TaxTMI 
TaxTMI 
2021 (5) TMI 1073
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....s erred in upholding the action of the Assessing Officer ["A.O"] in not allowing deduction of Rs.36,92,20,070/- incurred on sales promoting expenses under section 37(1) of the Act. 2. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in applying Explanation-1 to Section 37(1) to disallow the sales promotion expenses of Rs. 36,92,20,070/- 3. On the facts and circumstances of the case and in law, the learned CIT(A) has erred in holding that once the appellant disallowed similar expenses in earlier years, it is not open to the appellant to make a claim for deduction in the relevant year. 4. On the facts and circumstances of the case and in law, the Appellant is entitled to deduction of Rs. 3,55,17,709/-, being the cess paid by the Appellant under the Act. The Appellant submits that the Assessing Officer be directed to allow the deduction of Rs. 3,55,17,709/-, in computing the income of the Appellant The appellant craves leave, to add, to alter, to amend, to modify, and/or to deleted any above grounds of appeal as may be necessary." Before adverting any further, we may herein observe that the assessee appellant vi....
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.... it was observed by the A.O that the assessee had claimed that it had initially disallowed the sales promotion expenses pertaining to the freebies given to doctors in light of the CBDT Circular No. 5/2012 read a/w the Medical Council of India (MCI) Regulations, 2012. However, as stated by the assessee as the ITAT, Mumbai in the case of DCIT-8(2), Mumbai Vs. PHL Pharma Pvt. Ltd. in ITA No. 4605/Mum/2014 (2017) 78 taxmann.com 36, dated 12.01.2017 had thereafter held that the MCI guidelines were not applicable to pharmaceutical companies, therefore, for the said reason it had withdrawn the suo motto disallowance of sales promotion expenses that was earlier offered in the return of income. The A.O was however not inclined to accept the aforesaid claim of the assessee. It was observed by the A.O that the CBDT vide its Circular No. 5/2012, dated 01.08.2012, had held, that the expenses claimed by the pharmaceutical companies on account of distribution of freebies being in violation of the provisions of Indian Medical Council (Professional conduct, etiquette and ethics) regulations, 2002 were inadmissible as an expense. Observing, that the assessee's claim for deduction of expenses incurre....
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....there was no reason as to why such freebies were given by the assessee only to the doctors and not to the general public which was the final consumer of its products. It was observed by the CIT(A) that there was no justification on the part of the assessee to have claimed the freebies given to the doctors as a business expense. Also, the CIT(A) did not find favour with the alternative contention of the assessee for allowing its claim for deduction in so far the same pertained to freebies of a value of less than Rs. 1,000/-. As regards the support that was drawn by the assessee from the orders of the ITAT, Mumbai in the case of DCIT-8(2), Mumbai Vs. PHL Pharma Pvt. Ltd., ITA No. 4605/Mum/2014 (2017) 78 taxmann.com 36, dated 12.01.2017 AND Aristo Pharmaceuticals Pvt. Ltd., ITA Nos. 6680/5553 /5479/Mum, the CIT(A) was of the view that as the years involved in the said respective cases before the Tribunal were prior to the CBDT Circular No. 5/2012, dated 01.08.2012, therefore, the Tribunal in the said cases had after taking cognizance of the fact that the Circular did not have a retrospective application decided the said appeals in favour of the aforesaid assessee's. As regards the ord....
