DCIT CIR -4(2) (1), MUMBAI vs. M/S. GODDRESS PHARMACEUTICALS P.LTD, MUMBAI

This appeal is filed by the Deputy Commissioner of income tax, Circle – 4 (2) (1), Mumbai (the learned AO) against the order passed by the National faceless appeal Centre (NFAC) the learned CIT – A), Delhi dated 18/8/2021 assessment year 2017 – 18 wherein the assessee filed an appeal before eight against the order passed by the Asst Commissioner of income tax – 12 (2) (2), Mumbai u/s 143 (3) of the act was allowed. Therefore, assessing officer is “Whether on the facts and in the circumstances of the case and in law Ld. CIT(A) has erred in deleting the disallowance of expenditure on Business Promotion/Travelling of Rs.1,88,95,898/- for business purpose without considering the facts that assessee has failed to justify the excess expenditure incurred on business promotion.

Brief facts of the case shows that assessee is a company engaged in the business of manufacturing of drugs and

During the course of assessment proceedings, the learned that AO noted that assessee has claimed business promotion distribution and travelling expenditure. On examination of the details see found that the Ledger of the expenses did not have any proper correlation and the amounts were shown mostly in the form of reimbursement to the employees and directors, reputation of names of employees in many of the expenses. Initially the assessee did not provide the complete detail is called for however on receipt of show cause notice the assessee provided the said details however it also did not contain the names of retailers and assessee also did not file any collation with the sales affected by them on account of spending of the above money. Further the learned AO noted that assessee has booked a hotel rooms and flight tickets from Messer’s Akbar travels private limited to whom notice u/s 133 (6) was issued and in response to the notice that company denied to have any account of the assessee. Accordingly out of the total expenditure of ₹ 75,583,590/– the learned assessing officer disallowed one fourth of the business promotion expenditure amounting to ₹ 18,825,898/–.

The learned assessing AO also found that during the and. Cash deposit of ₹ 3,385,274 was made, assessee in response stated that ₹ 2,346,255 has been deposited by the various debtors. AO issued notices u/s 133 (six) to all

Assessee aggrieved with the order of the learned assessing officer preferred an appeal before the learned CIT – A. Before the learned CIT – A assessee reiterated the details filed before the learned assessing officer with respect to the various expenditure and given the explanation for the same. With respect to the information obtained by the assessing officer from Akbar Travels private limited u/s 133 (6) of the act, assessee submitted that it has not dealt with that company but has dealt with Akbar holidays private limited. It also submitted the confirmation as well as form number 16 A issued to that party. On the basis of this the learned CIT – A held that that assessee submitted the evidences such as ledgers, bills, bank statements which prove that the expenditure has been incurred for the purpose of the business promotion and travelling accordingly he deleted the ad hoc disallowance is of one fourth expenditure on business promotion and travelling of ₹ 18,895,898/–.

The learned assessing officer is aggrieved with that order and has preferred this appeal before us. Ground number 1 is with respect to the deletion of the addition of Rs 1 88,25,898/– being one fourth of the expenditure on business promotion and travelling of the expenditure.

The learned departmental representative supported the order of the learned that assessing officer.

The learned that authorised representative submitted a detailed paper book containing 234 pages. He referred to the note on the nature of marketing and business promotion expenses incurred by the assessee along with the breakup of the business promotion expenditure and the Ledger of various business promotion expenditure. It also submitted the Ledger of the Akbar holidays private limited along with the confirmation. Therefore it was stated that there is no reason to uphold the ad hoc disallowance of one fourth of the total expenditure which is deleted by the learned CIT – A.

We have carefully considered the rival contention and perused the orders of the lower authorities. In the

Ground number 2 and 3 is with respect to the cash deposited by the assessee in its bank account amounting to ₹ 2,346,255 that has been added by the learned assessing officer as unaccounted cash deposits u/s 69A of the income tax act. The assessee submitted that these

Accordingly, appeal of the learned AO is dismissed.