MAPRA LABORATORIES PVT. LTD., MUMBAI V. ACIT - CIRCLE 7(2)(1), MUMBAI

ITA 6401/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8195 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 05-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER & SHRI RAJESH KUMAR, ACCOUNTANT MEMBER I.T.A. NOS. 6401/MUM/2018 ASSESSMENT YEARS : 2013-14 MAPRA LABORATORIES PVT LTD., 201, ADHYARU INDUSTRIAL ESTATE, SUN MILL COMPOUND, LOWER PAREL, MUMBAI. / VS. ACIT CIRCLE 7(2)(1) MITTAL COURT, NARIMAN POINT, 22, MUMBAI. ./ ./ PAN/GIR NO. : AAACM5060F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI AJAY KUMAR RASTOGI / RESPONDENT BY : SMT. JOTHILAKSHMI NAYAK / DATE OF HEARING 09/01/2020 !'# / DATE OF PRONOUNCEMENT 22/01 /2019 / O R D E R PER SAKTIJIT DEY- JM: THIS IS AN APPEAL BY THE ASSESSEE AGAINST ORDER DATED 20.07.2018 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) -13, MUMBAI FOR THE ASSESSMENT YEAR 2013-14. ITA NO S. 6401/MUM/2018 MAPRA LABORATORIES PVT LTD., MUMBAI. - 2 - 2. IN GROUND NO.1, THE ASSESSEE HAS CHALLENGED DISALLOWANCE OF RS. 28,11,627/- BEING EXPENDITURE INCURRED TOWARDS GIFT ITEMS GIVEN TO DOCTORS. 2.1 BRIEFLY THE FACTS ARE, THE ASSESSEE, A RESIDENT COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF VARIOUS TYPES OF PHARMACEUTICAL PRODUCT S. FOR THE ASSESSMENT YEAR UNDER DISPUTE THE ASSESSEE FILED ITS RETURN OF INCOME ON 26.09.2013, DECLARING INCOME OF RS. 16,29,88,200/-. IN COURSE OF ASSESSMENT PROCEEDING, THE ASSESSING OFFICER NOTICE D THAT THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS. 28,11,627/- TOWARDS PROVIDING VARIOUS GIFT ITEMS TO DOCTORS, SUCH AS LAPTOP, LCD, TV, WASHING MACHINE, AIR CONDITIONERS, MIXER GRINDER, MOBILE ETC. NOTIC ING THIS, THE ASSESSING OFFICER CALLED UPON THE ASSESSE E TO FURNISH THE DETAILS OF THE DOCTORS, SUCH AS, ADDRES S, PAN, AMOUNTS SPENT, NATURE OF GIFTS ETC. IN RESPON SE ITA NO S. 6401/MUM/2018 MAPRA LABORATORIES PVT LTD., MUMBAI. - 3 - TO THE QUERY RAISED BY THE ASSESSING OFFICER, THE ASSESSEE FURNISHED THE NAME OF THE ENTITIES FROM WHOM HE HAD PURCHASED THE GIFT ITEMS, THE NAME OF DOCTORS TO WHOM SUCH GIFTS WERE GIVEN, NATURE OF GI FT ITEM AND PRICE. AFTER VERIFYING THE DETAILS FURNIS HED BY THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THA T VARIOUS DETAILS CALLED FOR WERE NOT FURNISHED BY TH E ASSESSEE. ACCORDINGLY, HE DISALLOWED THE AMOUNT OF RS. 28,11,657/-. 2.2 THE ASSESSEE CHALLENGED THE AFORESAID DISALLOWANCE IN AN APPEAL BEFORE LEARNED COMMISSIONER (APPEALS). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THOUGH, LEARNED COMMISSIONER (APPEALS) AGREED THAT EXPENDITURE INCURRED BY PHARMACEUTICAL COMPANIES IN GIVING GIFT S / FREEBIES TO DOCTORS IS AN ALLOWABLE EXPENDITURE U /S 37(1) OF THE ACT, HOWEVER, HE CONFIRMED THE ITA NO S. 6401/MUM/2018 MAPRA LABORATORIES PVT LTD., MUMBAI. - 4 - DISALLOWANCE BY HOLDING THAT THE ASSESSEE FAILED TO PROVIDE THE DETAILS OF THE PERSONS TO WHOM SUCH GIF T ITEMS WERE GIVEN. 2.3 LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED, THE ASSESSEE HAS FURNISHED THE PURCHASE VOUCHERS OF THE PARTIES FROM WHOM GIFT ITEMS WERE PURCHASED. H E SUBMITTED, IN VIEW OF SUCH EVIDENCE FILED BY THE ASSESSEE, THE DISALLOWANCE OF EXPENDITURE IS IMPROPER. 