Shri Ravi Ashokkumar Agrawal, Ahmedabad V. The Income tax Officer, Ward-1(2)(3), Ahmedabad

ITA 415/AHD/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5671 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 17-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Gift; Depreciation; Business expenditure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER) ITA. NO: 415/AHD/2017 (ASSESSMENT YEAR: 2010-11) SHRI RAVI ASHOKKUMAR AGRAWAL PROP: CUBIT HEALTH CARE, 43, KHETAN TOWER, NR. RAJASTHAN HOSPITAL, SHAHIBAUG,AHMEDABAD V/S INCOME TAX OFFICER, WARD- 1(2)(3), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: ADHPA 5704D APPELLANT BY : SHRI ASEEM L. THAKKAR, AR RESPONDENT BY : SHRI MUDIT NAGPAL, SR. D.R. ( )/ ORDER DATE OF HEARING : 12 -11-201 8 DATE OF PRONOUNCEMENT : 29 -11-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-10, AHMEDABAD DATED 29.11.2016 PERTAINING TO A.Y. 2010- 11 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO. 415/ AHD/2017 . A.Y.2010-11 2 1. THE HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.4,70,000/- MADE BY THE ASSES SING OFFICER OUT OF TRAVELLING EXPENDITURE CLAIMED BY THE APPELLANT TREATING THE S AME AS NON- BUSINESS EXPENDITURE. 2. THE HE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 1500/- MADE BY THE ASSESSIN G OFFICER BEING 50% OF THE DONATION EXPENSES OF RS.3000/- CLAIMED BY THE APPEL LANT AS EXEMPT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN CONFIRMING THE DISALLOWANCE OF EXPENSES OF RS. 16,914/- MADE BY TH E ASSESSING OFFICER BEING 10% OF THE TOTAL EXPENSES OF RS. 1,69,142/- WHICH C OMPRISES VEHICLE EXPENSES OF RS.73,999/-, TELEPHONE EXPENSES OF RS.69,023/-, MOB ILE EXPENSES OF RS. 15,965/- & INTERNET EXPENSES OF RS. 10,155/-. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN DISALLOWANCE OF RS.14,344/- MADE BY THE ASSESSING OFFICER BEING 171 0TH OF THE DEPRECIATION OF RS. 1,43,448/- ON MOTOR CAR CLAIMED BY THE APPELLANT. 2. GROUND NOS. 2, 3 & 4 ARE NOT PRESSED BECAUSE OF SMA LLNESS OF AMOUNT, THEREFORE, WE WOULD LIKE TO ADJUDICATE GROUND NO. 1 ONLY. 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND BY THE AO THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 6, 25, 244 /- TOWARDS TRAVELLING EXPENSES. THE AO ASKED THE ASSESSEE TO SUBMIT THE C OPY OF LEDGER AND ACCOUNT OF TRAVELLING EXPENSES. ON VERIFICATION OF THE DETA ILS, IT WAS OBSERVED BY THE AO THAT OUT OF RS. 6,25,244/-, RS. 4, 70, 000 /- WERE INCURRED TOWARDS THE BOOKING OF AMERICA TOUR IN RESPECT OF DR. J.K. BANSAL AND F AMILY. IT WAS OBSERVED BY THE AO THAT SHRI J.K. BANSAL IS IN ANY WAY CONNECTE D WITH THE BUSINESS OF THE ASSESSEE AND AS SUCH THIS EXPENDITURE CANNOT BE SAI D TO BE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IN VIEW OF THE ABOVE, AFTER DISCUSSING ITA NO. 415/ AHD/2017 . A.Y.2010-11 3 THE ISSUE IN DETAIL, THE AO MADE AN ADDITION OF RS. 4,70, 000/- TOWARDS TRAVELLING EXPENSES. 4. AGAINST THE ADDITION OF RS. 4,70,000/-, ASSESSEE PR EFERRED FIRST STATUTORY APPEAL BEFORE THE FIRST APPELLATE AUTHORITY BUT TO NO AVAI L. 5. NOW APPELLANT IS BEFORE US. 6. IN THIS CASE, THE APPELLANT IS ENGAGED IN THE BUSIN ESS OF TRADING IN MEDICINE AND PHARMACEUTICALS COMPANY AND APPELLANT SPENT AN AMOU NT OF RS. 4,70,000/- PAID TO THOMAS COOK (INDIA) LTD. FOR AMERICA TOUR I N RESPECT OF DR. J.K. BANSAL AND FAMILY IN ORDER TO PROMOTES ITS BUSINESS OF MEDICINE. AND STATED THAT DR. J.K. BANSAL HAS BENEFITTED TO ITS BUSINESS , THEREFORE, SUM OF RS. 4,70,000/- WAS SPENT FOR THE PURPOSE OF BUSINESS EX PEDIENCY. 