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Income Tax Appellate Tribunal, MUMBAI BENCH “G” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
PER OM PRAKASH KANT, AM This appeal by the assessee is directed against revision order dated 22.03.2021 passed by the Ld. Pr. Commissioner of Income-tax- 8, Mumbai (in short ‘the Ld. PCIT’) for assessment year 2014-15, raising following grounds:
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On the facts and in circumstances of the case and in law, the learned Pr. On the facts and in circumstances of the case and in law, the learned Pr. On the facts and in circumstances of the case and in law, the learned Pr. CIT:
Revision under section 263 of the Act Revision under section 263 of the Act
erred in passing passing revisionary order under section 263 of erred in passing passing revisionary order under section 263 of erred in passing passing revisionary order under section 263 of the Act revising the assessment the Act revising the assessment order under section 143(3) of the order under section 143(3) of the Act dated 20 February 2018, without appreciating that section Act dated 20 February 2018, without appreciating that section Act dated 20 February 2018, without appreciating that section 263 cannot be invoked unless the conjunctive conditions that 263 cannot be invoked unless the conjunctive conditions that 263 cannot be invoked unless the conjunctive conditions that assessment order passed is erroneous in law as well as prejudicial assessment order passed is erroneous in law as well as prejudicial assessment order passed is erroneous in law as well as prejudicial to the interests of the revenue, to the interests of the revenue, are satisfied; 2. erred in passing the order under section 263 of the Act without erred in passing the order under section 263 of the Act without erred in passing the order under section 263 of the Act without providing sufficient opportunity of being heard and without providing sufficient opportunity of being heard and without providing sufficient opportunity of being heard and without considering the adjournment letter filed by the Appellant and considering the adjournment letter filed by the Appellant and considering the adjournment letter filed by the Appellant and therefore the order under section 263 of the Act passed is in therefore the order under section 263 of the Act passe therefore the order under section 263 of the Act passe violation of principles of natural justice, bad in law and void; violation of principles of natural justice, bad in law and void; violation of principles of natural justice, bad in law and void; 3. erred in passing the revisionary order under section 263 of the erred in passing the revisionary order under section 263 of the erred in passing the revisionary order under section 263 of the Act, without appreciating that section 263 cannot be invoked in Act, without appreciating that section 263 cannot be invoked in Act, without appreciating that section 263 cannot be invoked in case where the view taken by the learned Pr. CIT is based on the case where the view taken by the learned Pr. CIT is bas case where the view taken by the learned Pr. CIT is bas presumption that, inadequate enquiry being made by the AO presumption that, inadequate enquiry being made by the AO presumption that, inadequate enquiry being made by the AO without pointing out any specific error or defect to show the without pointing out any specific error or defect to show the without pointing out any specific error or defect to show the assessment order is erroneous as well as prejudicial to the interest assessment order is erroneous as well as prejudicial to assessment order is erroneous as well as prejudicial to of the revenue; of the revenue; 4. erred in passing the revisionary order under section 263 of the Act erred in passing the revisionary order under section 263 of the Act erred in passing the revisionary order under section 263 of the Act revising the assessment order under section 143(3) of the Act revising the assessment order under section 143(3) of the Act revising the assessment order under section 143(3) of the Act dated 20 February 2018, wherein AO has already applied his mind dated 20 February 2018, wherein AO has already applied his mind dated 20 February 2018, wherein AO has already applied his mind during the course of assessment proceedings on the same set of during the course of assessment proceedings on the same set of during the course of assessment proceedings on the same set of facts without any change in law and therefore the Pr. CIT while facts without any change in law and therefore the Pr. CIT while facts without any change in law and therefore the Pr. CIT while passing revisionary order under section 263 of the Act wants to passing revisionary order under section 263 of the Act wants to passing revisionary order under section 263 of the Act wants to substitute his view and thereby, order sought to be revised under substitute his view and thereby, order sought to be revised under substitute his view and thereby, order sought to be revised under
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section 263 is neither erroneous/prejudicial to the interest of the section 263 is neither erroneous/prejudicial to the interest section 263 is neither erroneous/prejudicial to the interest revenue; revenue; 5. erred in relying on Explanation 2(a) to section 263 of the Act erred in relying on Explanation 2(a) to section 263 of the Act erred in relying on Explanation 2(a) to section 263 of the Act without appreciating that in the facts of this case, adequate without appreciating that in the facts of this case, adequate without appreciating that in the facts of this case, adequate enquiry was made by the AO and the assessment order is neither enquiry was made by the AO and the assessment order is neither enquiry was made by the AO and the assessment order is neither erroneous nor prejudicial to the interest of the rev erroneous nor prejudicial to the interest of the revenue; enue; 6. without prejudice to above, erred in invoking the provisions of without prejudice to above, erred in invoking the provisions of without prejudice to above, erred in invoking the provisions of section 263 of the Act in respect of issues ie () disallowance of section 263 of the Act in respect of issues ie () disallowance of section 263 of the Act in respect of issues ie () disallowance of physician samples; and (1) disallowance of conference expenses on physician samples; and (1) disallowance of conference expenses on physician samples; and (1) disallowance of conference expenses on doctors, without appreciating that these issues are subject matter doctors, without appreciating that these issues are su doctors, without appreciating that these issues are su of appeal before the CIT(A) and hence present revisionary of appeal before the CIT(A) and hence present revisionary of appeal before the CIT(A) and hence present revisionary proceeding is not maintainable on these issue; proceeding is not maintainable on these issue; 7. erred in passing order under section 263 of the Act on provision erred in passing order under section 263 of the Act on provision erred in passing order under section 263 of the Act on provision for pricing matters written back" of INR 5,67,46,000, when such for pricing matters written back" of INR 5,67,46,000, when such for pricing matters written back" of INR 5,67,46,000, when such issue was issue was never raised during the course of 263 proceeding and as never raised during the course of 263 proceeding and as these write back pertains to provision which was never claimed as these write back pertains to provision which was never claimed as these write back pertains to provision which was never claimed as deduction and hence order passed under section 143(3) is not an deduction and hence order passed under section 143(3) is not an deduction and hence order passed under section 143(3) is not an erroneous order erroneous order
Directing AQ to disallow balance 30% of expenditure i Directing AQ to disallow balance 30% of expenditure i Directing AQ to disallow balance 30% of expenditure incurred on purchase manufacture of physician samples of INR 7 purchase manufacture of physician samples of INR 7.18.35.712 (tax purchase manufacture of physician samples of INR 7.18.35.712 (tax effect INR 2,44, effect INR 2,44,16,958)
erred in holding that the expenditure incurred on distribution of erred in holding that the expenditure incurred on distribution of erred in holding that the expenditure incurred on distribution of physician samples is not allowable as business expenditure and is physician samples is not allowable as business expenditure and is physician samples is not allowable as business expenditure and is hit by Explanation to s hit by Explanation to section 37 of the Act as beng prohibited by ection 37 of the Act as beng prohibited by Indian Medical Council (Professional conduct, Etiquette and Indian Medical Council (Professional conduct, Etiquette and Indian Medical Council (Professional conduct, Etiquette and Ethics) Regulations, 2002 (MCI Regulations') Ethics) Regulations, 2002 (MCI Regulations')
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erred in not appreciating that the MCI Regulations are applicable erred in not appreciating that the MCI Regulations are applicable erred in not appreciating that the MCI Regulations are applicable only to individual medical only to individual medical pracutioners/ doctors and not octors and not applicable to the pharmaceutical companies: applicable to the pharmaceutical companies: 10. erred in not appreciating that the giving physician samples to erred in not appreciating that the giving physician samples to erred in not appreciating that the giving physician samples to doctors is a normal business practice and entire expenditure is doctors is a normal business practice and entire expenditure is doctors is a normal business practice and entire expenditure is incurred wholly and exclusively for the purpose of business incurred wholly and exclusively for the purpose of business incurred wholly and exclusively for the purpose of business
Directing AO to disallow balance 30% of sales promotion/ AO to disallow balance 30% of sales promotion/ AO to disallow balance 30% of sales promotion/ conference expenses on doctors of INR 3,34,64,782 (tax effect INR conference expenses on doctors of INR 3,34,64,782 (tax effect INR conference expenses on doctors of INR 3,34,64,782 (tax effect INR 1,13,74,679)