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....iness expenditure and not hit by the 'Explanation 1' to Sec. 37(1) of the Act. The ld. A.R further relied on the order of the ITAT, "D"Bench, Mumbai in the case of M/s Medley Pharmaceuticals Ltd. Vs. Dy. CIT, ITA No. 2344/Mum/2018 and drew our attention to the relevant observations therein recorded. Also reliance was placed on the order of the ITAT, "A" Bench in the case of M/s Aristo Pharmaceuticals Pvt. Ltd. Vs. DCIT- 2(1)(1), Mumbai, ITA No. 1104/Mum/2018; ITAT, Delhi Bench "A" in the case of Aishika Pharma (P) Ltd. Vs. ITO, Ward 2(1), New Delhi (2019); and ITAT, Mumbai "K" Bench in the case of India Medtronics Pvt. Ltd. Vs. Dy. CIT, ITA No. 7263/Mum/2018, dated 13.09.2019. Also, reliance was placed on the order of the Hon'ble High Court of Delhi in the case of Max Hospital Vs. Medical Council of India, W.P(C) 1334/2013; dated 10.01.2014. Qua the issue of allowability of "Education cess" and "Higher Education cess" as a deduction while computing the income of the assessee, it was submitted by the ld. A.R that the issue therein involved was squarely covered by the judgment of the Hon'ble High Court of Bombay in the case of Sesa Goa Ltd. vs. JCIT, Range 1, Panaji Goa (2020) 423 IT....
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....ation i.e kick back or bribe by the assessee company in the garb of commission which was disallowed as per the 'Explanation' to Sec. 37 of the Act. It was submitted by the ld. A.R that the facts of the present case were totally distinguishable as against those involved in the aforementioned case. As regards the reliance that was placed by the ld. D.R on the judgment of the Hon'ble High Court of Bombay in the case of CIT Vs. Gill & Co. (P) Ltd. (2001) 248 ITR 362 (Bom), it was submitted by Shri. J.D Mistri, ld. Senior Advocate, that unlike the facts involved in the case of the present assessee the issue involved in the aforementioned case was qua the disallowance under 'Explanation' to Sec. 37(1) of the amount of secret commission that was paid by the assessee company and was claimed as deduction. It was submitted by the ld. A.R that the issue involved in the present appeal i.e allowability of the sales promotion expenses incurred by the assessee company i.e a pharmaceutical company was absolutely differently placed as in comparison to the facts involved in the aforesaid judgment that was relied upon by the revenue. As regards the support that was drawn by the ld. D.R from the judgm....
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....lead to exclusion of an income offered by him in his return of income. In our considered view the CIT(A) is principally correct in observing that an A.O is divested of his jurisdiction to entertain a 'fresh claim' for deduction raised by an assessee in the course of the assessment proceedings except for where the same is raised by filing of a revised return of income. The aforesaid view of the CIT(A) is fortified by the judgment of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. Vs. CIT (2006) 284 ITR 323 (SC). However, the Hon'ble Apex Court in its aforesaid judgment in the case of Goetze (India) Ltd.(supra) had specifically observed that its decision was qua the restriction on entertainment of a 'fresh claim' of deduction by the A.O in the course of the assessment proceedings and would in no way impinge on the powers of the Income-tax Appellate Tribunal which would remain vested with the jurisdiction to entertain for the first time a point of law provided the facts on the basis of which the said issue is raised are available on record. We find that the said issue had thereafter been deliberated upon at length by the Hon'ble High Court of Bombay in the case of CIT Vs.....
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....led the appeal before the Supreme Court. The Supreme Court held as under :- "5. In CIT v. Kanpur Coal Syndicate, a three Judge bench of this Court discussed the scope of Section 31(3)(a) of the Income Tax Act, 1922 which is almost identical to Section 251(1)(a). The court held as under: (ITR p. 229) "If an appeal lies, Section 31 of the Act describes the powers of the Appellate Assistant Commissioner in such an appeal. Under Section 31(3)(a) in disposing of such an appeal the Appellate Assistant Commissioner may, in the case of an order of assessment, confirm, reduce, enhance or annul the assessment; under clause (b) thereof he may set aside the assessment and direct the Income Tax Officer to make a fresh assessment. The Appellate Assistant Commissioner has, therefore, plenary powers in disposing of an appeal. The scope of his power is coterminus with that of the Income-tax Officer. He can do what the Income Tax Officer can do and also direct him to do what he has failed to do." (emphasis supplied) 6. The above observations are squarely applicable to the interpretation of Section 251(1)(a) of the Act. The declaration of law is clear that....
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....e may be several factors justifying raising of such new plea in appeal, and each case has to be considered on its own facts. If the Appellate Assistant Commissioner is satisfied he would be acting within his jurisdiction in considering the question so raised in all its aspects. Of course, while permitting the assessee to raise an additional ground, the Appellate Assistant Commissioner should exercise his discretion in accordance with law and reason. He must be satisfied that the ground raised was bona fide and that the same could not have been raised earlier for good reasons. The satisfaction of the Appellate Assistant Commissioner depends upon the facts and circumstances of each case and no rigid principles or any hard and fast rule can be laid down for this purpose." [emphasis supplied] 13. The underlined observations in the above passage do not curtail the ambit of the jurisdiction of the appellate authorities stipulated earlier. They do not restrict the new/additional grounds that may be taken by the assessee before the appellate authorities to those that were not available when the return was filed or even when the assessment order was made. The sentence read....
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....the same, the Supreme Court upheld the decision of the Appellate Assistant Commissioner in allowing the deduction. The words "could not have been raised" must, therefore, be construed liberally and not strictly. 15. It is indeed a question of exercise of discretion whether or not to allow an assessee to raise a claim which was not raised when the return was filed or the assessment order was made. As held by the Supreme Court there may be several factors justifying the raising of a new plea in appeal and each case must be considered on its own facts. However, such cases include those, where the ground though available when the return was filed or the assessment order was made, was not taken or raised for reasons which the appellate authorities may consider valid. In other words, the jurisdiction of the appellate authorities to consider a fresh or new ground or claim is not restricted to cases where such a ground did not exist when the return was filed and the assessment order was made. 16(A). A Full Bench of this Court in Ahmedabad Electricity Limited v. Commissioner of Income-tax, (1993) 199 ITR 351 considered a similar situation. In that case, the appell....
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....efer to all the judgments that the Full Bench referred to while answering the reference. The Full Bench referred to the observations of the Supreme Court in Jute Corporation of India Limited v. Commissioner of Income tax (supra) set out above. It is important to note that even in this case, therefore, the ground existed when the return was filed. The mere fact that a decision of a court is rendered subsequently does not indicate that the ground did not exist when the law was enacted. Judgments are only a declaration of the law. The assessee could have raised the ground in its return itself. It did not have to await a decision of a court in that regard. Indeed, even if a judgment is against an assessee, it is always open to the assessee to claim the deduction and carry the matter higher. The words "could not have been raised", therefore, cannot be read strictly. Neither the Supreme Court nor the Full Bench of this Court meant them to be read strictly. They include cases where the assessee did not raise the claim for a reason found to be reasonable or valid by the appellate authorities in the facts and circumstances of a case. 17. The next judgment to which our attention was....
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....me." Under Section 254 of the Income Tax Act the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with the appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under Section 254 only to decide the grounds which arise from the order of the Commissioner of Income Tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross- objections before the Tribunal. We fail to see why the Tribunal should be prevented from conside....
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....ted v. Commissioner of Income-tax. We are unable to agree. The decision was rendered by a Bench of two learned Judges and expressly refers to the judgment of the Bench of three learned Judges in National Thermal Power Company Limited vs. Commissioner of Income-tax (supra). The question before the Court was whether the appellant-assessee could make a claim for deduction, other than by filing a revised return. After the return was filed, the appellant sought to claim a deduction by way of a letter before the Assessing Officer. The claim, therefore, was not before the appellate authorities. The deduction was disallowed by the Assessing Officer on the ground that there was no provision under the Act to make an amendment in the return of income by modifying an application at the assessment stage without revising the return. The Commissioner of Income-tax (Appeals) allowed the assessee's appeal. The Tribunal, however, allowed the department's appeal. In the Supreme Court, the assessee relied upon the judgment in National Thermal Power Company Limited contending that it was open to the assessee to raise the points of law even before the Tribunal. The Supreme Court held :-....
