2017 (3) TMI 1562 - HC - Income Tax

Disallowance of inland transportation charges and commission expenses - not covered under Explanation to Section 37(1) - business expediency - Tribunal allowed claim - Held that - It is an agreed position between the parties that the impugned order of the Tribunal allowed the respondent assessee s appeal before it by placing reliance upon Ajanta Pharma Ltd case and it is also an agreed position that the appeals were filed by the Revenue in the case of Ajanta Pharma Ltd. (2017 (8) TMI 857 - BOMBAY HIGH COURT). Mr. Hadade, learned Counsel appearing for the respondent assessee states that the above income tax appeals in the case of Ajanta Pharma Ltd. (supra) are awaiting consideration for admission before the bench presided over by Hon ble Shri. Justice S.C. Dharmadhikari. In the above view, it would be appropriate that these appeals on one of the questions which follows the decision of its coordinate bench in Ajanta Pharma Ltd. (supra) be heard along with that matter. Revenue however submits that according to the Revenue decision of Ajanta Pharma Ltd. (supra) of the Tribunal would not apply to the present facts. In the above view, the present appeals are adjourned at the request of Counsel for a period of 4 weeks for admission.

Summary

Issues:
- Disallowance of inland transportation charges and commission expenses under Explanation to Section 37(1) of the Income Tax Act
- Allowing the assessee to raise a ground of appeal relating to disallowance of deduction u/s 80HHC of the Income Tax Act

Analysis:
1. The judgment involves three appeals challenging a common order by the Income Tax Appellate Tribunal regarding the respondent assessee's appeals for Assessment Years 2001-02, 2002-03, and 2003-04. The first issue raised by the Revenue questions the Tribunal's deletion of disallowance of inland transportation charges and commission expenses under Section 37(1) of the Income Tax Act. The Revenue argued that the expenses were not proven to be for business expediency and hence not allowable. The second issue relates to the Tribunal allowing the assessee to raise a ground of appeal concerning the disallowance of deduction under Section 80HHC, which had not been challenged before the CIT(A) and was deemed final.

2. Both parties agreed that the Tribunal's decision in favor of the respondent assessee was based on a previous decision of its coordinate bench in the case of Ajanta Pharma Ltd. The respondent's counsel highlighted that the income tax appeals in the Ajanta Pharma Ltd. case were pending consideration before a bench presided over by Justice S.C. Dharmadhikari. The adjournment of the present appeals was requested to align with the decision in Ajanta Pharma Ltd. The Revenue's counsel, however, contended that the Ajanta Pharma Ltd. decision would not apply to the current case.

3. Consequently, the present appeals were adjourned for four weeks for admission, with a further date set for the hearing. The decision to adjourn was made to allow for a comprehensive consideration of the issues raised by the Revenue and the respondent, particularly in light of the pending appeals related to the Ajanta Pharma Ltd. case. The judgment reflects a procedural step to ensure a fair and thorough review of the matters at hand before the High Court.