erred in holding that the sales promotion expenses/conference erred in holding that the sales promotion expenses/conference erred in holding that the sales promotion expenses/conference expenses on doctors are not allowable as business expenditure and expenses on doctors are not allowable as business expenditure and expenses on doctors are not allowable as business expenditure and are hit by Explanation to section 37 of the Act as being prohibited e hit by Explanation to section 37 of the Act as being prohibited e hit by Explanation to section 37 of the Act as being prohibited by MCI Regulations by MCI Regulations 12. erred in not appreciating that the MCI Regulations are applicable erred in not appreciating that the MCI Regulations are applicable erred in not appreciating that the MCI Regulations are applicable only to individual medical practitioners/ doctors and not only to individual medical practitioners/ doctors and not only to individual medical practitioners/ doctors and not applicable to the pharmaceutical companies; applicable to the pharmaceutical companies; 13. erred in not appreciating that the expenditure on honorarium fees ed in not appreciating that the expenditure on honorarium fees ed in not appreciating that the expenditure on honorarium fees paid to the doctors and expenditure on sponsorship, registration, paid to the doctors and expenditure on sponsorship, registration, paid to the doctors and expenditure on sponsorship, registration, travelling, accommodation and other subsistence support travelling, accommodation and other subsistence support travelling, accommodation and other subsistence support expenditure is incurred on account of agreement with the doctors expenditure is incurred on account of agreement with the doctors expenditure is incurred on account of agreement with the doctors for professional services rendered and is incurred wholly and ofessional services rendered and is incurred wholly and ofessional services rendered and is incurred wholly and exclusively for the purpose of business exclusively for the purpose of business
Disallowance of alleged difference of INR 2,00,81,152/ Disallowance of alleged difference of INR 2,00,81,152/ Disallowance of alleged difference of INR 2,00,81,152/- between profit on sale of fixed asset reduced from the head 'Profit from profit on sale of fixed asset reduced from the head 'Profit from profit on sale of fixed asset reduced from the head 'Profit from business/ profession' and sale business/ profession' and sale consideration reduced from block of consideration reduced from block of assets 'Residential Building' depreciable @5% (tax effect INR assets 'Residential Building' depreciable @5% (tax effect INR assets 'Residential Building' depreciable @5% (tax effect INR 68,25,584)
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erred in holding that the appellant has claimed excess deduction erred in holding that the appellant has claimed excess deduction erred in holding that the appellant has claimed excess deduction of INR 2,00,81,152/ of INR 2,00,81,152/- being the difference between profit on sale of being the difference between profit on sale of fixed assets o fixed assets of IN 23,41,84,000/- reduced while computing income reduced while computing income under the head 'profits and gains of business or profession' and under the head 'profits and gains of business or profession' and under the head 'profits and gains of business or profession' and INR 21.41,02,848 reduced from block of assets building; 21.41,02,848 reduced from block of assets building; 21.41,02,848 reduced from block of assets building; 15. erred in not appreciating that profit on sale of various depreciable erred in not appreciating that profit on sale of various depreciable erred in not appreciating that profit on sale of various depreciable assets of IN 23 assets of IN 23,41,84,000 was reduced while calculating business ,41,84,000 was reduced while calculating business income, whereas the total sale consideration on sale of such income, whereas the total sale consideration on sale income, whereas the total sale consideration on sale depreciable assets was IN 27,35.93,384/ depreciable assets was IN 27,35.93,384/- which was reduced from which was reduced from blockof various assets and included sale consideration of INR blockof various assets and included sale consideration of INR blockof various assets and included sale consideration of INR 21,41,02,848/ 21,41,02,848/- on sale of residential house (reduced from blockof ale of residential house (reduced from blockof residential building) and and therefore there was no excess residential building) and and therefore there was no excess residential building) and and therefore there was no excess deduction claimed by the appellant; deduction claimed by the appellant;
Disallowance of deduction of provision for pricing formulation Disallowance of deduction of provision for pricing formulation Disallowance of deduction of provision for pricing formulation written back of INR written back of INR 5.67,46,000/- (INR 1,92,87,965)
erred in directing AO to verify the provision for pricing erred in directing AO to verify the provision for pricing erred in directing AO to verify the provision for pricing formulation of INR 5,67,46,000/ formulation of INR 5,67,46,000/- as to whether the same is whether the same is contingent in nature and disallowable under section 43B of the contingent in nature and disallowable under section 43B of the contingent in nature and disallowable under section 43B of the Act: 17. should have appreciated that the said amount represents have appreciated that the said amount represents "provision fo "provision for pricing formumations written back" of INR r pricing formumations written back" of INR 5,67,46,000/ 5,67,46,000/- and underline provision when created in earlier and underline provision when created in earlier years, the same was not claimed as deduction and thereby reversal years, the same was not claimed as deduction and thereby reversal years, the same was not claimed as deduction and thereby reversal of the said provisio of the said provision in current year is rightly not offered to tax; ghtly not offered to tax;
The assessment u/s 143(3) r.w.s. 144C(4) of the Income The assessment u/s 143(3) r.w.s. 144C(4) of the Income-tax The assessment u/s 143(3) r.w.s. 144C(4) of the Income
Act, 1961 (in short ‘the Act’) was passed by the Assessing Officer on Act, 1961 (in short ‘the Act’) was passed by the Assessing Officer on Act, 1961 (in short ‘the Act’) was passed by the Assessing Officer on
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20.02.2018. The Ld. PCIT called for the records and thereafter 20.02.2018. The Ld. PCIT called for the records and thereafter 20.02.2018. The Ld. PCIT called for the records and thereafter issued show cause notice to the assessee and show cause notice to the assessee and after after considering submission of the assessee submission of the assessee, passed the impugned order holding the passed the impugned order holding the assessment order passed by the assessee assessment order passed by the assessee as erroneous in so far as s erroneous in so far as prejudicial to the interest of the Revenue in terms of section 263 of prejudicial to the interest of the Revenue in terms of section 263 of prejudicial to the interest of the Revenue in terms of section 263 of the Act.
Aggrieved, the assessee is before the Tribunal raising the Aggrieved, the assessee is before the Tribunal raising Aggrieved, the assessee is before the Tribunal raising grounds as reproduced above. grounds as reproduced above.
None appeared on behalf of the assessee despite notifying. None appeared on behalf of the assessee despite notifying None appeared on behalf of the assessee despite notifying Even no adjournment application ven no adjournment application was filed. The Ld. Departmental filed. The Ld. Departmental Representative (DR) drawn out attention t Representative (DR) drawn out attention to letter dated 28.06.2022 o letter dated 28.06.2022 filed by the assessee filed by the assessee, wherein it is mentioned that the Assessing wherein it is mentioned that the Assessing Officer has not passed the consequential assessment order and the Officer has not passed the consequential assessment order and the Officer has not passed the consequential assessment order and the time limit for which which had already expired on 31.03.2022. Therefore, already expired on 31.03.2022. Therefore, the present appeal has become a the present appeal has become academic.
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In view of the above submission, we are of the opinion that no In view of the above submission, we are of the opinion that no In view of the above submission, we are of the opinion that no purpose will be served in adjudicating this appeal when purpose will be served in adjudicating this appeal when purpose will be served in adjudicating this appeal when limitation for passing consequential order has already expired and for passing consequential order has already expired and for passing consequential order has already expired and no consequential assessment order has been passed consequential assessment order has been passed, thus t thus the matter has only rendered academic. Accordingly, we dismiss the appeal as has only rendered academic. Accordingly, we dismiss the appeal as has only rendered academic. Accordingly, we dismiss the appeal as infructuous.
5.1 However, in case, the assessee wants to press the grounds However, in case, the assessee wants to press the grounds However, in case, the assessee wants to press the grounds raised, the assessee is at liberty to file a Miscellaneous Application raised, the assessee is at liberty to file a Miscellaneous Application raised, the assessee is at liberty to file a Miscellaneous Application for seeking recall of the order, for seeking recall of the order, if so advised.
In the result, the appeal filed by the assessee is dismissed. In the result, the appeal filed by the assessee is dismissed. In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open Court in nounced in the open Court in 12/10/2022. /10/2022. Sd/- Sd/- - (RAHUL CHAUDHARY RAHUL CHAUDHARY) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 12/10/2022 Dragon Legal/Rahul Sharma, Sr. P.S.
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Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, BY ORDER, //True Copy// (Sr. Private Secretary) (Sr. Private Secretary) ITAT, Mumbai ITAT, Mumbai