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2022 (9) TMI 493 - AT - Income TaxNature of expenses - product registration expenses - revenue or capital expenditure - Claim denied by the AO holding that Marketing Intangible assets are created in favour of the assessee since the assessee would be entitled to enduring benefits on account of this expenditure - HELD THAT - We have noted that the assessee had explained the nature of expenses so claimed relating to product registration as being mandatorily required as per the laws of the country to which the products were exported. CIT(A) however noted that identical expenses had been held to be revenue in nature by the Hon'ble Jurisdictional High Court in the case of Torrent Pharma 2013 (4) TMI 570 - GUJARAT HIGH COURT and Cadila Healthcare Ltd. 2013 (3) TMI 539 - GUJARAT HIGH COURT and following which decisions in the case of the assessee also, the claim in the preceding year was allowed Since the issue admittedly stands decided in favour of the assessee in the preceding year by the first appellate authority and the Revenue having not brought to our notice any decision of higher authorities reversing the order of the Ld. CIT(A) or any other contrary decision of higher authorities in similar facts, we see no reason to interfere in the order of the ld. CIT(A). Appeal of the Revenue is dismissed.
Issues:
Appeal by Revenue against CIT(A)'s order under section 250(6) of the Income Tax Act, 1961 regarding disallowance of product registration expenses. Analysis: 1. The appeal was filed by the Revenue against the order passed by the CIT(A) regarding the disallowance of product registration expenses amounting to Rs. 1,71,77,152/- claimed by the assessee as revenue. The assessee did not appear before the Tribunal, and no application for adjournment was filed. The Tribunal noted the lack of response from the assessee despite previous directions to issue notices, indicating the assessee's disinterest in participating in the proceedings. 2. The primary issue in the appeal was the nature of the product registration expenses claimed by the assessee. The AO had denied the claim, considering it as capital in nature, creating Marketing Intangible assets. However, the CIT(A) reversed this decision, citing previous judgments in favor of the assessee in similar cases. The assessee's explanation highlighted the mandatory nature of product registration expenses for exporting pharmaceutical products, emphasizing that no enduring benefits were created. 3. The CIT(A) referred to previous decisions by the Hon'ble Jurisdictional High Court in cases involving Torrent Pharma Ltd. and Cadila Healthcare Ltd., where similar expenses were considered revenue in nature. The CIT(A) found that no enduring benefits were created by the expenses, and they were necessary for enabling exports without creating any tangible or intangible assets. The CIT(A) relied on these precedents to allow the claim of the assessee. 4. The Tribunal observed that the issue had been decided in favor of the assessee in the preceding year by the CIT(A), and no contrary decisions from higher authorities were presented by the Revenue. As a result, the Tribunal upheld the CIT(A)'s order, rejecting the appeal of the Revenue and dismissing it. The Tribunal concluded that there was no reason to interfere with the CIT(A)'s decision based on the precedents and facts of the case. 5. In the final order pronounced on 26th August 2022 at Ahmedabad, the Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decision to allow the product registration expenses as revenue in nature based on the legal precedents and the absence of contradictory decisions from higher authorities.
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