DCIT (OSD) 8(2), MUMBAI V. ICPA HEALTH PRODUCTS LTD, MUMBAI

ITA 6957/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92570 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2010-2011
• Appeal Filed On: 29-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Competent authority; Tax effect
• Section: 37(1); 37

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - I - BENCH , , BEFORE S/SH. I P BANSAL,JUDICIAL M EMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 6957 /MUM/20 1 3 , / ASSESSMENT YEAR - 2010 - 11 DY. CIT - 8(2) - (OSD) ROOM NO.218, AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. VS M/S. ICPA HEALTH PRODUCTS LTD. OFF. 233 - A, ADARSH INDUSTRIA L ESTATE,SAHAR ROAD, CHAKALA ANDHERI (E) , MUMBAI . PAN: AAACI 3042 F ( / A PPELLANT ) ( / RESPONDENT ) /ASSESSEE BY :SHRI RONAK G. DOSHI / REVENUE B Y :SHRI SACCHIDANAND DUBEY - DR / DATE OF HEARING : 26 - 0 5 - 2015 / DATE OF PRONOUNCEMENT : 26 - 0 5 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT. 19.9.2013 OF CIT(A) - 17, MUMBAI, THE ASSESSING OFFICER(AO) , HAS RAISED FOL LOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.11,81,900/ - BEING FREEBIES GIVEN BY THE ASSESSEE TO DOCTORS, IGNORING THE FACT THAT SUCH PAYMENTS ARE SPECIFICALLY PROHIBITED W.E.F. 10.12.2009 BY THE MEDICAL COUNCIL OF INDIA (MCI), WHICH IS THE COMPETENT AUTHORITY, AND THEREFORE, THE SAID EXPENSES ARE ILLEGAL AND CONSEQUENTLY NOT ALLOWABLE AS PER THE EXPLANATION TO SECTION 37(1) OF THE INCOME - TAX ACT, 1961. 2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF SALES PROMOTION EXPENSES OF RS. 11,81,900/ - ON THE GROUND THAT THE CBDT'S CIRCULAR IS APPLICABLE PROSPECTIVELY WITHOUT APPRECI ATING THAT, EVEN OTHERWISE, AS PER THE PROVISIONS OF EXPLANATION TO SEC. 37( 1) INSERTED BY THE FINANCE (NO.2) ACT, 1998 W.R.E.F. 01.04.1962, THE IMPUGNED EXPENSES ARE ILLEGAL IN VIEW OF THE IMC REGULATIONS, 2002 APPLICABLE W.E.F 10.12.2009, WHICH PROHI BITS GIVING OF SUCH FREEBIES BY PHARMACEUTICAL COMPANIES TO DOCTORS/MEDICAL PRACTITIONERS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE OF SALES PROMOTION EXPENSES OF RS. 11,81,900 / - ON THE GROUND THAT THE CBDT'S CIRCULAR IS APPLICABLE PROSPECTIVELY, WITHOUT APPRECIATING THAT DUE TO THE AMENDMENT OF THE IMC REGULATIONS, 2002 WITH EFFECT FROM 10.12.2009, THE PROHIBITION OF FREEBIES BY PHARMACEUTICAL COMPANIES TO DOCTORS WAS APPLI CABLE TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN DISALLOWING THE SAID EXPENSES OF RS.11,81,900/ - AS PER THE EXPLANATION TO SECTION 37 (1) OF THE ACT. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE LD . CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 6957M/13 2 ASSESSEE - COMPANY, ENGAGED IN THE BUSINESS OF PHARMACEUTICALS AND TRADING IN ORAL HEALTH CARE PRODUCTS FILED ITS RETURN OF INCOME ON 7.10.2010 DECLARING TOTAL INCOME AT RS .11.14 CRORES. THE AO COMPLETED THE ASSESSEMENT ON 7.1.13 DETERMINING THE INCOME OF THE ASSESSEE AT RS.11, 34, 05, 730/ - . AGGREIV E D BY THE ORDER OF AO THE ASSES SEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY ( FAA ) WHO PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE. 2. A T THE TIME OF HEARING BEFORE US, REPRESENTATIVES OF BOTH THE SIDES AGREED THAT TAX EFFECT INVOLVED IN THE APPEAL WAS LESS THAT RS.4.00 LACS I.E. RS. 3.65 LACS. AS THE TAX EFFECT IS LESS THAN THE TAX LIMIT PRESCRIBED BY THE CENTRAL BOARD OF D IRECT TAXES ( CBDT ) FOR FILING SECOND APPEALS , SO, WE ARE DISMISSING THE APPEAL FILED BY THE AO FOR LOW TAX EFFECT . AS A RESULT APPEAL FILED BY AO IS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH MAY ,2015. 26 TH , 2015 SD/ - SD/ - ( /I P BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 26 .0 5 .2015 . . . JV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.