GILLETTE INDIA LIMITED, Jaipur V. ACIT, Alwar

ITA 37/JPR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99571 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 20-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MEENA CIT DHK
• Keywords: Gift; Transfer pricing; Business expenditure; Corroborative evidences; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 37/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR 2008-09 M/S GILLETE INDIA LTD. SPA 65A INDUSTRIAL AREA, BHIWADI DIST.ALWAR CUKE VS. THE ACIT, CIRCLE-2, ALWAR ````````````````````LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACI 3924J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT VK;DJ VIHY LA-@ ITA NO. 192/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR 2008-09 THE ACIT, CIRCLE-2, ALWAR CUKE VS. M/S GILLETE INDIA LTD. SPA 65A INDUSTRIAL AREA, BHIWADI DIST.ALWAR ````````````````````LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACI 3924J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI M.S. MEENA (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20/10/2015 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 18/12/2015. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND T HE REVENUE AGAINST THE ORDER OF CIT(A)-II, JAIPUR DATED 18.12. 2013. ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 2 GROUNDS TAKEN BY THE ASSESSEE IN ITA NO. 37/JP/14 : (I) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CO NFIRMING THE ACTION OF THE AO IN MAKING ADJUSTMENT OF RS. 4,54,29,602/- U/S 92C(3) IN RESPECT OF PAYMENT FOR BUSINESS SERVICES TO THE AES . IN DOING SO, HE HAS ERRED I N AGREEING WITH THE TPOS ACTION. (II) THE LD.CIT(A) HAS ERRED ON THE FACTS AND IN LAW IN CONFIRMING THE ACTION OF AO IN MAKING DISALLOWANCE OF RESTRUCT URING EXPENSES OF RS. 4,53,76,793/- RELATED TO THE EMPLOY EES RELOCATION/RELATED COST AND TRAVELLING/ TRAINING/ E CONOMIC /ADMINISTRATIVE COST BY TREATING THE SAME AS ONE TIME EXPENDITURE FOR ENDURING BENEFIT, THEREBY CAPITAL I N NATURE AS AGAINST REVENUE CLAIMED BY THE ASSESSEE. (III) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CON FIRMING DISALLOWANCE OF RS. 35 LACS OUT OF ADVERTISEMENT EX PENSES. GROUND TAKEN BY REVENUE IN ITA NO. 192/JP/14 (I) THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE DISALLOWA NCE OF RS. 1,07,38,198/- MADE BY AO ON ACCOUNT OF WRITE OFF OF INVENTORIES. (II) THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON THE F ACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE DISALLOWA NCE OF RS. 41,61,559/- MADE BY AO ON ACCOUNT OF TRAVELLING AND CONVEYANCE EXPENSES. (III) THAT THE CIT(A) HAS ERRED IN LAW AS NO DETAILS ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN RESTRICTING THE DI SALLOWANCE OF RS. 50,00,000/- TO RS. 35,00,000/- MADE BY THE AO ON ACCOUNT OF ADVERTISEMENT EXPENSES. ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 3 (IV) THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON THE F ACTS AND CIRCUMSTANCES OF THE CASE IN DELETING THE DISALLOWA NCE OF RS. 14,20,259/- MADE ON ACCOUNT OF MISCELLANEOUS EXPENS ES. 2. REGARDING THE FIRST GROUND OF APPEAL TAKEN BY T HE ASSESSEE, THE FACTS IN BRIEF AS STATED IN THE TPOS ORDER DA TED 2.10.2011 ARE AS UNDER: 2.1 THE ASSESSEE HAS MADE PAYMENT OF RS. 1,34,42,2 03/- AND RS. 3,19,87,309/- TO ITS AES P&G ASIA PVT. LTD. (MRO H) AND MANILA BRANCH OF P&G ASIA PVT. LTD. RESPECTIVELY. AS PER THE FORM 3 CEB, THE PAYMENT WAS IN RESPECT OF SERVICES RENDERED BY THE AES TO THE ASSESSEE VIDE BUSINESS SERVICES AGREEMENT AT COST PLUS 7% MARK-UP BASED ON THE GROUPS TRANSFER PRICING POLICY. THE TYPE OF TRANSACTION RELATING TO PAYMENT OF SERV ICES HAS BEEN STARTED BY THE ASSESSEE IN THE PRECEDING Y EAR, AND NO SUCH TRANSACTION HAD BEEN UNDERTAKEN PRIOR TO THAT. THE ASSESSEE HAS APPLIED TNMN METHOD BY TAKING OPERATING PROFIT/ TO TAL COST OF THE PROFIT LEVEL INDICATOR. THE COST PLUS MARK UP CHA RGED BY THE AE (7%) HAS BEEN COMPARED WITH THE MEAN COST PLUS MARG IN EARNED BY THE COMPARABLE COMPANIES ARRIVED AT 6.49%. AS PER NOTE GIVEN IN FORM 3CEB, THE GUIDELINES OF INLAND REVENUE AUTHORI TY OF SINGAPORE ON TRANSFER PRICING FOR SERVICES EXPECT AT LEAST 5% MARK-UP ON THE LOCAL COST OF THE SERVICES. AS AGAINST THIS, THE AE OF THE COMPANY WAS CHARGED 7% MARK UP ( WHILE THE MEAN COST MARGIN CHA RGED BY THE COMPARABLES WAS 6.49%). IT HAS BEEN CLAIMED THAT THE PRICE CHARGES BY THE AE IS WITHIN 5% OF THE ALP (I.E. COST +6.49% ). HENCE THE SAME HAS BEEN CONSIDERED BY THE ASSESSEE TO BE AT A RMS LENGTH. 