TaxTMI 
TaxTMI 
2012 (9) TMI 757
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....nue has raised common grounds in the respective appeals except the difference of amount. The grounds raised for the assessment year 2003 - 04 are reproduced as under: Grounds of assessee's appeal: "The Commissioner of Income Tax(Appeals) erred in allowing PSR salary & expenses only to the extent of Rs. 30,94,638/- being 28% of sales. On the facts and circumsnces of the case, he should have allowed total amount spent on PSR salary and expenses of Rs. 35,80,946/-(16,61,617 + 19,19,329) Grounds of revenue's appeal: "On the facts and in the circumstances of the case and in law, the ld Commissioner of Income Tax(Appeals) erred in reducing the disallowance of Rs. 19,23,014/- to Rs. 4,89,993/- out of PSR salary and PSR expenses" As it is evi....
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....n respect of PSR expenses. Since the assessee declared loss of Rs..2,37,370/- in the return of income; therefore, the Assessing Officer has observed that the expenditure has been booked by the assessee to convert the gross profit rate of 51.28% in to net loss. The Assessing Officer was of the view that in the line of business PSR salary and expenses are normally taken at 10% to 15% of the total sales; but in the case of the assessee it comes to 32.4%, which is on higher side. Accordingly, the Assessing Officer restricted the expenses claimed by the assessee to 15% of sales i.e. Rs.. 16,57,841/-and disallowed the remaining expenses of Rs.. 19,23,014/-. 3.2 The assessee challenged the action of the Assessing Officer before Commissioner of ....
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....asis without examining the issue of genuineness of expenditure. The assessee has furnished all details of the expenditure towards PSR expenses and PSR salary for 47 Medical representatives employed by the assessee, who spread over several states in the country. He has further submitted that in the line of business of the assessee, which is ethical marketing of pharmaceutical formulation, a team of Medical Representatives is engaged, trained and developed to sell the pre-determined set of products. In this line of business, substantial expenses are in form of salaries, daily allowances and travelling and conveyance allowances. The Medical Representatives are regularly visiting to the practising Doctors, follow-up with the chemists and wholes....
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....ficer though doubted higher percentages of expenditure claimed by the assessee; however, no enquiry or investigation has been made by the Assessing Officer to find out the genuineness of the claim of the assessee. From the facts of the case, it is clear that the business of the assessee is to promote and market the pharmaceutical products, which involve a large number of Medical Representatives to travel different places for marketing through canvassing the doctors, hospitals and chemists as well as wholesalers. This activity is an essential part of the assessee's business and has not been disputed by the authorities below. Therefore, when the expenditure on marketing of pharmaceutical products is bound to happen, than without giving a f....