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2023 (10) TMI 81 - AT - Income TaxNon entertaining the claims of the assessee raised first time before the AO and then before the Ld.CIT (A) - Non-Adjudication of Grounds of Appeal on the merits of the matter on the ground that once claim is not made in the return, it cannot be made during the assessment proceedings - HELD THAT - We found that assessee sought our indulgence in the matter which is already on record and in ITR filed by the assessee for which no new facts are required to be looked into therefore in the light of the judgment of honorable apex court in the case of National Thermal Power Co Ltd 1996 (12) TMI 7 - SUPREME COURT and Pruthvi Brokers and shareholders 2012 (7) TMI 158 - BOMBAY HIGH COURT wherein the honorable court held that assuming the assessing officer is not entitled to grant a deduction on the basis of letter filed during the course of assessment proceedings, the appellate authorities are entitle to consider the claim and adjudicate the same. It is clear therefore that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities but is also entitled to raise additional claims before them. To that extent the order of Ld.CIT (A) is perverse by not adjudicating the matter on merits and dismissed on technical grounds itself. Therefore ground no. 1 raised by the assessee is allowed and stand of Ld.CIT (A) is set aside. Allowability of sales promotion expenses incurred on doctors for prescribing appellant company s product - HELD THAT - This issue has deliberated in detail by the honorable apex court in the case of Apex Laboratories Ltd 2022 (2) TMI 1114 - SUPREME COURT - Although the similar issue has been decided in appellants own case by the co-ordinate bench of ITAT Mumbai for the AY 2015-16 and 2016-17 2021 (5) TMI 1073 - ITAT MUMBAI but in the light of decision of honorable apex court in the case of Apex Laboratories (supra) there is no rescue to the assessee and amount of sales promotion expenses is disallowable. Hence, this ground of appeal raised by the assessee is dismissed. Taxability of difference between deferral sales tax liability and its prepayment at its NPV - chargeable to tax u/s. 41 or u/s. 28(iv) ? - HELD THAT - We have examined the claim of the assessee and we are of the view that this surplus relying on the decision of honorable apex court in the matter of CIT Vs Balkrishna Industries Ltd. 2017 (11) TMI 1626 - SUPREME COURT in view of the above decision this amount is neither chargeable to tax u/s. 41 nor u/s. 28(iv) as the same is not a remission or cessation of liability for the purposes of Sec. 41 nor covered by Sec. 28(iv) as the same is not a non-monetary benefit which can be covered in sec 28(iv). Sec 28(iv) comes into picture only when sum value of benefit or perquisite arising from business or profession. Here in this case there is no benefit of perquisite arising to assessee by virtue of this arrangement. It is further to be noted that sec 28(iv) of the act has been amended by the finance act 2023 w.e.f A.Y 2024-25 which covers cash or in kind or partly in cash or partly in kind. This amendment clearly strengthens the contention of the assessee that in the year under consideration the same was not covered by section 28(iv). Revenue is not supposed to take advantage of assessee ignorance about treatment of any particular receipt/expenditure. Entries in the books of accounts are not the decisive factor as has been held by honorable apex court in the case of Kedarnath Jute Mfg Ltd 1971 (8) TMI 10 - SUPREME COURT , UP state industrial development corporation 1997 (4) TMI 2 - SUPREME COURT and CIT Vs Woodward Governor India Pvt Ltd. 2009 (4) TMI 4 - SUPREME COURT - Decided in favour of assessee.
Issues Involved:
1. Non-adjudication of grounds of appeal on the merits. 2. Deduction for sales promotion expenses incurred on doctors. 3. Taxability of the difference between deferral sales tax liability and its prepayment at its net present value (NPV). 4. Disallowance of education cess. 5. Disallowance of education cess on dividend distribution tax. 6. Additional ground regarding taxation of export incentives under the Merchandise Exports from India Scheme (MEIS). Summary: Issue I: Non-Adjudication of Grounds of Appeal on the Merits The assessee contended that the Ld. CIT (A) erred by not adjudicating the grounds raised on merits, merely holding that claims not made in the return cannot be made during assessment proceedings. The Tribunal found that Ld. CIT (A) dismissed the appeal on technical grounds, referencing the Goetze India Ltd. case. The Tribunal allowed this ground, stating that appellate authorities can consider and adjudicate additional claims. Issue II: Deduction for Sales Promotion Expenses The assessee sought a deduction of Rs 28,75,17,266/- for sales promotion expenses incurred on doctors. The Tribunal referenced the Apex Laboratories Ltd. case, which ruled against such deductions. Consequently, this ground of appeal was dismissed. Issue III: Taxability of Difference Between Deferral Sales Tax Liability and Its Prepayment at NPV The assessee argued that the difference between the deferral sales tax liability and its prepayment at NPV amounting to Rs 3,77,47,870/- is a capital receipt not taxable under section 28(iv) of the Act. The Tribunal agreed, referencing the CIT vs. Balkrishna Industries Ltd. case, and directed the AO to reduce the income by Rs 3,77,47,870/-, allowing this ground of appeal. Issue IV & V: Disallowance of Education Cess and Education Cess on Dividend Distribution Tax These grounds were not pressed by the assessee during the hearing and were thus dismissed. Additional Ground: Taxation of Export Incentives under MEIS The Tribunal did not address this additional ground explicitly in the summarized judgment. Conclusion: The appeal was partly allowed, with the Tribunal directing the AO to reduce the income by Rs 3,77,47,870/- and dismissing the grounds related to sales promotion expenses and unpressed issues.
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