2.2 AFTER CONSIDERING THE SUBMISSION OF THE ASSESS EE, TPO HAS GIVEN ITS FINDINGS AT PARA 7 OF ITS ORDER WHICH REA DS AS UNDER: ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 4 THE ASSESSEE HAS NOT BEEN ABLE TO SHOW THE GENUIN ENESS FOR SUCH SERVICE, OR THE COST EFFECTIVENESS OF SUCH ARRANGEM ENT, OR THAT THE MONEY CHARGED BY THE AE WAS AT ARMS LENGTH. NO IND EPENDENT PARTY WOULD HAVE MADE A PAYMENT FOR SUCH AN ARRANGEMENT I N UNCONTROLLED CIRCUMSTANCES. THEREFORE, BY THE APP LICATION OF CUP, THE ARMS LENGTH OF THIS TRANSACTION OF PAYMENT OF S ERVICE FEE IS DETERMINED AT NIL AS AGAINST RS. 4,54,29,602/- DETE RMINED BY THE ASSESSEE. THE ASSESSING OFFICER SHALL ENHANCE THE I NCOME OF THE ASSESSEE BY RS.4,54,29,602/- 2.3 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATT ER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS SUSTAINED THE ADDITIO N FOLLOWING THE DRP ORDER DATED 10.08.2011 FOR ASSESSMENT YEAR 2007 -08 WHERE THE DRP HAD UPHELD THE ADJUSTMENT MADE BY THE TPO IN TH E IDENTICAL FACTS. 2.4 DURING THE COURSE OF HEARING THE LD. AR REITER ATED ITS SUBMISSION MADE BEFORE THE LD. CIT(A) WHICH ARE CON TAINED AT PAGE 19 TO 39 OF THE ASSESSEES PAPER BOOK. IT WAS FURTH ER BROUGHT TO THE NOTICE OF THE BENCH THAT THE COORDINATE BENCH OF IT AT IN ASSESSEES OWN CASE FOR AY. 2007-08 HAS DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE. ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 5 2.5 THE COORDINATE BENCH IN ITS ORDER DATED 11.08 .2015 IN ITA NO. 1087/JP/2011 FOR A.Y. 2007-08 HAS GIVEN THE FOL LOWING FINDINGS AT PARA 5 TO 5.2 OF ITS ORDER WHICH READS AS UNDER: WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD ON THIS ISSUE. IT EME RGES FROM THE RECORD THAT ASSESSEE SUBMITTED FOLLOWING DOCUMENTS: (1) BUSINESS SERVICES AGREEMENT VIDE ITS SUBMISSION DAT ED 27JANUARY, 2010 (2) DETAILS BREAK UP OF SERVICES RENDERED BY SINGAPORE & PHILIPPINES (3) BALANCE SHEET AND PROFIT AND LOSS ACCOUNT OF P&G SI NGAPORE (4) SIMILAR SERVICES WERE PROVIDED BY THE AE TO OTHER INDIAN P & G AFFILIATES. (5) LEDGER ACCOUNT OF THE AE ( P&G SINGAPORE) AND ALL DEBIT NOTES AND OTHER SUPPORT EVIDENCES. BESIDES, WE FIND THAT THE TPO HAS OBSERVED THAT (A) THE ASSESSEE IS A START UP COMPANY WHICH IS NOT COR RECT AS IT WAS ALREADY AN ESTABLISHED COMPANY CAME INTO NEW RE GIME OF P&G BUSINESS CONSOLIDATION. SIMILAR SERVICES HAVE P ROVIDED BY THE AE NOT ONLY TO THE ASSESSEE BUT TO VARIOUS OTH ER UNITS ON A UNIFORM BUSINESS POLICY. (B) THE AUTHORITIES BELOW HAVE NOT CONTROVERTED THE FA CT THAT ASSESSEE HAS NOT CLAIMED ANY OTHER EXPENDITURE IN RESPECT OF THE SERVICES WHICH ARE CLAIMED TO BE RECEIVED FROM AE. IN OUR CONSIDERED VIEW, THE BUSINESS OPERATION OF THE ASSE SSEE CANNOT BE CARRIED ON WITHOUT THESE SERVICES, FOR WHICH THE EXPENDITURE IS EITHER TO BE BORNE BY THE ASSESSEE DIRECTLY OR T HE SAME IS TO BE OUT SOURCED. IN THE ABSENCE OF THE SELF INCURRING OF EXPENDITURE THE ASSESSEES CLAIM THAT IT IS OUT SOURCING THE SERVICES FINDS CREDENCE. WE FIND MERIT IN THE ARGUMENT OF THE ASS ESSEE THAT IN A.Y. 2007-08 IN THE CASE OF THE OTHER COMPANY OF P& G GROUP VIZ. GILLETTE DIVERSIFIED PRIVATE LTD. (GDOPL) SIMI LAR KIND OF ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 6 PAYMENT OF SERVICES HAS BEEN ACCEPTED AND AMOUNT PA ID SO HAVE BEEN HELD TO BE ALP. THE ORDER THEREOF IS PLACED ON RECORD. SIMILARLY THE ASSESSEES OWN CASE FOR A.Y 2011- 12 THE LD. TPO/AO HAVE UNHESITATINGLY ACCEPTED THESE P AYMENTS AND NO ALP ADJUSTMENTS IN THIS BEHALF ARE MADE. FURTHER IN THE CASE OF CUSHMAN AND WAKEFIELD IND IA PVT. LTD. (SUPRA) IT HAS BEEN HELD THAT COMMERCIAL WISD OM OF THE ASSESSEE CANNOT BE CALLED INTO QUESTION. THEREFORE, WE ARE UNABLE TO SUBSCRIBE THE VIEW ADOPTED BY AUTHORITIES BELOW THAT THESE SERVICES WERE NOT REQUIRED BY THE ASSESSEE. SUCH CO MMERCIAL DECISIONS ARE BETTER LEFT TO THE BUSINESS ACUMEN OF THE ASSESSEE AND NOT DECIDED BY THE AO. WE HAVE PERUSED THE EVI DENCE ON RECORD, REVENUES OWN TREATMENT OF THE SAME AE AND SERVICES IN ASSOCIATE CONCERN FOR A.Y. 2007-08 AND ASSESSEES O WN CASE FOR AY 2011-12. WE ARE UNABLE TO UPHOLD THE FINDING OF TPO AND AO THAT DETAILS ABOUT RENDERING OF SERVICES WERE NOT F