DCIT 8(2), MUMBAI vs. PROCTER & GAMBLE HOME PRODUCTS LTD, PUNE

Revenue by : Shri D.V. Singh (DR) Assessee by : Shri Haresh G. Buch, Jishaan Jain (AR) Date of hearing : 22.08.2016 Date of Pronouncement : 09.11.2016 O R D E R PER PAWAN SINGH, JM: 1. These cross appeals are directed against the order of ld. Commissioner of Income-tax (Appeals)-17, Mumbai [for Short ‘CIT(A)’] dated 14.08.2014 for Assessment Year (AY)-2004-05. As both the appeals are filed against the same order of Ld. CIT(A) by the parties, hence, both the appeals were ITA Nos.6774 & 6882/M/014, M/s Procter & Gamble Home Products Ltd. clubbed together, heard and being decided by a common order to avoid conflicting decision. First we are taking the appeal filed by assessee.

is that Ld CIT(A) erred in upholding the disallowance of Rs. 3 crores being amortized portion for relevant year out of Rs. 21 crores paid under the ‘Safeguard’ Confidentiality Agreement to Godrej Soaps Ltd. (‘GSL’).

3. We have heard the rival contention of the respective ld representatives of the parties. At the outset, it was submitted by ld. ld. Authorised Representative (AR) of the assessee that the issue raised by the assessee in his appeal is covered against the assessee by the order of Tribunal in assessee’s own case for AYs 1997-98 to 2000-01 dated 15.12.2010 vide ITA No. 988, 8868- 8870/Mum/2001 & 2004. Ld. Departmental Representative (DR) for Revenue not disputed the contention of ld. AR for assessee. Thus, considering the contention of ld. AR of the assessee, the appeal filed by the assessee is dismissed. As the same is covered against him by the decision of Tribunal in assessee’s own case for AYs 1997-98 to 2000-01 dated 15.12.2010 vide ITA No. 988, 8868-8870/Mum/2001 & 2004.

4. In the result, appeal of the assessee is dismissed.

that learned CIT(A) erred in deleting the addition of Rs. 47 crores on account of reduction in G.P. without appreciating that the assessee has given different explanations during the assessment proceedings and in set aside proceedings.

6. We have heard ld. representatives of the parties and perused the record. The Ld. DR for the Revenue argued that during the assessment, the AO asked the assessee to furnish the reasons for fall in Gross Profit (G.P.), the assessee filed its reply and contended that the fall in G.P. ratio was relating to 2 & 6882/M/014, M/s Procter & Gamble Home Products Ltd. shampoo sachets which contribute more than 50% of Gross sale. It was further contended that expenses on packing of the bulk shampoo products in small sachets for 20 gm. to higher weight packs, were the main reasons which affected the GP rate. The assessee was further asked to furnish the details thereof for examination by AO and the assessee neither gave evidence nor could prove its contention, thus, the AO made the addition on account of reduction of GP. The ld. DR for the Revenue relied upon the order of AO. On the other hand, ld. AR for assessee argued that the AO has not appreciated the fact brought before him. The assessee during the appellate proceeding filed additional evidence to prove the contention about fall in the G.P. rate. The ld CIT(A) forwarded the evidences to the AO in his remand report. The AO has not disputed in his report about the facts of the assessee.

7. We have considered the rival contention of the parties and perused the material available on record. The AO in his remand report gave the following observation: “Without prejudice to the above, the submissions made by the assessee have been carefully perused. It is noted that during the period under consideration, the assessee company was aggressively marketing its products and trying to get a foothold in the laundry segment of the market ahead and strongly than its competitors. In a bid to do that, it reduced the selling price per Kg. of its laundry products vis-a-vis preceding year by 24.75% and the corresponding purchase price per Kg. in the said period was reduced by 13%. As the laundry sales constituted 61% of the total turnover of the assessee company, this excess of reduction of sales price over purchase price accounted for a roughly 7.15% of the fall in GP.”

8. We have noticed that the AO in his remand report accepted that the assessee has reduced the selling price of its laundry products vis-a-vis the preceding year by 24.75% and the corresponding purchase price was reduced by 13%. The AO has further accepted that excess reduction of sale price offered, the purchase price accounted for a roughly of 7.5% of fall in GP. We have further seen that while considering this ground the ld CIT(A) observed that the AO has not disputed that laundry segments contributes nearby 61% of the 3