2.4 LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED, THOUGH, THE ASSESSEE MIGHT HAVE FURNISHED THE DETAI LS OF GIFT ITEMS PURCHASED BY FURNISHED PURCHASE INVOICES, HOWEVER, EXCEPT FURNISHING THE NAME OF TH E DOCTORS, THE ASSESSEE HAS NOT FURNISHED THE OTHER DETAILS LIKE THEIR ADDRESS, PAN ETC. SHE SUBMITTED , IN ITA NO S. 6401/MUM/2018 MAPRA LABORATORIES PVT LTD., MUMBAI. - 5 - ABSENCE OF NECESSARY DETAILS FURNISHED BY THE ASSESSEE, EXPENDITURE COULD NOT HAVE BEEN ALLOWED. 2.5 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. UNDISPUTEDLY, THE ASSESSEE HAS CLAIMED THE DISPUTED AMOUNT TOWARDS EXPENDITURE INCURRED IN PROVIDING GIFT ITEMS TO DOCTORS. LEARNED COMMISSIONER (APPEALS) HAS AGREED WITH THE ASSESSEE THAT EXPENDITURE INCURRED TOWARDS PROVIDING GIFT ITEMS TO DOCTORS IS AN ALLOWABLE EXPENDITURE. HOWEVER, THE DISALLOWANCE MADE IN THE PRESENT CASE IS DUE TO LACK OF EVIDENCE. IT IS OBS ERVED, DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER HAD SPECIFICALLY CALLED UPON THE ASSESSEE T O FURNISH THE DETAILS OF EXPENDITURE INCURRED TOWARDS GIFT ITEMS SUCH AS ADDRESS, PAN AND DETAILS OF GIFT ITEMS GIVEN TO DOCTORS. ON PERUSAL OF DETAILS FURNISHED BEFORE THE ASSESSING OFFICER, WHICH IS PL ACED ITA NO S. 6401/MUM/2018 MAPRA LABORATORIES PVT LTD., MUMBAI. - 6 - AT PAGE 09 TO 11 OF THE PAPER BOOK, IT IS NOTICED T HAT THE ASSESSEE HAS ONLY MENTIONED NAME OF THE DOCTORS TO WHOM GIFT ITEMS WERE GIVEN WITHOUT PROVIDING THE IR ADDRESS AND PAN. IT MAY BE A FACT THAT THE ASSESSE E HAD FURNISHED PROOF OF PURCHASE OF GIFT ITEMS. HOWEVER, THE ASSESSEE ALSO HAS TO PROVE THAT GIFT ITEMS WERE ACTUALLY GIVEN TO THE DOCTORS. SINCE, T HE ASSESSEE DID NOT FURNISH THE ADDRESS, PAN OR ANY OTHER DETAILS RELATING TO THE DOCTORS TO WHOM GIFT ITEMS WERE PRESENTED, THE ASSESSING OFFICER, AS WEL L AS, LEARNED COMMISSIONER (APPEALS) WERE PREVENTED FROM CARRYING OUT CROSS VERIFICATION TO ASCERTAIN WHETHER ACTUALLY THE GIFT ITEMS WERE PROVIDED TO TH E DOCTORS CONCERNED. BY ONLY PROVIDING THE NAMES OF THE DOCTORS THE ASSESSEE CANNOT ABSOLVE ITSELF FROM DISCHARGING THE ONUS OF PROVING THE GENUINENESS OF EXPENDITURE. IN VIEW OF THE AFORESAID, WE ARE INCL INED ITA NO S. 6401/MUM/2018 MAPRA LABORATORIES PVT LTD., MUMBAI. - 7 - TO RESTORE THE ISSUE TO THE ASSESSING OFFICER FOR F RESH ADJUDICATION, THEREBY PROVIDING AN OPPORTUNITY TO T HE ASSESSEE TO FURNISH FURTHER DETAILS RELATING TO DOC TORS TO WHOM THE GIFT ITEMS WERE ALLEGEDLY PRESENTED, SO THAT THE ASSESSING OFFICER CAN VERIFY THE AUTHENTIC ITY OF ASSESSEES CLAIM. ACCORDINGLY, GROUND RAISED IS ALLOWED FOR STATISTICAL PURPOSES. 3. GROUND NO. 2 IS NOT PRESSED, HENCE DISMISSED. 4. IN GROUND NO. 3, ASSESSEE HAS CONFESSED THE DISALLOWANCE OF RS. 3,24,383/- TOWARDS GIFT ITEMS PROVIDED TO OTHERS. 4.1 BRIEFLY THE FACTS ARE, DURING THE ASSESSMENT PROCEEDING THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF RS. 1,62,19,152/- TO THE PROFIT AND LOSS ACCOUNT AS EXPENSES TOWARDS GIFT ARTICLES. NOTICING THIS, THE ASSESSING OFFICE R