TaxTMI 
TaxTMI 
TaxTMI 
2022 (12) TMI 1276
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....ils on ITBA portal. The AO completed the assessment u/s. 143(3) on 24.12.2019 determining the total loss at Rs.55,67,59,009/- wherein he made addition of Rs.17,10,283/- by making disallowance of certain expenses which were paid in violation of provisions of section 37(1) and disallowed an amount of Rs.94,07,535/- out of other business expenses of Rs.4,70,37,679/- by disallowing 20% of the expenses on adhoc basis on the ground that this amount is for launching for new products of the company and the expenses is capital in nature. 3. Subsequently, the ld.PCIT examined the record and noted that the AO vide show cause notice dated 15.12.2019 had specifically asked for the details related to sales promotion expenses of Rs.15,37,40,000/-. The assessee in response to the same had submitted the following details. Sr. No Particulars Amt (Rs.) 1 630760000 Sponsorship/ Marketing programs 7,49,87,461 2 630800000 Promotions expense 4,70,37,679 3 652000000 Meeting expense-Local/ In-House 1,89,94,398 4 630100000 Educational grants-external 52,31,477 5 631000000 Product samples 17,10,283 6 Other advertisement and sales promotion expenses 57,75,196 Total....
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....ly incurred for the purpose of business. Relying on various decisions, it was submitted that the Ld.PCIT is not justified in invoking the revisionary provision u/s. 263 of the I.T.Act. 6. However, the Ld.PCIT was not satisfied with the arguments advanced by the assessee. He observed that the assessee company has not made any submission to substantiate that it had submitted complete details pertaining to the expenses charged to the P&L account under the head "other advertisement and sales promotion expenses" of Rs.57,75,196/-. Since according to the ld.PCIT, the AO had failed to examine the issue of other advertisement and sales promotion expenses of Rs.57,75,196/- and passed the order, therefore, such order has become erroneous and prejudicial to the interest of the revenue. Rejecting the various explanations given by the assessee and relying on various decisions the ld.PCIT set aside the order passed by the AO with a direction to him to redo the assessment by allowing an opportunity of being heard to the assessee and pass the order in accordance with law after due verification. 7. Aggrieved with such order of the ld.PCIT, the assessee is in appeal before the Tribunal by raising ....
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....sales promotion expenditure, which is as under:- Sr. No Particulars Amt (Rs.) 1 630760000 Sponsorship/ Marketing programs 7,49,87,461 2 630800000 Promotions expense 4,70,37,679 3 652000000 Meeting expense-Local/ In- House 1,89,94,398 4 630100000 Educational grants-external 52,31,477 5 631000000 Product samples 17,10,283 6 Other advertisement and sales promotion expenses 57,75,196 Total 15,37,36,494 9. Referring to page no.476 of the paper book, the ld.counsel for the assessee drew the attention of the Bench to para 6.2 of the assessment order, which reads as under:- " 6.2 In response to the notice, the assessee submitted that an amount of Rs.15,37,40,000/- towards sales promotional and advertisement expenses was incurred under various heads of expenses. Free samples of Rs.17,10,283/- were distributed as a part of promotional activities whereby new drugs/medicine were given as free samples to create awareness, promote the new product and get feedback from medical practitioners. The expenses incurred are part of the sales expenses." 10. He submitted that the AO after detailed examination of all the details filed had passed the assessm....
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....s. PCIT in ITA No.895 &896/Mum/2021, dated 31.02.2022(Mum.Trib) 13. We have heard the rival arguments made by both the sides, perused the orders of the AO and ld.PCIT and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the AO in the instant case completed the assessment u/s. 143(3) on 24.12.2019 determining the total loss at Rs.55,67,59,009/- as against the returned loss of Rs.56,78,76,827/- wherein he disallowed an amount of Rs.17,10,283/- being payments in violation of provisions of section 37(1) and disallowed other business promotion expenses of Rs.94,07,535/- on adhoc basis being 20% of such expenses claimed at Rs.4,70,37,679/- on the ground that such expenses are incurred for launching of new products. We find the Ld.PCIT invoked jurisdiction u/s.263 of the I.T.Act on the ground that out of the total sales promotion expenses of Rs.15,37,40,000/-, the AO had not examined the other advertisement and sales promotion expenses of Rs.57,75,196/- by calling for details from the assessee and passed the order without verification of the same and therefore, the order has become erroneous as well as prejudicial to t....
