED DURING THE YEAR AND HE NCE THE SAME SHOULD BE ALLOWED IN THIS YEAR ONLY. HOWEVER, IT IS SEEN THAT THE EXPLANATION OF THE ASSESSEE COMPANY DID NOT FIND FAV OUR FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE EXPENSES TO BE ALLOWED MUST PERTAIN TO THE YEAR IN QUESTION. THE ASSESSING OFFICER ACCORDINGLY DISALLOWED 4/5 TH OF SUCH EXPENSES AMOUNTING TO ` 1,12,44,028/-. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOM E TAX (APPEALS) HELD AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, ORDER OF THE ASSESSING OFFICER, SUBMISSIONS MADE BY THE LD. AUTHORISED REPRESENTATIVE. IT IS NOTED THAT THIS ISSUE HAS BEEN DECIDED IN THE FAVOUR OF THE APPELLANT BY APPE AL ORDERS FOR A.Y. 2003-04, 2004-05, 2005-06 AND 2006- 07. THE JURISDICTIONAL ITAT F BENCH VIDE THEIR ORDER DATED 30.8.2010 FOR A.Y. 2006-07 HAVE UPHELD THE ORDERS O F LD. COMMISSIONER OF INCOME TAX (APPEALS) FOR THOSE YEARS . FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF TH E ORDER OF HONBLE TRIBUNAL IS REPRODUCED BELOW:- WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS BEFORE US. WE ARE OF THE VIEW THAT TH E RULE OF CONSISTENCY IS NOT OF UNIVERSAL APPLICATION ESPECIALLY IN A CASE WHERE A WRONG DECISION IN THE ITA NO. 3077/DEL/2011 3 PAST HAS NOT BEEN EITHER RECTIFIED OR CHALLENGED IN APPELLATE PROCEEDINGS. THEREFORE, WE WOULD PREFER TO GO BY THE MERITS OF THE CASE. THE ASSESSING OFFICER HAS HIMSELF STATED IN THE ASSESSMENT ORDER THAT THE INCOME TAX ACT DOES NOT RECOGNIZE THE CONCEPT OF DEFERRED REVENUE EXPENDITURE. IN SUCH CIRCUMSTANCES, WHAT HAS TO BE SEEN IS THAT WHETHER ANY BENEFIT HAS ACCRUED TO THE ASSESSEE IN THE CAPI TAL FIELD. THE EXPENDITURE HAS BEEN INCURRED ON REGISTRATION OF THE DRUGS IN THE COUNTRY WHERE THE DRUGS ARE EXPORTS. THE FINDING OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS THAT THE EXPENDITURE IS OF REVENUE NATURE AND FOR THIS PURPO SE RELIANCE HAS BEEN PLACED ON THE DECISION OF THE APE X COURT IN THE CASE OF C.I.T. VS. FINLAY MILLS LTD. 20 ITR 475. THIS FINDING HAS NOT BEEN CHALLENGED BY THE L D. DEPARTMENTAL REPRESENTATIVE. THEREFORE, IT IS HELD THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS RIGHT IN ALLOWING THE WHOLE OF THE EXPENDITURE. SINCE THE FACTS ARE IDENTICAL TO THE FACTS OF THE E ARLIER YEARS AND THE ASSESSING OFFICER HAS NOT BROUGHT ANY FRES H FACTS, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE ITAT , THE EXPENDITURE CLAIMED BY THE APPELLANT UNDER THE HEAD REGISTRATION OF PRODUCTS IS HELD TO BE REVENUE EX PENDITURE. ACCORDINGLY, ADDITION MADE ON THIS ACCOUNT BY THE ASSESSING OFFICER IS DELETED. THIS GROUND OF APPE AL IS ALLOWED. ITA NO. 3077/DEL/2011 4 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. BOTH THE COU NSEL FAIRLY AGREED THAT THE ISSUE INVOLVED IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN EARLIER YEARS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED TH E ADDITION BY FOLLOWING THE EARLIER TRIBUNALS DECISIONS. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INC OME TAX (APPEALS), ACCORDINGLY, WE UPHOLD THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/8/2011 UPO N CONCLUSION OF HEARING. SD/- SD/- [ [[ [C.L. SETHI C.L. SETHI C.L. SETHI C.L. SETHI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 17/8/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES