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TMI Blog2012 (10) TMI 1231X X X X Extracts X X X X X X X X Extracts X X X X ..... for the years under consideration were filed by the assessee declaring total income of ₹ 1,52,74,577/- and ₹ 3,35,34,532/- for assessment years 2001-02 and 2002-03 respectively. Book profits declared by the assessee in the said returns u/s 115JB was ₹ 12,67,26,080/- and ₹ 16,19,05,671/- for assessment years 2001-02 and 2002-03 respectively. In the assessments completed by the AO u/s 143(3), the total income of the assessee was computed by the AO at ₹ 1,89,46,090/- and ₹ 4,66,28,140/- for assessment years 2001-02 and 2002-03 respectively. However, as the tax payable by the assessee on book profit u/s 115JB was more than the tax payable on income so computed under the normal provisions, the assessee was held to be liable to pay tax on the book profits for assessment years 2001-02 and 2002-03. 4. The additions made to its total income in the assessments completed u/s 143(3) for assessment years 2001-2 and 2002-03 were challenged by the assessee in appeal initially before the learned CIT(Appeals) and thereafter before the Tribunal. After the relief given by the learned CIT(Appeals) as well as the Tribunal in respect of the said additions, the add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 158, he cancelled the penalty imposed by the AO u/s 271(1)(c) for both the years under consideration. Aggrieved by the order of the learned CIT(Appeals), the Revenue has preferred these appeals before the Tribunal. 8. We have heard the arguments of both the sides and also perused the relevant material on record. As pointed out by the learned counsel for the assessee from the relevant orders of the AO giving effect to the orders of the Tribunal passed in the quantum proceedings, the tax payable by the assessee on book profit u/s 115JB is more than the tax on total income as finally computed under the normal provisions for both the years under consideration. The assessee, therefore, is held to be liable to pay tax on the book profits for both the years under consideration. In the case of CIT vs. Nalwa Sons Investment Ltd. (ITA No. 1420/2009 dated August 3, 2010) Hon ble Delhi High Court has held that when the tax payable on book profit u/s 115JB of the Act is more than the tax payable on the total income as computed under the normal provisions, the book profit becomes the basis of assessment and the additions made in computing the total income under the normal provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds the issue raised in ground No.1, it is observed that the expenditure incurred by the assessee on the articles presented to Doctors was disallowed by the AO by invoking Explanation to section 37(1) being the payments in contravention to Rule of Indian Medical Council. On appeal, the learned CIT(Appeals) deleted the said disallowance following the order of the Tribunal in assessee s own case for the earlier years deleting the additions made on a similar issue. A copy of the order of the Tribunal dated 11th Sept., 2009 passed for assessment years 2001-02 to 2004-05 in assessee s own case is placed on record before us and a perusal of the same shows that a similar issue has been decided by the Tribunal in favour of the assessee for the following reasons given in paragraph No. 40 to 42 : 40. Ground 2 relates to addition of ₹ 3,75,865/- on account of personal gifts made to the Doctors and medical practitioners. The revenue has argued stating that the said is personal in nature. therefore the same should be disallowed u/s 37 of the Act, The counsel has stated that the identical issue has come for consideration in the case of Warren Pharma in TIA No.6357/M/2006 for the A.Y.200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors on account of proper verification of material, we find that the order of CIT(A) is a reasonable order based on material, therefore, the same is confirmed,. 42. From the above, it is evident that the disallowance of 15% on gifts to the doctors should be disallowed on account of proper verification of material. We find no reason to interfere with the above settled position in the assessee s case. Thus ground 2 of the revenue is dismissed. As the issue involved in the year under consideration as well as all the material facts relevant thereto are similar to assessment years 2001-02 to 2004-05, we respectfully follow the order of the Tribunal for the said years and sustain the disallowance made by the AO on this issue to the extent of 25% in respect of personalized sales promotion expenses and 15% in respect of gifts to Doctors on account of unverifiable and unvouched element involved in the said expenses. The impugned order of the learned CIT(Appeals) is accordingly modified to that extent and ground No. 1 of he Revenue s appeal is partly allowed. 11. As regards the issue raised in ground No.2 relating to allocation of overhead expenses to Baddi Unit entitled for deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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