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....horities in case the relevant material is available on record. In both the aforesaid judgments the Hon'ble High Courts had referred to the judgment of the Hon'ble Apex Court in the case of Goetze (India) Ltd. (supra). Accordingly, in the backdrop of the aforesaid judgment of the Hon'ble High Court of Bombay in the case of Pruthvi Brokers & Shareholders (Pvt). Ltd. (supra) and that of the Hon'ble High Court of Madras in the case of Abhinitha Foundations (Pvt.) Ltd. (supra), we are of the considered view that the assessee's claim for deduction of freebies distributed to doctors, though raised for the first time by way of a revised computation of income in the course of the assessment proceedings and declined to be taken cognizance of by the A.O, however, without any hesitation could have been considered in the course of the proceedings before the appellate authorities, as the same was borne out from the facts available on record and no new facts were required to be looked into for adjudicating the same. 11. We shall now advert to the sustainability of the view taken by the lower authorities, i.e as to whether or not the assessee company was entitled to raise a claim for deduction ....
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....ioners under the Indian Medical Council Act, 1956 was restricted only to the persons registered as medical practitioners with the State Medical Council and whose names were entered in the Indian Medical Register maintained under Sec. 21 of the said Act. Further, it was observed that the scheme of the Indian Medical Council Act, 1956 neither deals with nor provides for any conduct of any association/society and regulates the conduct of only the registered medical practitioners and not that of the pharmaceutical companies or allied health sector industries. Apart from that, the Tribunal in its order had also drawn support from the order of the Hon'ble High Court of Delhi in the case of MAX Hospital., Pitampura Vs. Medical Council of India [CWP No. 1334/2013, dated 10.01.2014]. In the aforesaid case, the Medical Council of India (MCI) had filed an 'Affidavit' before the High Court, wherein it was deposed by the council that its jurisdiction was limited only to take action against the registered medical professionals under the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, and it had no jurisdiction to pass an order affecting the rights/interest ....
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....cope and ambit of statutory provisions relating to professional conduct of registered medical practitioners under the Indian Medical Council Act, 1956 is restricted only to the persons registered as medical practitioners with the State Medical Council and whose name are entered in the Indian Medical Register maintained under Sec. 21 of the said Act. We are of the considered view that the scheme of the Indian Medical Council Act, 1956 neither deals with nor provides for any conduct of any association/society and deals only with the conduct of individual registered medical practitioners. In the backdrop of the aforesaid facts, it emerges that the applicability of the MCI regulations would only cover individual medical practitioners and not the pharmaceutical companies or allied health sector industries. Interestingly, the scope of the applicability of the MCI regulations was looked into by the Hon'ble High Court of Delhi in the case of Max Hospital, Pitampura Vs. Medical Council of India (CWP No. 1334/2013, dated 10.01.2014). In the aforementioned case the MCI had filed an 'Affidavit' before the High Court, wherein it was deposed by the council that its jurisdiction is limited only t....
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....maxim "ExpressioUnius Est ExclusioAlterius", which provides that if a particular expression in the statute is expressly stated for a particular class of assessee, then by implication what has not been stated or expressed in the statute has to be excluded for other class of assesses. Thus, now when the MCI regulations are applicable to medical practitioners registered with the MCI, then the same cannot be made applicable to pharmaceutical companies or other allied healthcare companies. 22. We shall now advert to the CBDT Circular No. 5/2012, dated 01.08.2012. We find that the aforesaid CBDT Circular reads as under:- "Inadmissibility of expenses incurred in providing freebees to medical practitioner by pharmaceutical and allied health sector industry Circular No. 5/2012 [F.No. 225/142/2012-ITA.II], dated 1-8-2012 It has been brought to the notice of the Board that some pharmaceutical and allied health sector Industries are providing freebies (freebies) to medical practitioner and their professional associations in violation of the regulations issued by Medical Council of India (the 'Council') which is a regulatory body constituted under the Medical....
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.... expense prohibited by the law. We are of the considered view that as observed by us hereinabove, the code of conduct enshrined in the notifications issued by MCI though is to be strictly followed and adhered by medical practitioners/doctors registered with the MCI, however the same cannot impinge on the conduct of the pharmaceutical companies or other healthcare sector in any manner. We find that nothing has brought on record which could persuade us to conclude that the regulations or notifications issued by MCI would as per the law also be binding on the pharmaceutical companies or other allied healthcare sector. Rather, the concession made by the MCI before the Hon'ble High Court of Delhi in the case of Max Hospital Vs. MCI (CWP No. 1334/2013, dated 10.01.2014) fortifies our aforesaid view that MCI has no jurisdiction to pass any order or regulation against any hospital, pharmaceutical company or any healthcare sector. We further find that MCI had by adding Para 6.8.1 to its earlier notification issued as "Indian Medical Council Professional (Conduct, Etiquette and Ethics) Regulations, 2002" had even provided for action which shall be taken against medical practitioners in case ....
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....ent of the scope of MCI regulation to the pharmaceutical companies by the CBDT is without any enabling provision either under the Income Tax Act or under the Indian Medical Council Regulations. We are of a strong conviction that the CBDT cannot provide casus omissusto a statute or notification or any regulation which has not been expressly provided therein. Still further, though the CBDT can tone down the rigours of law in order to ensure a fair enforcement of the provisions by issuing circulars for clarifying the statutory provisions, however, it is divested of its power to create a new impairment adverse to an assessee or to a class of assessee without any sanction or authority of law. We are of the considered view that the circulars which are issued by the CBDT must confirm to the tax laws and though are meant for the purpose of giving administrative relief or for clarifying the provisions of law, but the same cannot impose a burden on the assessee, leave alone creating a new burden by enlarging the scope of a regulation issued under a different act so as to impose any kind of hardship or liability on the assessee. We thus, are unable to persuade ourselves to subscribe to the ri....
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....regulation framed by the medical council, then, it may legitimately claim the deduction. It was observed by the Tribunal that if the assessee brings out that the MCI regulation was not applicable to the assessee before the A.O, then, the same cannot be applied blindly. As in the present case, the A.O despite the claim of the assessee that the Sales promotion expenses incurred by it were not liable to be disallowed, had however, summarily rejected the same by referring to the CBDT Circular No. 5/2012 (supra), therefore, the reliance placed by the revenue on the aforesaid judgment would not assist its case. As regards the reliance placed by the ld. D.R on the order of the ITAT, Mumbai in the case of CIT, Circle 6(3), Mumbai Vs. Liva Healthcare Ltd. (2016) 161 ITD 63 (Mum), the same had been considered and distinguished on facts by the Tribunal in the case of PHL Pharma Ltd. (supra). It was observed by the Tribunal that in the case of Liva Healtcare Ltd. (supra) the expenses were disallowed under Sec. 37(1), for the reason, that they were not incurred wholly and exclusively for the purpose of business and were infact incurred to create good relations with the doctors in lieu of expect....
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....nder 'Explanation' to Sec. 37(1) of the amount of secret commission that was paid by the assessee company and was claimed as deduction. As the issue involved in the appeal of the present assessee before us i.e allowability of the sales promotion expenses incurred by the assessee company, a pharmaceutical company, is differently placed as in comparison to the facts involved in the aforesaid judgment relied upon by the revenue, therefore, the same too would not assist its case. 14. We, thus, in terms of our aforesaid observations and respectfully following the view taken by the co-ordinate bench of the Tribunal i.e ITAT "A" Bench, Mumbai, in the case of Aristo Pharmaceuticals Pvt. ltd. Vs. ACIT (ITA No. 6680/Mum/2012, dated 26.07.2018), are of a strong conviction that the expenditure of Rs. 36,92,20,070/- incurred by the assessee towards sales promotion expenses would not be hit by the 'Explanation' to Sec. 37 of the Act. Accordingly, on the basis of our aforesaid observations, we are of the considered view that the CIT(A) had erred in upholding the disallowance of the assessee's claim for deduction of sale promotion expenses of Rs.36,92,20,070/- made by the A.O. We, thus, set-asi....
