Principal Commissioner Income-tax, Alwar v. Gillette India Ltd
[Citation -2017-LL-0523-56]

Citation 2017-LL-0523-56
Appellant Name Principal Commissioner Income-tax, Alwar
Respondent Name Gillette India Ltd.
Court HIGH COURT OF RAJASTHAN
Relevant Act Income-tax
Date of Order 23/05/2017
Judgment View Judgment
Keyword Tags travelling and conveyance expenses • promotion expenses • sales promotion • market price • tds
Bot Summary: The issues are squarely covered by the decision in appeal No.33/2016 decided today along with other connected appeals which reads as under: 3. In so far as issue No.(i) is concerned, the Tribunal in its order has observed as under: 8.8. The A O has raised a new issue about the claim of double deduction. The observations made by the Tribunal in the earlier year where appeal was preferred but this question was not admitted and the same issue is squarely covered by the decision on issue No.(ii) of appeal No.134/2014 as above. Regarding issue No.(ii) , the same are covered by the decision on issue No.(iv) of appeal No.134/2014, wherein the following reasoning was adopted. Regarding issue No.(iv) counsel has relied upon the decision of the Supreme Court in the case of Commissioner of Income Tax. The issues are answered in favour of the assessee and against the department.


HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 125 / 2016 Principal Commissioner Income Tax, Alwar. ----Appellant Versus M/S Gillette India Ltd., SPA-65A, Industrial Area, Bhiwadi, Alwar. ----Respondent For Appellant(s) : Mrs. Parinitoo Jain with Mr. Mukesh Meena For Respondent(s) : Mr. Sanjay Jhanwar with Mr. Prakul Khurana & Ms. Archana HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE DR. JUSTICE VIRENDRA KUMAR MATHUR Judgment Per Hon ble Jhaveri, J. 23/05/2017 1. By way of this appeal, appellant has challenged judgment and order of Tribunal whereby Tribunal has partly allowed appeal preferred by assessee and dismissed appeal preferred by department. 2. This Court while admitting appeal on 04.10.2016 has framed following substantial questions of law: (i) Whether Tribunal was legally justified in deleting addition of Rs. 1,07,38,198/- made on account of inventories written off specifically when (2 of 5) neither any details were furnished by company and nor there was any supporting evidence to justify and establish that inventories were actually destroyed? (ii) Whether Tribunal was legally justified in deleting addition of Rs.41,61,559/- made on account of travelling and conveyance expenses nor any supporting evidence was filed to justify claim? (iii) Whether Tribunal was legally justified in allowing deduction u/s 37 and deleting addition of Rs. 50,00,000/- out of which Rs.35,00,000/- was upheld by CIT(A) on account of advertisement and sales promotion expenses specifically when no evidences are produced, purpose was also not established and TDS was also not deducted? (iv) Whether Tribunal was legally justified in deleting addition of Rs. 14,20,254/- made on account of miscellaneous expenses which were neither verifiable as no supporting evidence was available and also same could not be established to have been incurred wholly and exclusively for purpose of business? 3. issues are squarely covered by decision in appeal No.33/2016 decided today along with other connected appeals which reads as under: 3. In so far as issue No.(i) is concerned, Tribunal in its order has observed as under: 8.8. A O has raised new issue about claim of double deduction. Such issue was never raised in earlier years nor any query was raised in assessment proceedings. In fact A O has made these observations in assessment order on basis of arguments of ld. D/R in course of appellate proceedings for assessment year 2003-04 before ITAT. Hon ble ITAT in assessment year 2003-04 in ITA No. 188 & 265/JP/2007 dated 9.8.2010 after considering said (3 of 5) arguments of ld. D/R held that there is no case of double deduction and deleted disallowance made in respect of inventories written off. Copy of ITAT order is at. 1.Reliance is placed on following cases: J. C. I. T. Vs. ITC Ltd. 299 ITR (AT) 341(SB) (Cal.): CIT Vs. Alfa Leval (India) Ltd. 295 ITR 451 (SC): 8.9. In present case, assessee has actually written off inventory of Rs. 91,83,353/- by identifying damaged / obsolete items. This is also regular practice of assessee. In any case since stock are valued at cost or market price whichever is lower and these inventory has no value, same is to be allowed to assessee in view of accounting principles and ratio laid down by Hon ble Supreme Court. CIT Vs. Hotline Teletube and Components Ltd. 175 Taxman 216 (Del.): Provision for diminution in value of stock is allowable as business loss. 8.10. In view of above, it is contended that asessee s claim of inventory written off is fully allowable. 4. Therefore, observations made by Tribunal in earlier year where appeal was preferred but this question was not admitted and same issue is squarely covered by decision on issue No.(ii) of appeal No.134/2014 as above. 5. Regarding issue No.(ii) & (iii), same are covered by decision on issue No.(iv) & (v) of appeal No.134/2014, wherein following reasoning was adopted. 6. Regarding issue No.(iv) & (v) counsel has relied upon decision of Supreme Court in case of Commissioner of Income Tax. vs. Alfa Laval (India) Ltd. [2007] 295 ITR 0451 and decision of Bombay High Court in case of Commissioner of Income Tax vs. Retilal Becharlal & Sons and Commissioner of Income Tax vs. General Atlantic (P) Ltd. [2016] 384 ITR 0271 (Bom). 6.1 Counsel for appellant has contended that expenses made were not admissible under Section 37 of Act, where income was disproportionate to turn-over. (4 of 5) 6.2 In that view of matter, Tribunal has seriously committed error in allowing expenses. 6.3 However, counsel for respondent has taken us to para 6.3 where Tribunal summarizing same observed as under: 6.3 After considering rival submission, we find that Group M Media India Pvt. Ltd. is Indian Co. as is evident from company master details placed at Paper Book Page 17. From same, it is noted that this company is incorporated on 29.11.2001 having registered office at Mumbai. Therefore, it is Indian Co. as defined u/s 2(26) and is company resident in India u/s 6(3). All payment made to this company towards advertisement charges is in Indian currency. Tax is deducted at source on such payment u/s 194C. Sec. 195 is applicable when payment is made to non resident. Admittedly, payment to Group M Media India Pvt. Ltd. is payment to resident and not non resident. Therefore, section 195 is not attracted. AO has not disputed genuineness of payment and therefore only because there is no agreement for advertisement work with this company cannot be viewed adversely. Therefore, disallowance of Rs.36,70,04,056/- made by AO is incorrect, against law and same is deleted. So far as expenses on trade incentive is concerned, we find that similar incentives given as per various schemes in earlier years has been allowed. AO at Page 2 of order has admitted that bills and vouchers of expenses, as desired, were produced for verification which was test checked. observation of AO that services has been received by assessee against these payment and therefore he should have deducted tax at source on value of gift is ill founded in as much as payment is not against services but against sale of goods to distributors and therefore TDS provisions are not applicable. Therefore, disallowance of Rs.16,17,24,303/- made by AO on this account is deleted. 6.4 In our considered view, view taken (5 of 5) by Tribunal is required to be accepted on facts. 6. In that view of matter, issues are answered in favour of assessee and against department. 7. appeal stands dismissed. 4. Therefore, issues are answered in favour of assessee and against department. 5. appeal stands dismissed. (VIRENDRA KUMAR MATHUR),J. (K.S. JHAVERI),J. Asheesh Kr. Yadav/193 Principal Commissioner Income-tax, Alwar v. Gillette India Ltd
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