DCIT 8(1)(OSD), MUMBAI V. IMS HELATH INFORMATION & CONSULTING SERVICES INDIA P. LTD, MUMBAI

ITA 8295/MUM/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3978 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 09-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 08-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P K SHUKLA
• Keywords: Depreciation; Additional evidence; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER & SHRI SANJAY GARG, JUDICIAL MEMBER ITA NOS. 8295/MUM/2011 ASSESSMENT YEARS: 2008-09 D.C.I.T. 8(1), (OSD), MUMBAI, ROOM NO. 216-A, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020 VS. M/S. IMS HEALTH INFORMATION & CONSULTING SERVICES INDIA PVT. LTD., 4 TH FLOOR, ICC CHAMBERS II, SAKI VIHAR ROAD, POWAI, MUMBAI-400 072 PAN:A AACK2203J (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NIRAJ SETH REVENUE BY : SHRI P.K. SHUKLA DATE OF HEARING : 09.07.2013 DATE OF PRONOUNCEMENT : 24.07.2013 O R D E R PER SANJAY GARG, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE CIT(A) DATED 22.09.2011. 2. THE GROUNDS OF APPEAL ARE REPRODUCED AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCES OF P ANEL COST EXPENDITURE OF RS. 2,14,57,123/-, SERVICE CHARGES O F RS. 7,04,92,793/- , PAYMENTS/SERVICE CHARGES TO IMS AG, SWITZERLAND O F RS. 16,04,210/- AND LEGAL AND PROFESSIONAL CHARGES OF RS. 59,28,530 /-, HELD BY THE AO AS CAPITAL EXPENDITURE, WITHOUT APPRECIATING THE FA CTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THE PANEL COST EXPE NDITURE, SERVICE CHARGES, PAYMENTS/SERVICE CHARGES TO IMS AG, SWITZE RLAND AND LEGAL AND PROFESSIONAL CHARGES AS REVENUE EXPENDITURE, RE LYING ON THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE BEFOR E HIM, WITHOUT AFFORDING THE ASSESSING OFFICER DUE AND NECESSARY O PPORTUNITY TO EXAMINE AND VERIFY THE ADDITIONAL EVIDENCE. ITA NO. 8295 /MUM/2011 DCIT 8(1) V. M/S IMS HEALTH INFORMATION & CONSULTI NG SERVICES INDIA PVT. LTD. ASSESSMENT YEAR: 2008-09 2 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. C IT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RES TORED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E-COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING MARKET RESEARCH REPORTS OF TH E PHARMACEUTICAL INDUSTRY AND CONSULTANCY SERVICES TO THE PHARMACEUTICAL COMPANIE S. THE ASSESSEE IN HIS INCOME TAX RETURN, CLAIMED THE FOLLOWING EXPENSES AS REVEN UE IN NATURE:- (I) PANEL COST EXPENDITURE OF RS. 2,14,57,123 (II) SERVICES CHARGES OF RS. 7,04,92,793 TO AC NIEL SEN ORG-MARG PRIVATE LIMITED (III) SERVICES CHARGES OF RS. 16,04,210 TO IMS AG, SWITZERLAND (IV) LEGAL AND PROFESSIONAL CHARGES OF RS. 59,28,53 0 4. THE AO, HOWEVER, DURING THE ASSESSMENT PROCEEDIN GS UNDER SECTION 143(3) OF THE INCOME TAX ACT, DISALLOWED THE SAID CLAIM OF THE ASSESSEE AND TREATED THE ABOVE SAID EXPENSES AS CAPITAL IN NATURE, OBSERVING AS UNDER:- I HAVE CONSIDERED THE ASSESSEES ARGUMENTS AND AL SO PERUSED THE FACTS OF THE CASE. THE DATA COLLECTED IS UTILIZED IN MARK ET RESEARCH FOR PHARMACEUTICALS AND HEALTH CARE SECTOR TO COMPANIES IN INDIA AS WELL AS GLOBALLY. THE COLLECTION OF DATA IS A MUST FOR THE ASSESSEE AND THESE DATAS CANNOT BE CONSUMED IN ONE YEAR. IT CAN BE UTILIZED OVER A PERIOD OF TIME AND THEREFORE, IT IS AN INTANGIBLE ASSETS ACQUIRED BY THE ASSESSEE AND THE ASSESSEE IS ENTITLED FOR DEPRECIATION U/S 32(II) OF THE I.T. ACT, 1961. 5. THE LEARNED CIT(A), HOWEVER, ALLOWED THE CLAIM O F THE ASSESSEE BY WAY OF ADMITTING CERTAIN ADDITIONAL EVIDENCES IN THE SHAPE OF LETTERS AND COPY OF THE AGREEMENT ETC., WHICH FACT CAN BE NOTED FROM THE FO LLOWING OBSERVATIONS OF THE LEARNED CIT(A) MADE IN PARA 5.1 OF HIS ORDER:- THE APPELLANT ALSO INVITED MY ATTENTION TO THE WRI TTEN SUBMISSIONS WITH RESPECT TO PAYMENTS TO IMS AG GIVEN TO AO DURING T HE COURSE OF ASSESSMENT VIDE LETTERS DATED 8 OCTOBER 2010 WHICH WERE SUBMITTED TO AS PART OF THE PAPER BOOK FILED DURING THE COURSE O F APPEAL AND HAVE BEEN TO A LARGE EXTENT REPRODUCED IN THE ASSESSMENT ORDER. FURTHER, COPIES OF THE THREE INVOICES RAISED BY IMS AG ON TH E APPELLANT WERE ENCLOSED AS PART OF PAPER BOOK AND FORMED PART OF T HE SUBMISSION TO THE AO DATED 8 OCTOBER 2010. THE APPELLANT ALSO SUBMITT ED TO ME SEPARATELY ITA NO. 8295 /MUM/2011 DCIT 8(1) V. M/S IMS HEALTH INFORMATION & CONSULTI NG SERVICES INDIA PVT. LTD. ASSESSMENT YEAR: 2008-09 3 THE AGREEMENT DATED 30 DECEMBER 2003 BETWEEN IT AND IMS AG WHICH SPELT OUT THE ROLES AND RESPONSIBILITIES OF THE PAR TIES. 6. THE GRIEVANCE OF THE REVENUE IS THAT THE LEARNED CIT(A) WITHOUT GIVING THE OPPORTUNITY TO THE ASSESSING OFFICER TO EXAMINE THE SAID ADDITIONAL EVIDENCES AND EVEN WITHOUT RECORDING HIS FINDING AS TO THE JUSTIF ICATION FOR ADMISSION OF ADDITIONAL EVIDENCE AT APPELLATE STAGE HAS ALLOWED THE CLAIM O F THE ASSESSEE. ON THE OTHER HAND, THE LEARNED AR, BEFORE US, HAS SUBMITTED THAT THE CLAIM OF THE ASSESSEE REGARDING THE ABOVE SAID EXPENSES BEING REVENUE IN NATURE HAD NOT ONLY BEEN ADMITTED BY THE AO IN THE PREVIOUS YEARS I.E. A.YS. 2005-06, 2006-07 AND 2007-08, BUT ALSO IN SUBSEQUENT YEAR TO THE RELEVANT ASSESSM ENT YEAR I.E. DURING A.Y. 2009-10 ALSO. HOWEVER, THE LEARNED AR WAS FAIR ENOUGH TO A DMIT THAT THE CERTAIN DOCUMENTS RELIED UPON BY THE LEARNED CIT(A) IN HIS ORDER, WER E NOT BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS. 7. IN VIEW OF THE FACT, ADDITIONAL EVIDENCE HAS BEE N ADMITTED BY THE CIT(A) WITHOUT GIVING OPPORTUNITY TO THE AO TO EXAMINE THE SAID DOCUMENTS AND FURTHER THAT THE ADDITIONAL EVIDENCE HAS BEEN ADMITTED BY THE LE ARNED CIT(A) WITHOUT GIVING ANY FINDING IN RESPECT OF JUSTIFICATION FOR THE SAME IN HIS ORDER, WE SET ASIDE THE ORDER UNDER APPEAL AND REMAND BACK THE CASE TO THE FILE O F THE LEARNED CIT(A) TO PASS A FRESH SPEAKING ORDER. IT IS FURTHER DIRECTED THAT I F THE LEARNED CIT(A) WILL BE OF THE VIEW THAT THE ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE ARE NECESSARY FOR THE JUST DECISION OF THE CASE, HE WILL PASS A SPEAKING ORDER FOR ADMITTING THE SAME IN EVIDENCE AT APPELLATE STAGE. IT IS FURTHER DIRECTED THAT IF THE LEARNED CIT(A) WILL ADMIT ANY ADDITIONAL EVIDENCE, HE WILL GIVE A PROPER OPPO RTUNITY TO THE AO TO EXAMINE AND REBUT THOSE EVIDENCES BY WAY OF CALLING A REMAND RE PORT OR OTHERWISE AS PER PROVISIONS OF LAW. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF JULY, 2013. SD/- SD/- (P.M. JAGTAP) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER ITA NO. 8295 /MUM/2011 DCIT 8(1) V. M/S IMS HEALTH INFORMATION & CONSULTI NG SERVICES INDIA PVT. LTD. ASSESSMENT YEAR: 2008-09 4 MUMBAI, DATED: 24.07.2013. *KKM COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR I BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.