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....rial available on record, and have also considered the judicial pronouncements that have been relied upon by them in context of the issue in hand. In so far the claim of the Ld. A.R that unlike "rates" and "taxes" the amount paid by an assessee towards "Education Cess" or any other "cess" viz. the Secondary and Higher Education Cess is not a disallowable expenditure u/s 40(a)(ii) of the Income-tax Act, 1961, we find, that the said issue is squarely covered by the recent order of the Hon'ble High Court of Bombay in the case of Sesa Goa Limited vs. Joint Commissioner of Income-tax (2020) 107 CCH 375 (Bom). In the case before the Hon'ble High Court the following substantial question of law was inter alia raised: "iii. Whether on the facts and in the circumstances of the case and in law, the Education Cess and Higher and Secondary Education Cess is allowable as a deduction in the year of payment." After exhaustive deliberations the Hon'ble High Court had observed that the legislature in Sec. 40(a)(ii) had though provided that "any rate or tax levied" on "profits and gains of business or profession" shall not be deducted in computing the income chargeable under the head "Pro....
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....e purposes of this sub-clause, any 9 TXA17&18-13 dt. 28.02.2020 sum paid on account of any rate or tax levied includes any sum eligible for relief of tax under section 90A;] 17. Therefore, the question which arises for determination is whether the expression "any rate or tax levied" as it appears in Section 40(a)(ii) of the IT Act includes "cess". The Appellant - Assessee contends that the expression does not include "cess" and therefore, the amounts paid towards "cess" are liable to be deducted in computing the income chargeable under the head "profits and gains of business or profession". However, the Respondent - Revenue contends that "cess" is also included in the scope and import of the expression "any rate or tax levied" and consequently, the amounts paid towards the "cess" are not liable for deduction in computing the income chargeable under the head "profits and gains of business or profession". 18. In relation to taxing statute, certain principles of interpretation are quite well settled. In New Shorrock Spinning and Manufacturing Co. Ltd. Vs Raval, 37 ITR 41 (Bom.), it is held that one safe and infallible principle, which is of guidance in these....
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....me chargeable under the head "profits and gains of business or profession". Acceptance of such a contention will amount to reading something in the text of the provision which is not to be found in the text of the provision in Section 40(a)(ii) of the IT Act. 23. If the legislature intended to prohibit the deduction of amounts paid by a Assessee towards say, "education cess" or any other "cess", then, the legislature could have easily included reference to "cess" in clause (ii) of Section 40(a) of the IT Act. The fact that the legislature has not done so means that the legislature did not intend to prevent the deduction of amounts paid by a Assessee towards the "cess", when it comes to computing income chargeable under the head "profits and gains of business or profession". 24. The legislative history bears out that the Income Tax Bill, 1961, as introduced in the Parliament, had Section 40(a)(ii) which read as follows : "(ii) any sum paid on account of any cess, rate or tax levied on the profits or gains of any business or profession or assessed at a proportion of, or otherwise on the basis of, any such profits or gains" 25. However, when the mat....
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....cess" ought not to be read or included in the expression "any rate or tax levied" as appearing in Section 40(a)(ii) of the IT Act. 28. In the Income Tax Act, 1922, Section 10(4) had banned allowance of any sum paid on account of 'any cess, rate or tax levied on the profits or gains of any business or profession'. In the corresponding Section 40(a)(ii) of the IT Act, 1961 the expression "cess" is quite conspicuous by its absence. In fact, legislative history bears out that this expression was in fact to be found in the Income Tax Bill, 1961 which was introduced in the Parliament. However, the Select Committee recommended the omission of expression "cess" and consequently, this expression finds no place in the final text of the provision in Section 40(a)(ii) of the IT Act, 1961. The effect of such omission is that the provision in Section 40(a)(ii) does not include, "cess" and consequently, "cess" whenever paid in relation to business, is allowable as deductable expenditure. 29. In Kanga and Palkhivala's "The Law and Practice of Income Tax" (Tenth Edition), several decisions have been analyzed in the context of provisions of Section 40(a)(ii) of the IT A....
