9911796707
TMI Blog2022 (5) TMI 520X X X X Extracts X X X X X X X X Extracts X X X X ..... ters. We find similar issue came up for hearing before the Tribunal for the Asstt.Year 2013-14 in assessee s own case [ 2019 (7) TMI 537 - ITAT AHMEDABAD ] wherein Co-ordinate Bench remitted back the issue to the file of AO with direction to re-compute the disallowance under Rule 8D(2)(iii) and consider only the investments which have actually yielded exempt income instead of gross investment. We are of the view that similar direction to the AO to decide the issue afresh in line with the directions of the Tribunal in AY 2013-14 would be just and appropriate in this assessment year also. We hold so and direct the AO accordingly. Levy of interest under section 234A of the Act for delay in filing return of income - HELD THAT:- As per the assessee, the assessee had furnished the return of income for year under consideration within the due date prescribed under section 139(1) of the Act. Though this interest is consequential in a nature, this issue is remitted back to the file of the AO to decide whether interest of Rs.1,97,584/- was in accordance with law or not. Allowing the differential interest made out of interest claimed under section 36(1)(iii) of the Act by treating it as a busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id to doctors, the learned CIT [A] followed the earlier assessment year and confirmed the disallowances made by the assessing officer. On the disallowance made under section 14A, learned CIT [A] directed to delete interest expenses amounting to Rs.1.15 crores, however the disallowance of Rs.8,10,910/- on account of Administrative expenses is upheld. Further, the AO was directed to recompute the disallowance under section 14A taking into account Rs.45,000 already disallowed by the assessee in its return of income. The AO was further directed not to add the disallowance made under section 14A of the Act to the book profit of the assessee company as computed under section 115JB of the Act. Thus the appeal filed by the assessee was partly allowed by the Ld CIT [A] . 4. Aggrieved against the order passed by the appellate authority, both the assessee and revenue are in appeal before us. The grounds of appeal raised by the assessee in ITA 983/AHD/2019 are as follows: i) Disallowance of discount offered to doctors of Rs.6,89,791/- ii) Disallowance under section 14A read with Rule 8D of Rs.2,63,100/- iii) Deduction of education and secondary & higher education cess under section 37(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat in the next assessment year, the AO himself has admitted the claim of discount made to stockiests/customers etc. aggregating to Rs.10.90 Crores and only the discount of Rs.15.44 Lakhs given to Doctors were rejected. It was thus contended that the order of the CIT(A) is in parity with the action of the AO himself in the subsequent year and therefore cannot be assailed by the Revenue by any means. As regard discount offered to the doctors amounting to Rs.8.956Lakhs, the learned AR pointed out that the supply of medicines have been made to the Doctors also by the C&F agents by way of sale and not on any promotional offer and therefore, no distinction can be drawn for discount bestowed to Doctors qua other stockiests/distributors/dealers etc. The learned AR thus submitted that the appeal of the Revenue thus deserves to be rejected whereas the appeal of the assessee requires to be allowed on this score. 11.9 We have carefully considered the rival submissions on the issue. The maintainability of discount on sales is in question. It is the case of the Revenue that the assessee is supplying medicines to its C&F agents for its ultimate sale in the market for consumption. The discounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w the trade discount paid to all parties including Doctors as ordinary business expenditure. Thus, Ground No.2 of the Revenue's appeal is dismissed. As a corollary, Ground No.1 of the assessee's appeal in ITA No. 2511/Ahd/2015 stands allowed." 6. In reply thereto the Ld.DR appearing for the Revenue relied upon the orders of the lower authorities and pleaded to confirm the disallowance accordingly. 7. We have given our thoughtful consideration and materials available on record. It is the case of the assessee that the trade discounts given to the doctors are similar to the discounts given to the distributors and other dealers which is an allowable expenditure under section 37 of the Act. This view is confirmed by the Coordinate Bench of the Tribunal in assessee's own case for the Asstt.Year 2009-10. Respectfully following the decision, we set aside the orders of the CIT(A) and AO and direct the AO to allow trade discount paid to the Doctors as ordinary business expenditure. Thus, we allow ground no.1 in favour of the assessee. 8. Ground no. 2: Disallowance U/s. 14A read with rule 8D of Rs.8,10,910/-. 