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TMI Blog2012 (10) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... ation that the product does not command adequate demand. Loss on sale of packing material as well as gross profit addition were based on the same rationale that the new product has limited demand in the Indian market. It is the contention of the assessee that the said aforesaid concentrate has a limited shelf life, since the same was due to expire. Assessee had to sell the same to its holding company to minimize the loss in this regard. Thus, this was a business decision of the assessee and Revenue cannot question the same. Also no evidence that assessee has sold the concentrate to its holding company which in turn has made a profit in this regard, by selling it to others. Hence, the contention of the revenue that assessee could also have found buyers as the holding company is also devoid of cogency - in favour of assessee. - I.T.A. No. 5183/Del/2010 - - - Dated:- 12-10-2012 - SHRI U.B.S. BEDI, AND SHRI SHAMIM YAHYA, JJ. Assessee by : Sh. C.S. Aggarwal, Sr. Adv., Sh. Shailesh Gupta, Adv. Department by : M rs. Shumana Sen, Sr. D.R. ORDER PER SHAMIM YAHYA: AM This appeal by the Revenue is directed against the order of the Ld. Commissioner of Income Tax (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from Tetra Pak India Limited. The laminate which was purchased from Tetra Pak India Limited was specific to product and had the brand Tropicana Twister printed on it. Thus, it could not be used for any other product. The management in order to recover at least part of the cost sold it to a third party namely M/s Ankit Paper Company. The said laminate was sold for a sum of Rs.186,673/- which was purchased at cost of Rs.7,555,291/-. This decision to sell the waste laminate was also taken to avert the continued cost of storing the same. The management also decided to sell the old concentrate of Tropicana Twister , as its shelf life was going to expire. The company sold the concentrate at cost price to M/s Pepsico India Holdings Private Limited, Chembur, engaged in the business of juice based products for Rs.7,747,000/-. The amount realized by the company on sale of laminate and concentrate has been included in the turnover whereas; cost of these has been included under the head purchase for resale in the financial statements of the company. Copy of invoices of M/s Dohler along with the copy of invoices raised on local parties to whom the sale of laminate and concentrate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks. The proposed launch of this product was cancelled. As the shelf life of the fruit juice concentrate was nearing expiry, it was sold by the assessee to its holding company Pepsico India Holdings Pvt. Ltd. at cost. It was further submitted before the Ld. Commissioner of Income Tax (A) that cancellation of launch of Tropicana Twister was the business decision of the assessee and that the manner in which the business is to be conducted is the discretion of the assessee. It was further submitted that it was not the business of the assessee to sell concentrates, and it was only when shelf life of the same was nearing its expiry date that the assessee decided to sell the same to at least recover the cost price. Considering the above, Ld. Commissioner of Income Tax (A) held that there is no case for application of provisions of section 40A(2)(b), since there is no payment / expenditure. Ld. Commissioner of Income Tax (A) deleted the addition made in this regard. Ld. Commissioner of Income Tax (A) further deleted the addition made by the Assessing Officer regarding the loss in sale of packing material amounting to Rs.7,182,327/-. Further, Ld. Commissioner of Income Tax (A) observed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the preceding year and represented the raw material and was in respect of the proposed new brand of juice drinks. However, due to change in the market and lack of demand in the aforesaid product in the Indian Market, proposed launch of the aforesaid product could not be materialized and launch of the aforesaid product was abandoned. It is further noted that the aforesaid concentrate which was imported by the assessee has a shelf life which was about to expire, and as such, assessee considered it appropriate in its business interest to sell the same to recover the cost and thus it sold the same to its holding company namely M/s Pepsico India Holding Private Limited. Thus, there was no loss incurred in this regard. This decision was a business decision and was based on the realization that the product does not command adequate demand. 6.2 We find that the Assessing Officer has also made addition for loss of packing material in this regard amounting to Rs.7182327/-. The loss on account of sale of packing material was also incurred due to the same reasons i.e. shelving the plan to launch the new product Tropicana Twister . Ld. Commissioner of Income Tax (A) has deleted the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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