URNISHED AND ITS BENEFIT IN THE ASSESSEES BUSINESS COULD NOT BE ASC ERTAINED. THE DETAILS OF SERVICES PROVIDED ARE MENTIONED AS CITED ABOVE, BESIDES ASSESSEE HAS NOT INCURRED ANY EXPENDITURE ON ITS OW N IN THIS BEHALF. IT CANNOT BE ACCEPTED THAT ASSESSEE WILL PR OVIDE EVEN THE SCRATCHES OF INFORMATION ABOUT RENDERING OF SERVICE S WHICH IS OTHERWISE DISCERNIBLE FROM THE FACTS. THE QUESTION ED JUDGEMENT ALSO TAKES IN STRIDE THE FACT THAT THE QUANTUM OF B ENEFIT AVAILED BY THE ASSESSEE IN TERMS OF ITS BUSINESS YIELD CANNOT BE QUESTIONED AS IN CASES IT MAY SO HAPPEN THAT THE SERVICES THOUGH AVAILED DOES NOT YIELD INTO ANY OSTENSIBLE BENEFIT. WHEREAS IN THIS CASE ASSESSEE HAS BEEN ABLE TO DEMONSTRATE THAT THERE AR E OSTENSIBLE BENEFITS. THUS THIS PROPOSITION ALSO FAILS UNDER T HE DOMAIN BUSINESS ACUMEN OF THE ASSESSEE. CONSIDERING ALL TH E FACTS AS NARRATED ABOVE, AND THE CASE LAWS, WE MAY FURTHER ADD THAT THERE IS NO WHISPER BY LOWER AUTHORITIES THAT THE ALP WOR K PROVIDED BY THE ASSESSEE SUFFERS FROM ANY INFIRMITY. IT IS NOT PROPER TO GO FOR AN ALP ASCERTAINMENT WITHOUT FINDING ANY FAULT WITH THE ASSESSEES WORKING. THE TP SERVICES PROVIDE THAT THE AO HIMSELF FIRST RECORD ITS OBJECTIONS ON THE MERITS OF THE W ORKING OF THE ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 7 ASSESSEE, WITHOUT DOING SO, THE ALP DETERMINATION B ECOMES A QUESTIONABLE EXERCISE. IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES WE HOLD THAT THE TP ADJUSTMENT TO THE ALP AS FURNIS HED BY THE ASSESSEE IS WITHOUT ANY JUSTIFICATION . THE SAME IS DELETED. 2.6 GIVEN THAT THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH IN ASSESSEE OWN CASE THAT A.Y 2007-08, ADJUST MENT OF RS. 4,54,29,602/- U/S 93C(3) OF THE ACT IN RESPECT OF P AYMENT FOR BUSINESS SERVICES TO AES OF THE ASSESSEE IS DELETED . HENCE THE GROUND NO.1 OF THE ASSESSEE IS ALLOWED. 3. REGARDING GROUND NO.2, THE ASSESSEE HAS CHALLENG ED THE DISALLOWANCE OF RESTRUCTURING EXPENSES OF RS. 4,53 ,76,793/-. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS INCURRED A SUM OF RS. 9,18,93,739/- ON RESTRUCTURING EXPENSES, AS PER DETAILS BELOW:- RESTRUCTURING COST EXPENSES INCURRED DURING THE YEAR EMPLOYEE RELOCATION AND RELATED COSTS VRS TRANSITION COSTS INCLUDING TRAVEL/TRAINING/COMMUNICATION AND RS.4,50,68,784/- RS. 4,65,16,946/- RS. 3,09,009/- TOTAL RS. 9,18,93,739/- ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 8 3.1 THE ASSESSING OFFICER DISALLOWED THE ABOVE RESTRUC TURING EXPENSES CLAIMED BY THE ASSESSEE HOLDING THAT THESE ARE ONE TIME EXPENDITURE WHICH RESULTED IN ENDURING BENEFIT TO THE SSESSEE, HENCE THE SAME ARE IN NATURE OF CAPITAL EXPENDITURE AND CANNOT BE ALLOWED AS REVENUE EXPENDITURE. 3.2 THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFOR E THE LD. CIT(A)WHO FOLLOWING THE DRPS ORDER FOR A.Y. 2007-0 8 UPHELD THE ADDITION IN THE HANDS OF THE ASSESSEE. 3.3 THE MATTER FOR A.Y. 2007-08 HAS SINCE BEEN DEC IDED BY THE COORDINATE BENCH IN ITS ORDER DATED 16.08.2015 IN I TA NO. 1087/JP/2011 WHEREIN THE MATTER HAS BEEN DECIDED I N FAVOUR OF THE ASSESSEE. THE RELEVANT FINDINGS OF THE COORDINATE BENCH ARE CONTAINED AT PARA 12 TO 12.1 OF ITS ORDER DATED 16.08.2015 WHIC H READS AS UNDER: WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. HONBLE SUPREME COURT IN EMPIRE JUTE MILLS HAS LAID DOWN THE PROPOSITION THAT MEREL Y BECAUSE EXPENDITURE RESULTS IN SOME ENDURING BENEFIT IS NOT ALONE DECISIVE OF ITS BEING CAPITAL IN NATURE. IF THE SAME INCREAS ES THE REVENUE ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 9 GENERATING APPARATUS THEN IT WILL FALL IN THE CATEG ORY OF REVENUE EXPENDITURE DESPITE GIVING ENDURING BENEFIT. BESID ES IN ALEMBIC IT HAS BEEN HELD THAT MERELY BECAUSE ONCE FOR ALL PAYM ENT IS MADE IT DOES NOT IPSO FACTO AMOUNT TO CAPITAL EXPENDITUR E. ASSESSEE INCURRED THESE EXPENSES FOR SHIFTING OF CORPORATE OFFICE FROM GURGAON TO MUMBAI WHOLLY AND EXCLUSIVEL Y FOR ITS BUSINESS. BESIDES, HONBLE HIGH COURT GAVE THE PER MISSION FOR CHARGING OF THESE EXPENSES AGAINST AMALGAMATION RE SERVES. IN ASSESSMENT YEAR 2006-07, SIMILAR EXPENDITURE OF RS.11,12,24,780/- WERE ALLOWED BY THE AO IN ASSESSM ENT FRAMED U/S 143(3) AFTER CONSIDERING THE DETAILS AS SUCH EX PENDITURE REFLECTED IN THE NOTES TO THE ACCOUNTS. IN VIEW OF THE FOREGOING WE ARE OF THE CONSIDERED VIEW THAT ASSESSEES CLAIM F ALLS IN THE CATEGORY OF REVENUE EXPENSES AND DESERVES TO BE ALL OWED. THIS GROUND SUCCEEDS. 