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....by the Assessee towards the 'education cess' were liable for deduction in computing the income chargeable under the head of "profits and gains of business or profession". They are as follows :- (i) DCIT Vs Peerless General Finance and Investment and Co. Ltd. (ITA No.1469 and 1470/Kol/2019 decided on 5th December, 2019 by the ITAT, Calcutta; (ii) DCIT Vs Graphite India Ltd. (ITA No.472 and 474 Co. No.64 and 66/Kol/2018 decided on 22nd November, 2019 )by the ITAT, Calcutta; (iii) DCIT Vs Bajaj Allianz General Insurance (ITA No.1111 and 1112/PUN/2017 decided on 25th July, 2019) by the ITAT, Pune. 32. Again, Ms. Linhares, learned Standing Counsel for the Revenue was unable to say whether the Revenue had instituted the appeals in the aforesaid matters. Mr. Ramani, learned Senior Advocate for the Appellant submitted that to the best of his research, no appeals were instituted by the Revenue against the aforesaid decisions of the ITAT. 33. The ITAT, in the impugned judgment and order, has reasoned that since "cess" is collected as a part of the income tax and fringe benefit tax, therefore, such "cess" is to be construed as "tax". According to us, there is no scop....
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....ue however submitted that the Appellant - Assessee, in its original return, had never claimed deduction towards the amounts paid by it as "cess". She submits that neither was any such claim made by filing any revised return before the Assessing Officer. She therefore relied upon the decision of the Supreme Court in Goetze (India) Ltd. Vs Commissioner of Income Tax (2006) 284 ITR 323 (SC) to submit that the Assessing Officer, was not only quite right in denying such a deduction, but further the Assessing Officer had no power or jurisdiction to grant such a deduction to the Appellant - Assessee. She submits that this is what precisely held by the ITAT in its impugned judgments and orders and therefore, the same, warrants no interference. 38. Although, it is true that the Appellant - Assessee did not claim any deduction in respect of amounts paid by it towards "cess" in their original return of income nor did the Appellant - Assessee file any revised return of income, according to us, this was no bar to the Commissioner (Appeals) or the ITAT to consider and allow such deductions to the Appellant - Assessee in the facts and circumstances of the present case. The record bears o....
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.... that there was no obligation on the Assessing Officer to consider the claim for deduction in such letter, the Commissioner ( Appeals ) or the ITAT, before whom such deduction was specifically claimed was duty bound to consider such claim. Accordingly, we are unable to agree with Ms. Linhare's contention based upon the decision in Goetze (supra ). 42. For all the aforesaid reasons, we hold that the substantial question of law No.(iii) in Tax Appeal No.17 of 2013 and the sole substantial question of law in Tax Appeal No.18 of 2013 is also required to be answered in favour of the Appellant - Assessee and against the Respondent-Revenue. To that extent therefore, the impugned judgments and orders made by the ITAT warrant interference and modification. 43. Thus, we answer all the three substantial questions of law framed in Tax Appeal No.17 of 2013 in favour of the Appellant - Assessee and against the Respondent -Revenue. Similarly, we answer the sole substantial question of law framed in Tax Appeal No.18 of 2013, in favour of the Appellant - Assessee and against the Respondent - Revenue." As regards the support drawn by the ld. D.R from the judgment of the Hon'....
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.... 4. On the facts and in the circumstances of the case and in law, the Appellant is entitled to deduction of Rs. 4,01,43,083/-, being of cess paid by the Appellant under the Act. The Appellant submits that the Assessing Officer be directed to allow the deduction of Rs.4,01,43,083/-, in computing the income of the Appellant The appellant craves leave, to add, to alter, to emend, to modify, and/or to deleted any above grounds of appeal as may be necessary." 19. Briefly stated, the assessee company had e-filed its return of income for A.Y 2015-16 on 02.11.2015, declaring its total income at Rs. 428,63,07,770/- and 'book profit' under Sec. 115JB at Rs.451,75,08,196/-. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2) of the Act. During the course of the assessment proceedings, it was observed by the A.O that the assessee in view of the CBDT Circular No. 5/2012 r.w. Medical Council of India (MCI) Regulations, 2002 had in its return of income offered a disallowance of sales promotion expenses of Rs.34.09 crore in respect of the freebies that were given to doctors during the year in question. However, in the course of the assessment ....