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....020. Dear Sir, Sub: Mylan Pharmaceuticals Private Limited ('Company' or 'Assessee' or 'Tax payer')-PAN: AABCM9323J Assessment Year (AY): 2016-17 Ref: 1) Notice dated 28 August 2017 under section 143(2) of Income Tax Act, 1961 ('the Act') 2) Our letter dated 24.08.2018 3) Notice under section 142(1) of the Income tax Act, 1961 dated 28.08.2018 4) Our letter dated 17.09.2018 5) Notice under section 142(1) of the Income tax Act, 1961 dated 30.08.2019 6) Our letter dated 20.09.2019 7) Our letter dated 12.12.2019 8) Show-cause Notice dated 15.12.2019 ---------------------------------------------------------------------------------------- We refer to the captioned show-cause notice issued by your goodself requesting the Company to show cause with respect to certain allowances claimed by the Company in its Tax Return. 1. Advertisement and sales promotion expenses - Rs. 15,37,40,000 1.1. During the assessment year under consideration, the company has incurred an amount of Rs. 15,37,40,000 towards advertisement and sales promotion expenses. Statement giving the brief , nature of this expenditure is given in Annexure 'A'. ....
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....FY20 17-18 FY20 18-19 Advertisement & Sales Promotional Expenses 6.24 37.59 78.36 142.15 153.74 208.15 460.56 619.53 Products Sales 17.63 44.83 229.03 656.66 157.69 2736.86 3232.19 3712.04 %of Advertisement & Sales promotion Expenses to Product sales 35.39% 83.85% 34.21% 21.65% 9.77% 7.61% 14.25% 16.69% 2. Foreign travelling expenses-Rs.10,39,25,523 The Company submits that foreign travelling expenses are incurred on the employees travelling abroad in the ordinary course of the business of the Company. * Details of the foreign travelling expenses incurred during the year is enclosed as 'Annexure K' * Sample copies of the invoices are enclosed as ' Annexure L' Accordingly, the expenditure on foreign travel being incurred by the Company wholly and exclusively for the purpose of its business should be allowable to the Company. Further, the Company submits that the medical practitioners are not given any free travel facilities, hotel accommodation facilities etc. and accordingly, IMC Regulations and CBDT Circular does not apply. We would further like to bring to your notice that out of Rs. 10,39,25,523, an am....
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....he Company and Sorento Healthcare Communications Private Limited enclosed as a part of Annexure C above wherein it may be observed that the benefits from the sponsorship expenses incurred arises to the Company. 2. 630800000 Promotions expense: Tn this we record the following nature of expenses: a) Promotional material - Product related brochures; leaflets; other printing materials b) Diagnostic services c) Miscellaneous expenses for conducting and participating in the promotional events * Details of the above expenses are enclosed as Annexure D. * Copies of invoices on sample basis are enclosed as Annexure E. 3. 652000000 Meeting expense-local/in-house: This represents the following nature of expenses: a) Regular Sales meeting expenses b) Product workshop programmes c) Training programmes for new product launches for sales staff. d) Hotel expenses for conducting various training programmes. *Details of the above expenses are enclosed as Annexure F. * on sample basis are enclosed as Annexure G. 4. 630100000 Educational grants-external: This represents expenses in relation to Continuous Medical Education (CME) programmes which are being conducted acros....
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....im, the order should have been written more elaborately. There must be some prima facie material on record to show that the tax which was lawfully exigible has not been imposed or that by the application of the relevant statute on an incorrect or incomplete interpretation, a lesser tax than was just, has been imposed. The power of the Commissioner u/s power of the 263(1) is not limited only to the material which was available before the AO and in order to protect the interests of the Revenue, the Commissioner is entitled to examine any other records which are available at the time of examination by him and to Take into consideration even those events which arose subsequent to the order of the assessment". 18. We find the Hon'ble Supreme Court in the case of Malabar Industrial Company Ltd., Vs. CIT |243 ITR 83] (SC) held that the phrase 'prejudicial to the interest of Revenue' has to be read in conjunction with an erroneous order passed by AO. Every loss of Revenue as a sequence of order of the AO cannot be treated as prejudicial to the interest of Revenue. For example, when an AO adopted one of the courses permissible in law, and it has resulted in loss of Revenue, or ....