3.4 HENCE RESPECTFULLY FOLLOWING COORDINATE BENCH DECISION FOR A.Y. 2007-08, DISALLOWANCE OF RS. 4,53,76,793/- IS DELETED. GROUND NO.2 OF THE ASSESSEE IS ALLOWED. 4. GROUND NO.3 OF THE ASSESSEE AS WELL AS GROUND NO .3 OF THE DEPARTMENTAL APPEAL RELATES TO DISALLOWANCE OF RS. 50 LACS MADE BY THE AO ON ACCOUNT OF ADVERTISEMENT EXPENSES. THE ASSESSEE IS CONTESTING DISALLOWANCE OF RS. 35 LACS WHICH HA S BEEN SUSTAINED BY THE LD. CIT(A) WHEREAS THE REVENUE IS CONTESTING THE RELIEF OF RS. 15 LACS PROVIDED BY THE LD. CIT(A) TO THE ASSESSEE. 4.1 THE FACTS IN BRIEF AS PER AOS ORDER ARE THAT T HE ASSESSEE HAS DEBITED EXPENDITURE OF RS. 68,45,77,760/- UNDER THE HEAD ADVERTISEMENT AND SALES PROMOTION. ACCORDINGLY TH E ASSESSEE WAS REQUIRED TO FURNISH NATURE & DETAILS OF ADVERTI SEMENT EXPENSES DEBITED AT RS. 68,46,77,760/ AND TDS COMP LIANCE MADE THEREUPON. THE ASSESSEE WAS ALSO REQUIRED TO FURNISH ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 10 PARTY-WISE DETAILS OF PAYMENT OF ADVERTISEMENT OF E XPENSES EXCEEDING RS. 1 LAC PAID IN INDIA AND ABROAD AND T HE MODE OF SUCH PAYMENT. IF ANY AGREEMENT/CONTRACT EXECUTED I N THIS REGARDS WITH THE PARTIES, FURNISH A COPY OF THE SAM E. INDICATE THE PURPOSE CONSIDERING THE MONOPOLY STATUS OF THE PR ODUCTS ENJOYED. VIDE WRITTEN REPLY DATED 18.11.2011, ASSESSEE STATE D IN SUBMISSION NO.6 THAT- DURING THE YEAR THE ASSESSEE ON ADVERTISEMENT HAS INCURRED AN EXPENSES OF RS. 68.45 CRORES. THE EXPENSES UNDER TH E HEAD ADVERTISEMENT INCLUDED ADVERTISEMENT IN PRINT MED IA, PRIME TELEVISION ADD, POSTER, RADIO ADD, SPONSORSHIP, PU BLIC RELATION, DISPLAYED UNIT, CONTEST, DEMONSTRATION, TRADE GIFT S, PROMOTIONAL CAMPAIGN, MERCHANDISING AND SALE INCENTIVES ETC. THE EXPENSES DEBITED UNDER THIS HEAD DO NOT INCLUDE D ANY PERSONAL EXPENSES AND HAVE BEEN INCURRED ONLY FOR THE PURPOSES COMPANYS BUSINESS ACTIVITIES. THERE IS NO CHANGE IN THE NATURE OF EXPENSES DEBITE D UNDER THIS HEAD AS COMPARE WITH PREVIOUS YEAR. THE MAJOR PARTY WISE DETAILS OF ADVERTISEMENT EXP ENSES ALONGWITH TDS DEDUCTED THEREON ARE ATTACHED AS PE R ANNEXURE-I THE TDS HAS BEEN APPROPRIATELY DEDUCTED ON THE APP LICABLE AMOUNT AS PER THE PROVISIONS OF THE INCOME TAX AC T.1961. FURTHER THE ASSESSEE WAS ASKED TO FURNISH DETAILS ALONGWITH BILLS/VOUCHERS IN SUPPORT OF THE CLAIM OF THE ABOVE MENTIONED EXPENSES. THE ASSESSEE ONLY FURNISHED REPLY AS MEN TIONED ABOVE BUT DID NOT FURNISHED ANY BILL VOUCHER REGARD ING PAYMENT MADE UNDER THIS HEAD. THEREFORE, DUE TO LACK OF VER IFICATION, THE SAME CANNOT BE TREATED AS THE EXPENSES INCURRED WH OLLY & EXCLUSIVELY IN CONNECTION WITH THE BUSINESS. THEREF ORE, AN ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 11 ADDITION OF RS.50,00,000/- WAS MADE TO THE DECLARED INCOME OF THE ASSESSEE ON THIS ACCOUNT. 4.1 SUBSEQUENTLY THE MATTER WAS CARRIED IN APPEAL B EFORE THE CIT(A) WHEREIN THE CIT(A) HAS CONFIRMED THE DISALLO WANCE OF RS. 35 LACS WITH THE FOLLOWING OBSERVATIONS WHICH ARE C ONTAINED AT PARA 6.3 OF HIS ORDER: I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSME NT ORDER AND APPELLANTS WRITTEN SUBMISSION. ASSESSING OFFI CER DISALLOWED RS. 50 LACS ON ADHOC BASIS ON THE GROUND THAT APPE LLANT DID NOT SUBMIT BILLS AND VOUCHERS FOR VERIFICATION. APPELL ANT SUBMITTED THAT OUT OF TOTAL EXPENSES OF RS. 68.45 CRORES, TDS WAS DEDUCTED ON ADVERTISEMENT EXPENSES TO THE EXTENT OF RS.64.83 CRORES AND AS SUCH THEE EXPENSES ARE VERIFIABLE FRO THE DETAIL S SUBMITTED BY THE APPELLANT, IT IS CLEAR THAT STILL EXPENSES TO T HE EXTENT OF RS. 3.5 CRORES ON WHICH NO TDS WAS DEDUCTED ARE NOT FULLY VERIFIABLE. SINCE APPELLANT DID NOT MEET THE SPECIFIC REQUIREME NT OF THE AO AND JUST SUBMITTED SAMPLE INVOICES, THE AO COULD N OT HAVE VERIFIED THE VOUCHERS IN RESPECT OF THESE EXPENSES ON WHICH NO TDS WAS DEDUCTED. THE ADDITION MADE IN EARLIER YEAR S OUT OF THESE EXPENSES WAS SET-ASIDE BY ITAT IN EARLIER YEA RS TO THE AO FOR DETAILED VERIFICATION. THEREFORE THE ADDITION M ADE BY THE AO IS NOT FRIVOLOUS OR ARBITRARY. CONSIDERING THE FACT TH AT ADVERTISEMENT EXPENSES TO THE EXTENT OF ONLY RS.3.5 CRORES IS WIT HOUT DEDUCTION OF TDS, THE DISALLOWANCE FOR WANT OF VERIFICATION I S RESTRICTED TO RS. 35 LACS WHICH IS ABOUT 10% OF THIS EXPENSES ON WHICH NO TDS WAS DEDUCTED AND NO VERIFICATION COULD BE MADE IN THE ABSENCE OF COMPLETE VOUCHERS. ACCORDINGLY DISALLOW ANCE MADE BY THE AO IS CONFIRMED TO THE EXTENT OF RS. 35 LAKH S. ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 12 4.2 WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AS PER THE ASSESEE, O UT OF THE TOTAL ADVERTISEMENT EXPENSES OF RS. 68.45 CRORES, THE ASS ESSEE HAS DEDUCTED TDS ON EXPENSES AMOUNTING TO RS. 64.83 CR ORES AND COMPLETE PARTY-WISE DETAILS SHOWING THE NAME OF PA RTY, ADDRESS PAN NO. AND AMOUNT ON WHICH TDS HAS BEEN DEDUCTED H AS BEEN SUBMITTED. FURTHER THE ASSESSEE HAS GIVEN DETAILED EXPLANATION OF ADVERTISEMENT EXPENSES AND COPY OF THE SAMPLE INVOI CES VIDE ITS LETTER DATED 19.12.2011 TO THE AO. FURTHER, AS PER THE ASSESSEE ALL THE EXPENSES ARE INCURRED WHOLLY AND EXCLUSIV ELY IN CONNECTION WITH THE BUSINESS AND DURING THE YEAR UN DER CONSIDERATION THE ADVERTISEMENT EXPENSES CONSTITUT E ONLY 11.44% WHICH IS CONSISTENT WITH THE EXPENDITURE WHI CH HAS BEEN INCURRED IN THE PAST AND GIVEN THAT THE COMPANY IS DEALING IN FMCG PRODUCTS WHERE ROLE OF ADVERTISEMEN IS IMPERAT IVE, THEREFORE, NO DISALLOWANCE CALLED FOR. IT WAS ALS O BROUGHT TO THE NOTICE OF THE BENCH THAT IN A.Y. 2004-05 AND 2005-0 6 ADHOC DISALLOWANCE WERE MADE BY THE AO WHICH WAS SET-ASID E BY THE ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 13 HONBLE ITAT WITH DIRECTIONS TO THE AO TO EXAMINE AFRESH AND IN SUBSEQUENT YEARS I.E. A.Y. 2006-07 AND 2007-08, THE ADVERTISEMENT EXPENSES WERE DISALLOWED UNDER THE PR OVISIONS OF SECTION 40(A)(IA) AND NOT FOR THE REASON THAT EXPEN SES ARE NOT VERIFIABLE. AS PER THE LD. CIT(A), EXPENSES TO THE TUNE OF RS. 64.83 CRORES ARE VERIFIABLE AS THE SAID EXPENDITURE HAS SUFFERED TDS AND ACCORDINGLY TO THAT EXTENT THE EXPENDITURE IS VERIFIABLE. HOWEVER, GIVEN THAT BALANCE EXPENDITURE OF RS. 3.5 CRORES IS WITHOUT TDS, THE DISALLOWANCE FOR WANT OF VERIFICAT ION IS RESTRICTED TO 10% OF THE SAID EXPENDITURE AMOUNTING TO RS. 35 LACS. 4.3 WE HAVE GIVEN OUT CONSIDERED THOUGHT TO THE MAT TER. IT IS A CLEAR CASE OF ADHOC ADDITION WHEREIN THE AO HAD DI SALLOWED RS. 50 LACS IN ADVERTISEMENT EXPENSES WITHOUT GIVING AN Y SPECIFIC FINDINGS IN TERMS OF IDENTIFIABLE EXPENDITURE WHIC H CALLED FOR DISALLOWANCE. THE LD. CIT(A) HAS TAKEN A SOMEWHAT PRAGMATIC APPROACH WHEREIN HE HAS LINKED THE VERIFICATION OF EXPENDITURE WITH THE FACT AS TO WHETHER THE ASSESSEE HAS DONE TDS ON THE SAID EXPENDITURE OR NOT. IN OUR VIEW THE AUTHORI TIES NEED TO ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 14 TAKEN INTO CONSIDERATION THE FACT THAT THE ASSESSEE AS IN THE INSTANT CASE WHICH HAVE DIVERSED OPERATIONS AND TRA NSACTIONS RUNNING INTO THOUSANDS CRORES, IT IS PRACTICALLY I MPOSSIBLE TO GET EACH AND EVERY EXPENDITURE, VERIFIED WHICH HAS BEEN INCURRED DURING THE YEAR. THE AUTHORITIES SHOULD TAKEN INTO CONSIDERATION THE FACT THAT THE BOOKS HAVE BEEN STATUTORILY AUDIT ED UNDER THE REQUIREMENTS OF THE COMPANY LAW FOLLOWED BY THE TAX AUDIT AS PER I.T. ACT WHICH SHOULD BE TAKEN INTO CONSIDERATI ON AND DUE WEIGHTAGE SHOULD BE GIVEN. FURTHER IT IS NOTED THA T THE ASSESSEE HAS SUBMITTED COMPLETE PARTY-WISE DETAIL CHART O N WHICH TDS IS DEDUCTED. FURTHER DETAILED EXPLANATION ON ADVERTISE MENT EXPENSES AND SAMPLE INVOICES WERE ALSO FILED VIDE L ETTER DATED 19.12.2011 WHICH HAS APPARENTLY MISSED THE ATTENTIO N OF THE AO. IN LIGHT OF THAT, WE ARE OF THE CONSIDERED VIEW THA T THERE IS NO BASIS FOR DISALLOWANCE OF ADVERTISEMENT EXPENSES O N PURELY ADHOC BASIS, HENCE THE SAID ADDITION OF RS. 50 LAC S IS DELETED. HENCE THE GROUND NO.3 OF THE ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 15 ASSESSEE IS ALLOWED AND GROUND NO.3 OF THE REVENUE IS DISMISSED. 5. NOW COMING TO THE GROUND NO.1 TAKEN BY THE REVEN UE WHEREIN THE REVENUE HAS CHALLENGED THE DELETION OF DISALLOWANCE OF RS. 1,07,38,198/- MADE BY THE AO ON ACCOUNT OF W RITE OFF INVENTORIES 5.1 THE RELEVANT FACTS AS PER AOS ORDER ARE AS UNDER: IN THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE HAS DE BITED EXPENDITURE ON A/C OF INVENTORIES WRITTEN OFF OF RS .1,07,38,98/- UNDER THE HEAD OPERATING & OTHER EXPENSES. VIDE QUESTIONNAIRE DATED 18.07.2011 THE ASSESSEE WAS RE QUIRED TO FURNISH COMPLETE DETAIL OF INVENTORIES WRITTEN OFF DEBITED AT RS. 1,07,38,198/- ALONGWITH EVIDENCES IN SUPPORT OF THE CLAIM AND PROCEDURE FOLLOWED. PLEASE EXPLAIN AS TO HOW INVENT ORY WRITTEN OFF CAN BE EQUATED WITH BAD & DOUBTFUL DEBT WRITTEN OFF . VIDE WRITTEN REPLY DATED 05.10.2011 (SUBMISSION-3) , AR OF THE ASSESSEE SUBMITTED AS UNDER: DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY HAS WRITTEN OFF INVENTORY ITEMS TO THE EXTENT OF RS . 