TaxTMI 
TaxTMI 
2007 (2) TMI 174
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....ovo consideration was a conscious decision. The assessment year involved herein is the assessment year 1997-98. The petitioner is a 100 per cent. subsidiary of Coca Cola South Asia India Holding, Hongkong, which in turn is a subsidiary of Coca Cola Asia Holding, Singapore, and the ultimate holding company of the petitioner is "The Coca Cola Company U.S.A. ("TCCC" for short). TCCC is the registered owner in India of the trade marks such as Coca Cola, Coke, Fanta and Sprite. The petitioner had entered into an agreement with the TCCC on June 1, 1993, pursuant to which an ordinary gratuitous non-exclusive licence was granted to the petitioner and, accordingly the petitioner has been manufacturing and selling non alcoholic beverage basis also known as "concentrates" and beverages made out of such concentrates. The business activity of the petitioner comprises of blending, bottling and distribution of non-alcoholic beverages. Instead of setting up its own factory, the petitioner has entered into an arrangement with bottlers, fillers, wooden crate manufacturers, etc. so that the "concentrate" sold by the petitioner are used in the manufacture of non-alcoholic beverages under their s....
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....nbsp; ------------ 10,80,04,482 ------------ As regards the deduction of marketing expenses of Rs. 73,79,03,469 claimed as deduction, the Assessing Officer by his order dated March 31, 2000, disallowed a sum of Rs. 17,99,74,343 inter alia on the ground that there were differences in the amounts allegedly claimed to have been paid by the petitioner to various parties and the amount confirmed to have been received by those parties. The above disallowance included claims which were not confirmed by some of the parties by sending their reply to the Assessing Officer. The above disallowance included disallowance of expenses incurred in the earlier years and ad hoc disallowance of Rs. 2,00,00,000. Thus, out o....
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....n the scheme of things of the TCCC includes Maldives. (iii) The very genesis of the CCI Inc. evidenced from the papers submitted to the RBI was to provide technical and managerial assistance to the appellant-company as well as to take care of the brand image of the TCCC in India. (iv) The services rendered by the CCI Inc. to the bottlers licensed by the TCCC could be classified into services which are for the purposes of the appellant-company and the services which are for the purposes of the business of the bottlers/TCCC. While the services to the bottlers for purchase of concentrate etc. and activities relating to market research etc. could be classified as services for the purposes of the business of the company as it directly helps the appellant in planning its production as evidenced by minutes of S&OP (sales and operation meetings) submitted before me and also in manufacture resource planning styled as MRP-II Project by the appellant, the services rendered in quality up gradation of the bottlers etc. are for the purpose of the bottlers as well the TCCC brand-image. This aspect gets further provided by the recent episode of toxic residue in the soft drinks wherein the bo....
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....; Rs. Rs. (i) Difference 31,19,919 (ii) No reply (iii) Earlier years 9,11,61,718 ----------- 4,42,81,637 (iv) Ad hoc as in the 2,00,00,000 asstt. Order (v) Capital expenditure 3,37,18,863 on films/TV and brand building (bal.fig) ------------  ....
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.... Commissioner of Income-tax (Appeals) ought to have made disallowance of marketing expenses at Rs. 13,03,94,46 as computed below: Rs. Rs. (i) Difference 94,35,775 (ii) No reply 95,64,184 (iii) Earlier years 5,76,75,624 ----------- 7,66,75,583 (iv) Ad hoc as in the 2,00,00,000 asstt. Order (v) Capital expenditure 3,37,18,863 on films/TV and br....
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....e of the expenses of Rs. 46,35,12,031 claimed as service charges are to be segregated first yearwise and then the expenses pertaining or relating to the year in question are to be examined in detail to determine and ascertain whether all the expenses relating to the year under consideration have actually been paid out and expended wholly and exclusively for the purpose of business. The petitioner, thereupon filed a miscellaneous application stating therein that the Tribunal ought not to have remanded the case to the file of the Assessing Officer for redetermination without deciding the issues specifically raised in the appeal. The Tribunal by its order dated July 7, 2006, held that its decision to restore the matter to the Assessing Officer was a conscious decision taken based on the totality of the facts and circumstances of the case. The Tribunal further held that though the Assessing Officer is required to consider as to whether the entire claim of service charges and marketing expenses were incurred in the assessment year in question, the quantification of inadmissible expenses which may ultimately be found to be not having been incurred for the purpose of the assessee's bus....
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....1997-98. Mr. Dastur submitted that the scope of the enquiry in an appeal filed before the Tribunal is restricted to the specific issues raised in the appeal and it is not open to the Tribunal to pass an order which goes beyond the scope of the appeal. Accordingly, Mr. Dastur submitted that the impugned orders passed by the Tribunal be quashed and set aside and the case be remitted to the Tribunal with a direction to dispose of the appeal on the merits on the basis of the material on record. Mr. Kotangale, learned counsel appearing on behalf of the Revenue, on the other hand, submitted that in the present case, from the assessment order dated March 31, 2000, it is clear that the petitioner had not given the basis or break-up of the working of the expenses claimed by them. In these circumstances, the Tribunal was justified in remanding the matter to the Assessing Officer for de novo consideration. Mr. Kotangale submitted that by the remand order no prejudice is caused to the petitioner, because, as per the order of the Tribunal dated July 7, 2006, the disallowance on remand is restricted to the disallowance made by the Assessing Officer in the original assessment order and it woul....
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....rvices to the bottlers was necessary so that the branded goods are bottled and marketed as per the standards prescribed and that the services rendered to the bottlers ultimately boosts the sale of the" concentrates" and, therefore, the said expenses incurred for the business of the petitioner ought to have been allowed. It was pleaded that even the foreign travel expenses of the wives were incurred in the course of business and, therefore, allowable. Similarly, in respect of disallowance of marketing expenses of Rs. 10,00,000 confirmed by the Commissioner of Income-tax (Appeals), the petitioner claims that before the Tribunal, they were agreeable for confirmation of the disallowances made by the Commissioner of Income-tax (Appeals) i.e., prior period expenses at Rs. 4,11,61,718 and disallowance of Rs. 31,19,317 on account of "differences/no reply". Therefore, the issue to be decided by the Tribunal was whether the disallowance of prior period expenditure should have been Rs. 5,76,75,624 as claimed by the Revenue [instead of disallowance of Rs. 4,11,61,718 confirmed by the Commissioner of Income-tax (Appeals)] and whether the disallowance on account of differences/no reply should....
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....ken a conscious decision and clarified that on remand, the Assessing Officer shall restrict the disallowance to the amounts disallowed in the original assessment. Section 254(1) of the Income-tax Act, 1961, requires the Tribunal to give both the parties to the appeal an opportunity of being heard and pass such orders on the appeals filed before it as it thinks fit. The expression "pass such orders thereon as it thinks fit" in section 254(1) though wide enough to include the power of remand, such power can be exercised only if it is necessary to decide the issues which are the subject-matter of the appeal. In the present case, none of the issues specifically raised in the appeal have been considered by the Tribunal before remanding the matter to the file of the Assessing Officer. By the impugned order, the Tribunal has directed the Assessing Officer to reconsider the entire claim of service charges and marketing expenses by first segregating the prior period expenses and thereafter determine the actual amount pertaining to the year under appeal and adjudicate as to whether the expenses incurred in the year in question have been incurred wholly and exclusively for the purpose o....