7. AS PHARMACEUTICAL COMPANY AND ITS AGENT ARE NOT ALL OWED TO MAKE PUBLICITY THROUGH PUBLIC ADVERTISEMENT. THUS, PHARMACEUTICAL COMPANY AND ITS AGENT HAVE TO SPEND MONEY FOR DOCTORS. 8. IN SUPPORT OF ITS CONTENTION, LD. A.R. CITED AN ORD ER OF CO-ORDINATE BENCH IN THE MATTER OF SUNFLOWER PHARMACY VS. ITO IN ITA NO. 2546/AHD/2015 WHEREIN IT IS HELD: 5. WE SHALL NOW TURN TO THE SUBSTANTIVE APPEAL OF THE ASSESSEE. FROM THE PERUSAL OF THE RECORD, WE FIND THAT THE AO HAS DISALLOWED COMM ISSION PAID AGGREGATING TO RS. 41, 39, 13 1/- TO DOCTORS. FOR THIS PURPOSE, TH E ASSESSING OFFICER (AO) HAS RELIED UPON THE CBDT CIRCULAR NO, 5/20.1 2 DATED 01 /08/2012 ISSUED BY BDT AND OBSERVED THAT THE PAYMENT MADE TO THE DOCTORS CONTR AVENES SECTION 37(1) OF THE ACT IN VIEW OF THE EXPLANATION APPENDED TO THIS SUB -SECTION. WE FIND THAT THE ISSUE IS NO LONGER RES INTEGRA AND HAS BEEN EXAMINE D BY THE COORDINATE BENCH OF TRIBUNAL IN SYNCOM FORMULATIONS (I) LTD. VS. DCIT I N IT A NOS.6429 & ITA NO. 415/ AHD/2017 . A.Y.2010-11 4 6428/MUM/2012 ORDER DATED 23/12/2015. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE COORDINATE BENCH IS REPRODUCED HEREUND ER:- '5. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND T HAT RECEIVING OF GIFTS BY DOCTORS WAS PROHIBITED BY MCI GUIDELINES, GIVING OF THE SAME BY MANUFACTURER IS NOT PROHIBITED UNDER ANY I CM' FOR THE TIME BEING IN FORCE. GIVING SMALL GIFTS BEARING COMPANY LOGO TO DOCTORS DOES NOT TANTAMOUNT TO GIVING GIFTS TO DOCTORS BUT IT IS REGARDED AS AD VERTISING EXPENSES. AS REGARDS SPONSORING DOCTORS FOR CONFERENCES AND EXTE NDING HOSPITALITY, PHARMACEUTICAL COMPANIES HAVE BEEN SPONSORING PRACT ICING DOCTORS TO ATTEND PRESTIGIOUS CONFERENCES SO THAT THEY GATHER CONTEMPORARY KNOWLEDGE ABOUT MANAGEMENT OF CERTAIN ILLNESS/DISEA SE AND LEARN ABOUT NEWER THERAPIES. WE FOUND THAT THE DISALLOWANCE WAS MADE BY THE AO BY RELYING ON THE CBDT CIRCULAR DATED 01.08.20.12 ONWA RDS. HOWEVER, THE CIRCULAR WAS NOT APPLICABLE BECAUSE IT INTRODUCED W .E.F.OL.08.2012. I.E. ASSESSMENT YEAR 2013-2014, WHEREAS THE RELEVANT ASS ESSMENT YEAR UNDER CONSIDERATION IS 2010-2011 AND 2011-2012. ACCORDING LY, WE DO NOT FIND ANY MERIT IN THE DISALLOWANCE SO MADE BY THE AO IN BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION. ' 6. IN PARITY WITH THE REASONING GIVEN BY THE COORDINAT E BENCH, WE FIND THAT THE DISALLOWANCE MADE BY THE AO IS NOT JUSTIFIED. ACCOR DINGLY, THE SUBSTANTIVE CLAIM OF THE ASSESSEE IS ALLOWED. 9. ON THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CAS E, WE HOLD THAT ABOVE SAID AMOUNT WAS SPENT BY THE ASSESSEE FOR BUSINESS EXPED IENCY AND RESPECTFULLY FOLLOWING THE ORDER OF CO-ORDINATE BENCH, WE ALLOW THE APPEAL OF THE APPELLANT. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN OPEN COURT ON 29- 11- 2018 SD/- SD/- (WASEEM AHMED) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 29/11/2018 RAJESH COPY OF THE ORDER FORWARDED TO: -