10738198/-. THE BREAKUP IS BRIEFLY PROVIDED AS UNDER: LEDGER CODE AMOUNT RS, 58750300 58750100 DISPOSAL STOCK FP( PURCHASED OUTSIDE) DISPOSAL STOCK FP(IN HOUSE PRODUCED 525625/- 1012572/- TOTAL 0738198/- ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 16 THE DETAILS OF THE ABOVE LEDGER CODES INCLUDING THE MATERIAL CODE, QUANTITY AND DATE ARE ATTACHED AS ANNEXURE-1. WI TH REGARD TO PROCEDURE FOR WRITE OFF, IT IS WORTHWHILE TO MENTIO NED THE PHYSICAL VERIFICATION OF INVENTORY ITEMS IS CARRIED OUT AT R EGULAR PERIODS AS PER THE LAID DOWN PROCEDURE OF THE COMPANY AND AFTE R DUE DILIGENCE AND NECESSARY APPROVALS THE IDENTIFICATI ON ITEMS OF INVENTORIES ARE WRITTEN OFF FROM THE BOOKS OF ACCOU NTS. WITH REGARD TO ALLOWBILITY OF THIS EXPENSES, WE W ISH TO SUBMIT THE FOLLOWING FACTS: A) THE ASSESSEE COMPANY BEING IN THE FIRST MOVING CONSUMER GOODS, OBSOLESCENCE AND EXPIRY OF STOCK IS QUITE N ORMAL. THE COMPANY AS A REGULAR PRACTICE WRITES OFF ITS OBSO LETE AND EXPIRE STOCK. B) BASICALLY THIS ACCOUNTING HEAD IS A LINE ITEM, SPECIFICALLY IDENTIFIED AND SEGREGATED TO ENSURE CORRECT AND T RUE DISCLOSER OF MAJOR EXPENSES AS THE COMPANY VALUES ITS FINISHED G OODS AT COST OF MARKET PRICE WHICHEVER IS LOWER. C) THERE IS NO CHANGE IN THE NATURE OF EXPENSES DE BITED UNDER THIS HEAD AS COMPARED WITH PREVIOUS YEARS. THE INVENTORIES APPEARING AS CURRENT ASSETS IN THE AUDITED STATEMENT OF ACCOUNTS REPRESENT ASSETS: HELD FOR SALE IN THE ORDINARY OCCURS OF BUSINESS; IN THE PROCESS OF PRODUCTION FOR SUCH SALE; OR IN THE FORM OF MATERIAL OR SUPPLIERS TO BE CONSUM ED IN THE PRODUCTION PROCESS OR IN THE RENDERING OF SERVICES. THE COMPANY AS PER ACCOUNTING STANDARDS-2, ISSUED B Y THE INSTITUTION OF CHARTERED ACCOUNTANTS OF INDIA, VALU ES THE ABOVE STATED INVENTORIES AT LOWER OF COST OR NET REALIZAB LE VALUE AND THERE IS NO CHANGE IN THE METHOD OF VALUATION DURI NG THE YEAR AS COMPARED WITH THE EARLIER YEARS. THE DETAILED ACCO UNTING POLICY IS GIVEN ABOVE. DURING THE YEAR UNDER CONSIDERATION, CERTAIN OBSOLE TE, DAMAGED AND UNUSABLE INVENTORY ITEMS HAVE BEEN WRITTEN OFF IN THE BOOKS ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 17 OF ACCOUNTS. THE COMPANY HAS CARRIED OUT HIS ADJUS TMENT TO REFLECT THE CURRENT AD TRUE VALUE OF INVENTORY IN T HE AUDITED STATEMENT OF ACCOUNTS AND THIS IS IN ACCORDANCE WIT H THE SYSTEM OF ACCOUNTING AND METHOD OF VALUATION OF INVENTORY REGULARLY FOLLOWED BY THE COMPANY ON YEAR TO YEAR BASIS. THIS SYSTEM OF BRINGING THE INVENTORY TO THE NET REALIZABLE VALUE IS ALSO IN ACCORDANCE WITH THE INDIAN ACCOUNTING STANDARDS-2, WHICH LAYS DOWN THE FOLLOWING ACCOUNTING SYSTEM TO BE MANDATOR Y FOLLOWED BY EVERY COMPANY WITH REGARD TO ITS INVENTORY VALUA TION. THE ITEM OF INVENTORY WRITTEN OFF DURING THE YEAR W ERE ORIGINALLY PURCHASED/ MANUFACTURED FOR SALE IN THE ORDINARY CO URSE OF BUSINESS AND WERE HELD AS REGULAR INVENTORY ITEMS I N THE AUDITED STATEMENT OF ACCOUNTS. IT IS A WELL SETTLED LAW THAT THE LOSS OR EXPENSES INCURRED BY THE COMPANY BY FOLLOWING THE ACCOUNTING SYSTEMS AND ME THODS ON YEARS TO YEARS AND WHICH ARE IN ACCORDANCE WITH THE ACCOUNTING STANDARDS ARE ALLOWABLE EXPENSES. 5.2 THE CIT(A) VIDE HIS APPELLATE ORDER DATED 18.12 .2013 IN PARA NO. 3.3 HAS OBSERVED THAT: I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSMEN T ORDER AND APPELLANTS WRITTEN SUBMISSION. THE ASSESSING OFFICER MADE THE ADDITION IN RESPECT OF INVENTORY WRITTEN OFF ON THE G ROUND THAT THERE ARE NO SUPPORTING EVIDENCES TO JUSTIFY AND ES TABLISH THAT THE INVENTORIES HAVE BEEN ACTUALLY DESTROYED. APPELLANT SUBMITTED THAT THIS GROUND IS COVERED BY THE ORDER OF ITAT IT IS OWN CASE IN EARLIER YEAR UPTO ASSESSMENT YEAR 2005-06. IT IS N OT IN DISPUTE THAT AS FAR AS DECISION OF ITAT IS CONCERNED THE SA ME IS APPLICABLE TO THIS YEAR ALSO. RESPECTFULLY FOLLOWI NG THE DECISION OF ITAT, THE ADDITION ON ACCOUNT OF INVENTORY WRITTEN OFF MADE BY AO IS DELETED. 