CENTAUR PHARMACEUTICALS P.LTD, MUMBAI V. DCIT 10(1), MUMBAI

ITA 3981/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0218 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 10-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN LD
• Assessee Lawyers: VISHWAS V MEHENDALE LD
• Keywords: Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

ITA.NO.3981/MUM/2016 CENTAUR PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR 2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 3981/MUM/2016 ( / ASSESSMENT YEAR: 2011-12) CENTAUR PHARMACEUTICALS PRIVATE LIMITED CENTAUR HOUSE,SHANTI NAGAR VAKOLA, SANTACRUZ(E) MUMBAI 400 055 / VS. DEPUTY COMMISSIONER OF INCOME-TAX 10(1) MUMBAI ./ ./PAN/GIR NO. AAACC-0444-K ( /APPELLANT ) : ( !' / RESPONDENT ) ASSESSEE BY : VISHWAS V.MEHENDALE, LD. AR REVENUE BY : M.C.OMI NINGSHEN, LD. DR / DATE OF HEARING : 14/02/2018 / DATE OF PRONOUNCEMENT : 21/02/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011-12 CONTEST THE ORDER OF LD. COMMISSIONER OF IN COME-TAX (APPEALS)-22 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)22/IT/156/2014-15 DATED 03/03/2016. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX-10(1), MUMBAI [AO ] U/S 143(3) OF ITA.NO.3981/MUM/2016 CENTAUR PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR 2011-12 2 THE INCOME TAX ACT, 1961 ON 31/03/2014. THE SOLITARY ISSUE INVOLVED IN THE APPEAL IS DISALLOWANCE OF CERTAIN LEGAL & PROFE SSIONAL CHARGES FOR RS.18.70 LACS. THE SOLE EFFECTIVE GROUND RAISED BY THE ASSESSEE READS AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE LEARNED AS SESSING OFFICER OF MAKING A DISALLOWANCE OF LEGAL & PROFESSIONAL CHARGES OF RS. 18,70,718/- TREATING THE SAME AS CAPITAL EXPENDITURE AND NOT ALLOWING IT AS REVENUE EXPENDITURE. 2. FACTS LEADING TO THE SAME ARE THAT DURING ASSESSMENT PROCEEDINGS U/S 143(3), LD. AO OPINED THAT CERTAIN LEGAL & PROF ESSIONAL CHARGES TO THE EXTENT OF RS.69.17 LACS INCURRED BY THE ASSESSEE WE RE CAPITAL IN NATURE AND HENCE NOT ALLOWABLE AS REVENUE EXPENDITURE. THI S EXPENDITURE WERE PRIMARILY IN THE NATURE OF PRODUCT REGISTRATION FEES, PATENT REGISTRATION & FORGING OF LICENSE AGREEMENT ETC. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IM PUGNED ORDER DATED 03/03/2016. 3. THE LD. CIT(A) NOTED THAT THE CORRECT FIGURES TO BE DISALLOWED WAS RS.47.73 LACS AND FURTHER, RELYING ON THE ORDER OF ITS PREDECESSOR FOR EARLIER AYS, PROVIDED PARTIAL RELIEF TO THE EXTENT OF RS.29.46 LACS AND CONFIRMED BALANCE DISALLOWANCE OF RS.18.27 LACS BEI NG AMOUNT PAID TO DR. MAY PHARMA CONSULT GMBH . STILL AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR], AT THE OUTSET, DREW ATTENTION TO THE FACT THAT THE ASSESSE E SUFFERED SIMILAR DISALLOWANCE IN AYS 2008-09 & 2009-10 WHICH WAS CON TESTED UP-TO THE LEVEL OF THIS TRIBUNAL VIDE ITA NO.7056/MUM/2011 & ITA NO.5782/MUM/2012 DATED 27/04/2015 WHERE THE MATTER WAS RESTORED ITA.NO.3981/MUM/2016 CENTAUR PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR 2011-12 3 BACK WITH CERTAIN DIRECTIONS AND THEREFORE, SIMILAR DIRECTIONS MAY BE GIVEN IN THIS YEAR ALSO. THE LD. DR RAISED NO SERIO US OBJECTIONS AGAINST THE SAME. 5. UPON PERUSAL OF THE CITED ORDER OF THE TRIBUNAL FOR AY 2008-09 & 2009-10, WE FIND THAT THE ISSUE HAS BEEN RESTORED B ACK BY THE TRIBUNAL WITH FOLLOWING DIRECTIONS:- 6.2 NOW THE QUESTION RELATES TO PAYMENT MADE TO DR . MAY PHARMA CONSULT GMBH. IN THIS REGARD, WE OBSERVED THAT THIS DISALLO WANCE HAS BEEN UPHELD BY LD. CIT(A) ON THE GROUND THAT THIS WAS NOT MADE FOR THE PURPOSE OF BUSINESS. LD. CIT(A) HAS ALSO OBSERVED THAT THERE W AS NO MATERIAL ON RECORD TO HOLD THAT WHAT SERVICES WERE PROVIDED BY THE SAI D PARTY TO THE ASSESSEE. AGAINST THESE OBSERVATIONS OF LD. CIT(A) IT IS THE CASE OF THE LD. AR THAT THE PAYMENTS ARE SUPPORTED BY THE AGREEMENT AS WELL AS THE WORK DONE BY THE SAID PARTY WHICH WERE SUPPORTED BY EMAILS AND OTHER DOCUMENTARY EVIDENCE. HOWEVER, IT WAS SUBMITTED THAT THIS MATTER MAY BE R ESTORED BACK TO THE FILE OF AO FOR VERIFICATION OF THE PURPOSE OF BUSINESS AS W ELL FOR DETERMINING THE SERVICES RENDERED BY THE SAID PARTY TO THE ASSESSEE . ACCORDINGLY, AFTER HEARING BOTH THE PARTIES, WE RESTORE THE ISSUE TO T HE FILE OF AO LIMITED TO THE EXTENT OF MAKING SUCH VERIFICATIONS IN RESPECT OF P AYMENTS MADE TO DR. MAY PHARMA CONSULT GMBH, WHICH ARE CLAIMED AS EXPENDITU RE INCURRED FOR THE PURPOSE OF BUSINESS. AFTER CONDUCTING NECESSARY VER IFICATION, THE AO IS DIRECTED TO DECIDE THIS ISSUE IN ACCORDANCE OF LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING. WE DIRECT ACCORD INGLY. WE FIND IDENTICAL FACTS IN THE PRESENT CASE AND THE REFORE, RESPECTFULLY FOLLOWING THE BINDING JUDICIAL PRECEDENT, THE MATTE R IS RESTORED BACK TO THE FILE OF LD. AO FOR VERIFICATION ON SIMILAR LINES. 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOWE D FOR STATISTICAL PURPOSES. ITA.NO.3981/MUM/2016 CENTAUR PHARMACEUTICALS PRIVATE LIMITED ASSESSMENT YEAR 2011-12 4 ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEBRUARY, 2018 SD/- SD/- (MAHAVIR SINGH) ( MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 21. 02.2018 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. !$- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI