DY CIT 9(3)92), MUMBAI V. M/S GALDERMA INDIA PVT LTD., MUMBAI

ITA 843/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3347 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 14-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VINOD KUMAR
• Assessee Lawyers: KRUPA R GANDHI; RIDDHI MARU ARS
• Section: 271(1)(c); 143(3); 260A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G, BENCH MUMBAI BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER & SHRI RAVISH SOOD, JUDICIAL MEM BER ITA NO.843 & 844/MUM/2019 ( ASSESSMENT YEARS: 2011-12 & 2012-13 ) DCIT-9(3)(2) ROOM NO.418, 4 TH FLOOR AAYKAR BHAWAN M.K.ROAD MUMBAI-400 020 V S. GALDERMA INDIA PVT.LTD. LOTUS CORPORATE PARK D WING, UNIT 801 & 802 GRAHAM FIRTH STEEL COMPOUND, WESTERN EXPRESS HIGHWAY GOREGAON(WEST) MUMBAI-400 063 PAN/GIR NO.AAACG8660M APPELLANT ) .. RESPONDENT ) ASSESSEE BY MS. KRUPA R.GANDHI & MS. RIDDHI MARU, ARS REVENUE BY SHRI V.VINOD KUMAR, DR DATE OF HEARING 03/03/2020 DATE OF PRONOUNCEMENT 06/03/2020 / O R D E R PER G.MANJUNATHA, ACCOUNTANT MEMBER : THESE TWO APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST SEPARATE, BUT IDENTICAL ORDERS OF THE LD. COMMISSI ONER OF INCOME TAX (APPEALS)-16, MUMBAI, BOTH DATED 28/12/2018 FOR THE ASST. YEARS 2011-12 & 2012-13. SINCE, THE FACTS ARE IDENT ICAL AND ISSUES ARE COMMON, FOR THE SAKE OF CONVENIENCE, THESE APPE ALS WERE HEARD TOGETHER AND ARE DISPOSED-OFF BY THIS CONSOLIDATE O RDER. ITA NOS.843 & 844/MUM/2019 GALDERMA INDIA PVT.LTD. 2 2. THE REVENUE HAS MORE OR LESS RAISED COMMON GROUN DS OF APPEAL FOR BOTH ASST.YEARS. THEREFORE, FOR THE SAKE OF BREVITY, GROUNDS OF APPEAL FILED FOR AY 2011-12 ARE REPRODUC ED AS UNDER:- 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. C1T(A) ERRED IN DELETING PENALTY OF RS. 68, 00,000/- LEVIED U/S. 271(1 )(C) OF THE I.T. ACT, 1961 ON ACCOUNT OF DISA LLOWANCE OF PROMOTION EXPENSES?' 2. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING PENALTY OF RS.68,0 0,000/- LEVIED U/S. 271(1)(C) OF THE ACT SOLELY ON GROUND THAT QUANTUM ADDITION HAS BEEN DELETED BY THE HON'BLE IT AT IGNORING THE FACT THAT THE DECISION ON QUANTUM DECISION HAS NOT BEEN ACCEPTED BY THE DEPAR TMENT AND APPEAL U/S. 260A HAS BEEN FILED BEFORE THE HON'BLE BOMBAY HIGH COURT? 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF MARKETING AND TRADING OF DERMATOLOGY PRODUCTS. THE ASSESEE HAS FILED ITS RETURN OF INCOM E FOR THE AY 2011- 12 ON 30/09/2011, DECLARING TOTAL INCOME OF RS.6,80 ,98,658/-. THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE I.T .ACT, 1961 ON 08/03/2014 AND DETERMINED TOTAL INCOME AT RS. 10,30 ,96,510/- AFTER MAKING ADDITION OF RS.2,96,41,408/- TOWARDS SALES P ROMOTION EXPENSES BEING FREEBIES AND SPONSORSHIP GIVEN TO DO CTORS AND MARKETING PERSONNEL. THEREAFTER, THE LD. AO HAS INI TIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T.ACT, 1961 AND AFTER CONSIDERING RELEVANT SUBMISSIONS OF THE ASSESSEE HAS LEVIED PEN ALTY OF RS.68 LACS, WHICH IS EQUAL TO 100% OF THE TAX SOUGHT TO B E EVADED FOR FURNISHING INACCURATE PARTICULARS OF INCOME. MEANTI ME, THE ASSESEE HAS CHALLENGED ADDITIONS MADE BY THE LD. AO BEFORE THE APPELLATE AUTHORITIES AND THE ITAT, VIDE ITS ORDER DATED 02/0 4/2018 IN ITA NO.80/MUM/2016 & ITA NO.138/MUM/2016 FOR AY 2011-12 HAS DELETED ADDITIONS MADE BY THE LD. AO TOWARDS DISALL OWANCES OF ITA NOS.843 & 844/MUM/2019 GALDERMA INDIA PVT.LTD. 3 SALES PROMOTION EXPENSE, ON THE GROUND THAT CIRCULA R NO.05/2012, DATED 01/08/2012, ISSUED BY THE CBDT IS APPLICABLE FROM AY 2013- 14 ONWARDS AND CONSEQUENTLY, NO DISALLOWANCES COULD BE MADE TOWARDS SALES PROMOTION EXPENSES BEING FREEBIES GIV EN TO DOCTORS FOR AY 2011-12. 4. THE LD. AR FOR THE ASSESSEE, AT THE TIME OF HEAR ING SUBMITTED THAT PENALTY LEVIED BY THE LD. AO U/S 271(1)(C) OF THE I.T.ACT, 1961, ON ACCOUNT OF ADDITIONS TOWARDS DISALLOWANCES OF SA LES PROMOTION EXPENSES BEING FREEBIES GIVEN TO DOCTORS CANNOT SUR VIVE, BECAUSE THE ADDITIONS MADE BY THE LD. AO HAS BEEN FINALLY D ELETED BY THE ITAT, VIDE ITS ORDER DATED 02/04/2018 FOR AY 2011-1 2 AND VIDE ORDER DATED 31/05/2018 FOR AY 2012-13. 5. THE LD. DR, ON THE OTHER HAND SUBMITTED THAT ALT HOUGH, THE TRIBUNAL HAS DELETED ADDITIONS MADE BY THE LD. AO T OWARDS DISALLOWANCES OF SALES PROMOTION EXPENSES IN QUANTU M APPEALS PROCEEDINGS, BUT, FACT REMAINS THAT THE DEPARTMENT HAS NOT ACCEPTED THE FINDINGS OF THE TRIBUNAL AND FURTHER, APPEAL HA S BEEN FILED BEFORE THE HONBLE JURISDICTIONAL HIGH COURT AND HENCE, PE NALTY LEVIED ON SUCH ADDITIONS SHOULD BE DECIDED ON THE BASIS OF FA CTS BROUGHT OUT BY THE LD. AO DURING ASSESSMENT PROCEEDINGS AND REA SONS GIVEN FOR LEVYING PENALTY U/S 271(1)(C) OF THE I.T.ACT, 1961. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. WE FIND THAT THE ITAT, MUMBAI G BENCH IN ITA NO.80/MUM/20 16 & ITA NO.138/MUM/2016, VIDE ORDER DATED 02/04/2018 FOR AY 2011-12 HAS DELETED ADDITIONS MADE BY THE LD. AO TOWARDS SALES PROMOTION ITA NOS.843 & 844/MUM/2019 GALDERMA INDIA PVT.LTD. 4 EXPENSE, IN LIGHT OF THE CIRCULAR ISSUED BY THE CB DT, ON THE BASIS OF MCI REGULATIONS. WE FURTHER NOTED THAT ITAT, MUMBAI G BENCH IN ITA NO.1139/MUM/2016 & 1524/MUM/2016 VIDE ORDER DAT ED 31/05/2018 FOR AY 2012-13 HAS ALSO DELETED ADDITION S MADE TOWARDS SALES PROMOTION EXPENSES BEING FREEBIES GIVEN TO D OCTORS ON THE BASIS OF CIRCULAR NO.05/2012 DATED 01/08/2012 ISSUE D BY THE CBDT. ONCE, ADDITION ON WHICH PENALTY LEVIED U/S 271(1)(C ) OF THE I.T.ACT, 1961 HAS BEEN FINALLY DELETED BY THE APPELLATE AUT HORITIES, THEN THERE IS NOTHING SURVIVES TO LEVY PENALTY U/S 271(1 )(C) OF THE I.T.ACT, 1961. THE LD.CIT(A) AFTER CONSIDERING RELEVANT FACT S AND ALSO, BY TAKEN NOTE OF FACTS THAT THE TRIBUNAL HAS DELETED A DDITIONS MADE BY THE LD. AO, WHICH TRIGGERED LEVY OF PENALTY OF U/S 271(1)(C) OF THE I.T.ACT, 1961 HAS DELETED PENALTY LEVIED ON SUCH A DDITIONS, WE, THEREFORE ARE OF THE CONSIDERED VIEW THAT THE LD.CI T(A) WAS RIGHT IN DELETING PENALTY LEVIED BY THE LD. AO U/S 271(1)(C) OF THE I.T.ACT, 1961 AND HENCE, WE ARE INCLINED TO UPHOLD THE ORDE R OF THE LD.CIT(A) AND DISMISS, APPEAL FILED BY THE REVENUE FOR BOTH ASSESSMENT YEARS. 7. IN THE RESULT, BOTH APPEALS FILED BY THE REVENUE FOR AY 2011-12 AND 2012-13 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 06/03/2 020 SD/- (RAVISH SOOD) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 06/03/2020 THIRUMALESH SR.PS ITA NOS.843 & 844/MUM/2019 GALDERMA INDIA PVT.LTD. 5 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//