5.3 THE HONBLE ITAT VIDE ITS ORDER DATED 27.05.2011 I N ITA NO. 188/JP/07 HAS OBSERVED THAT: (PARA 16) ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 18 AS REGARD TO THE DISALLOWANCE OF RS. 8,37,10,704 /- IN RESPECT OF DAMAGED GOODS RETAIL AND RS. 3,64,71,703 /- IN RESPECT OF PROVISION FOR OBSOLESCE MADE BY THE AO FOR WANT OF ITEM-WISE DETAIL AND THE PROCEDURE THEREOF, THE LD. CIT(A) A FTER CONSIDERING THE ITEM WISE DETAILS AND CONSIDERING THE PROCEDUR E ADOPTED FOR DISPOSAL AND DESTRUCTION OF SUCH STOCK, COPY OF WH ICH IS PLACED IN THE PAPER BOOK HAS RIGHTLY DELETED THE DISALLOWANCE OF RS. 8,37,10,704/- BUT AT THE SAME TIME HE DID NOT ALLO WED THE CLAIM OF RS.3,64,71,703/- ON THE GROUND THAT IT IS ONLY A PROVISION AND NOT ACTUALLY DESTROYED . WE FIND THAT IN RESPECT O F BOTH THESE AMOUNTS ITEM-WISE DETAILS IS FILED. THE PROCEDURE ADOPTED AND THE RECOMMENDATION OF APPROPRIATE AUTHORITIES IS P LACED ON RECORD . THE DISALLOWANCE OF RS. 3,64,71,703/- CONFIRMED B Y THE CIT(A) ONLY FOR THE REASON THAT THESE ITEMS ARE NO T ACTUALLY DESTROYED AND IS ONLY A PROVISION CANT BE UPHELD FOR THE REASON THAT ITEM-WISE DETAILS OF THE SAME FILED, THESE A RE IDENTICAL ITEMS AND HAVE BEEN SUBSEQUENTLY DESTROYED AS PER THE REGULAR PROCEDURE FOLLOWED. THE WRITE OFF FOR OBSOLESCE OF SUCH IDENTIFIED ITEMS IS ALLOWABLE DEDUCTION AS PER THE CASE LAW S RELIED BY THE LD. AR . IN FACT NO PROVISION IS CREATED IN BOOKS OF ACCOUNTS BUT ONLY THE NOMENCLATURE OF PROVISION FOR OBSOLESCE IS USED. IN THE BALANCE SHEET ALSO NO SUCH PROVISION IS APPEARING E ITHER IN THE LIABILITIES SIDE OR AS REDUCTION FROM ASSET SIDE NOR THE LD. AR COULD POINT OUT ANY PROVISION IN THE BALANCE SHEET. THEREFORE , THE DISALLOWANCE OF RS. 3,64,71,703/- CONFIRMED BY THE LD. CIT(A) IS DELETED. 5.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOTED THAT THE ASSESEE HAS GIVEN DETAILS ABOUT THE INVENTORY WRITE OFF ALONGWI TH THE LEDGER CODES WHEREBY THE IDENTIFIED ITEMS OF INVENTORY ARE WRITTEN OFF IN ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 19 THE BOOKS OF ACCOUNTS. FURTHER IT IS NOTED THAT TH ERE IS NO CHANGE IN THE ACCOUNTING POLICY WHICH HAS BEEN FOLLOWED BY THE ASSESSEE IN RESPECT OF INVENTORY WRITE OFF AS COMPARED TO EA RLIER YEARS. RESPECTFULLY FOLLOWING THE COORDINATE BENCH DECISIO N IN ITA NO.188/JP/07 DATED 27.05.2011, THE DISALLOWANCE OF RS. 1,07,38,198/- MADE BY THE AO ON ACCOUNT OF INVENTOR IES WRITE OFF IS DELETED. HENCE GROUND NO.1 TAKEN BY THE REVENU E IS DISMISSED. 6. THE GROUND NO. 2 OF THE REVENUE IS REGARDING DIS ALLOWANCE OF RS. 41,61,5589/- ON ACCOUNT OF TRAVELLING AND C ONVEYANCE EXPENSES. 6.1 THE CIT(A) VIDE HIS APPELLATE ORDER DATED 18.1 2.2013 IN PARA NO. 4.3 HAS OBSERVED THAT: I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSME NT ORDER AND APPELLANTS WRITTEN SUBMISSION. ASSESSING OFFIC ER DISALLOWED 10% OF TRAVELLING AND CONVEYANCE EXPENSES ON ADHOC BASIS. APPELLANT SUBMITTED THAT COMPLETE DETAILS OF THESE EXPENSES WERE MAINTAINED AND THEREFORE, THERE IS NO QUESTION OF D ISALLOWING THESE EXPENSES WHICH WERE INCURRED WHOLLY AND EXCLU SIVELY FOR THE PURPOSE OF BUSINESS. ASSESSING OFFICER DID NOT POINT OUT THE DEFECT OR WHAT WAS MISSING. ACCOUNTS OF THE APPELL ANT WERE AUDITED AND THEREFORE WITHOUT POINTING OUT ANY DEFE CT, SUCH ADHOC DISALLOWANCE OF BUSINESS EXPENSES IS NOT JUSTIFIED. IN THE IMMEDIATE PRECEDING YEAR I.E. ASSESSMENT YEAR 2007- 08 DRP ACCEPTED THE APPELLANTS OBJECTION AGAINST THIS ADD ITION PROPOSED ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 20 BY THE AO AND DELETED THE ADDITION . FACTS IN THIS YEAR ARE IDENTICAL AND THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF DRP IN THE IMMEDIATE PRECEDING YEAR, DISALLOWANCE MADE BY THE ASSESSING OFFICER IS DELETED. 6.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE DISALLOWANCE OF TRAVELLING AND CONVEYANCE EXPENSES TO THE EXTENT OF 10% OF THE TOT AL EXPENDITURE IS CLEARLY ON ADHOC BASIS AS CONFIRMED BY THE LD. CIT(A). WE SEE NO INFIRMITY IN THE ORDER OF THE LD . CIT(A) WHO HAS DELETED THE SAID DISALLOWANCES. HENCE THIS GROUND N O.2 OF THE REVENUE IS DISMISSED. 7. GROUND NO.4 OF REVENUE IS REGARDING DISALLOWANC E OF RS.14,20,259/- ON ACCOUNT OF MISC. EXPENSES. 7.1 THE CIT(A) VIDE HIS APPELLATE ORDER DATED 18. 