9. The learned Senior Counsel submitted that the CIT(A) grossly erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9(1) of the Act. Though this interest is consequential in a nature, this issue is remitted back to the file of the AO to decide whether interest of Rs.1,97,584/- was in accordance with law or not. 13. In the result, appeal of the assessee is partly allowed for statistical purpose. 14. Now we take Revenue's appeal. 15. Revenue has raised following two grounds: "1.1. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in allowing the differential interest of Rs. 12,11,46,320/- by treating it as business expenditure ignoring the fact on record that the transaction between Aditya Medisales Ltd. & M/s Sun Pharmaceutical Industries Ltd. is not a transaction between 2 unrelated parties as the controlling person in both the company is same i.e Mr. Dilip Sanghvi for A.Y. 2014-15, as submitted by the assessee. 1.2. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the disallowance of Rs. 12,11,46,320/- made out of the interest claimed u/s 36(l)(iii), which was paid for non-business purposes. 2. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in partly allowing the appeal on disallowance u/s 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, the assessee-company is sole distributor of all the products of Sun Pharma, and as per the terms of agreement, the assessee company has to make payment on delivery of the products within the stipulated time, otherwise, interest on overdue bills raised against purchase of the products at the rate of 9% pa was to be paid to the principal. It was also pointed out by the assessee that similar claim for the Asst.Year 2009-10 was allowed by the CIT(A) by accepting the claim of the assessee. Similar allegations made by the AO in that assessment year was also rebuffed by the CIT(A) as not tenable. Assessee further submitted that even for the subsequent assessment years i.e. 2010-2011 and 2011-12 similar claim was allowed by the ld.CIT(A), therefore, since the facts and circumstances being the same, no disallowance on account of interest expenditure incurred on delayed payment of interest be made in the current year also. Thereafter, the assessee has tried to explain the nature of interest payment made by the assessee, and then he put effort to differentiate between 'interest' simplicitor and 'interest expenditure incurred on delayed payment of interest'; in other words, payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the year under consideration. In the appellate order CAB-1/30/2015-16 dated 01/02/2017 passed for AY.2012-13 similar disallowance made by the AO has been directed to be deleted. Following the order of my predecessor, the disallowance made in this year is also directed to be deleted. Accordingly, ground No. 2 is allowed." 21. Aggrieved by the action of the CIT(A), the Revenue is before the Tribunal. The ld.DR supported order of the AO, whereas the ld. Sr.Counsel for the assessee supported the order of the ld.CIT(A), and also reiterated the submissions as were made before the Revenue authorities. The ld.Sr.Counsel further submitted that similar claims were made by the assessee in earlier assessment years, and though they were disallowed by the AO, but in appeal before the CIT(A) the claim of the assessee was allowed in these years. Against similar issue raised by the assessee for the Asst.Year 1997-98 was went upto the Hon'ble Gujarat High Court at the instance of the Revenue, and Hon'ble High Court in Tax Appeal No.559 of 2009 order dated 4.5.2010 dismissed the appeal of the Revenue, and therefore, so far as the present issue is concerned, the same is settled, and the claim of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ell as the Tribunal have upon appreciation of the evidence on record found that the revenue has not been able to make out any case for applying the provisions of section 40A(2)(a); and that interest on unsecured borrowings is always higher than the rate of interest paid to the banks or financial institutions from where the loans raised are secured loans, and have accordingly accepted interest paid to Sun Pharmaceuticals at the rate of 24% p.a. to be reasonable. In the light of the concurrent findings of fact recorded by Commissioner (Appeals) as well as the Tribunal, and considering the fact that the findings and conclusions arrived at by the Tribunal are based on the evidence on record as well as normal commercial practices, it cannot be stated that the impugned order suffers from any legal infirmity so as to warrant interference." 23. We find that facts and circumstances in the present case are similar to that of earlier years. Therefore, in view of the above settled position of the issue by the ITAT and the Hon'ble Gujarat High Court, respectfully following the same, we dismiss this ground of appeal of the Revenue. 24. In the result, the appeal of the assessee is partly allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