12.2013 IN PARA NO. 7.3 HAS OBSERVED THAT: I HAVE CONSIDERED THE FACTS OF THE CASE. ASSESSMEN T ORDER AND APPELLANTS SUBMISSION. ASSESSING OFFICER DISAL LOWED 10% OF MISCELLANEOUS EXPENSES ON ADHOC BASIS. APPELLANT S UBMITTED THAT COMPLETE DETAILS OF THESE EXPENSES WERE MAINTA INED AND THEREFORE, THERE IS NO QUESTION OF DISALLOWING THES E EXPENSES WHICH WERE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. ASSESSING OFFICER DID NOT POINT OUT THE DEFECT OR WHAT WAS MISSING. ACCOUNTS OF THE APPELLANT WERE AUDITE D AND THEREFORE WITHOUT POINT OUT ANY DEFECT, SUCH ADHOC DISALLOWANCE OF BUSINESS EXPENSES IS NOT JUSTIFIED IN THE IMMEDIATE PRECEDING ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 21 YEAR I.E ASSESSMENT YEAR 2007-08, DRP ACCEPTED THE APPELLANTS OBJECTION AGAINST THIS ADDITION PROPOSED BY THE AO AND DELETED THE ADDITION. FACTS IN THIS YEAR ARE IDENTICAL AND THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF DRP IN THE I MMEDIATE PRECEDING YEAR, DISALLOWANCE MADE BY THE ASSESSING OFFICER IS DELETED. 7.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE DISALLOWANCE OF MISC. EXPENSES TO THE EXTENT OF 10% OF THE TOTAL EXPENDITURE IS CL EARLY ON ADHOC BASIS AS CONFIRMED BY THE LD. CIT(A). WE SEE NO IN FIRMITY IN THE ORDER OF THE LD. CIT(A) WHO HAS DELETED THE SAID DI SALLOWANCES. HENCE THIS GROUND NO. 4 OF THE REVENUE IS DISMISSED . 7.3 IN THE RESULT, THE GROUND NO.1,2,& 3 TAKEN BY T HE ASSESSEE ARE ALLOWED AND GROUND NO. 1,2,3 & 4 TAKEN BY THE R EVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/1 2/2015. SD/- SD/- VKJ-IH-RKSYKUH FOE FLAG ;KNO (R.P.TOLANI) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 18/12 /2015 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 22 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT M/ GILLETTE INDIA LTD., BHIW ADI 2. THE RESPONDENT THE ACIT, CIRCLE-2, ALWAR 3. THE CIT(A)-II, JAIPUR 4. THE CIT, ALWAR 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO.37/JP/14 192/JP/4) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 23 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 24 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 25 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 26 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 27 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 28 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 29 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 30 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 31 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 32 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 33 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 34 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 35 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 36 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 37 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 38 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 37/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09. VK;DJ VIHY LA-@ ITA NO. 192/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2003-04. FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 20.10.2015 M/S GUILLETE INDIA LTD. 65-A, INDUSTRIL AREA, BHIWADI CUKE VS. ACIT, CIRCLE - 2, ALWAR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACI 3924J ACIT, CIRCLE - 2, ALWAR CUKE VS. M/S GUILLETE INDIA LTD. 65 - A, INDUSTRIL AREA, BHIWADI LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAACI 3924J ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 39 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : /12/2015. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, AM THESE ARE CROSS APPEALS BY THE ASSESSEE AND THE RE VENUE AGAINST THE ORDER OF CIT(A)-II, JAIPUR DATED 18.12.2013 WHERE IN THE FOLLOWING GROUNDS TAKEN IN ITA NO. 37/JP/13. (I) THE LD.CIT/(A) HAS ERRED O ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 40 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 41 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 42 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 43 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 44 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 45 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 46 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 47 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 48 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 49 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 50 ITANO. 37/JP/14 & ITA NO. 192/JP/14 M/S GILLETE INDIA LTD. 51 (II) N FCT BND UIN LAW