Itxa/6203/2010 Of The Commissioner Of Income Tax-Vi, Mumbai v. M/S. Glaxo India Ltd., Mumbai

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.6203 OF 2010 The Commissioner of Income Tax-VI..Appellant.V/s.M/s. Glaxo India Ltd...Respondent. Mr. Suresh Kumar, for the Appellant.Mr. Tejas Shah i/b. M. M. Legal Ventures, for the Respondent. P.C:- CORAM: J.P.DEVADHAR & M.S.SANKLECHA,JJ.DATE : 25[th] FEBRUARY, 2013. In this Appeal for the Assessment Year 1995-96 by the Revenue, following questions are raised for our consideration:- (a)Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in not sustaining the finding of the CIT(A) in upholding the disallowances made by the Assessing Officer under Rule 6B in respect of gift articles? (b) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in directing to allow the expenditure on canteen supplies and provisions for visitors in the guest house as regular business expenditure on the maintenance of the guest house even though the same is in the nature of entertainment expenses and has to be disallowed as per provisions of Section 37(4) of the Income Tax Act? (c) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in deleting the addition of Rs.4,27,07,623/- in respect of excise duty paid on the finished goods lying in the closing stock? (d) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that Share Dilution expenses incurred for rising capital for purchase of Plant & Machinery should be capitalized and the depreciation be allowed on the same? (e) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the entire expenditure incurred on purchase of consumable ms like Diesel, Oil and Coal is to be allowed as business expenditure even if the entire purchases are not actually consumed during the relevant previous year? (f) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in directing to effect adjustments to profits in respect of unutilized Modvat credit pertaining to the respective units at Nasik & in pro-rating and adding to the profits of the respective units, the disallowances effected in computing the total income for computation of (g) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the interest on DPEA liability is to be allowed as expenditure on year to year basis without appreciating the fact that the interest liability as contingent in nature as it is dependent on DPEA liability which is disputed before the Delhi High Court and therefore has to construed as contingent liability as it is neither accrued nor arisen, and hence not allowable? (h) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in confirming the order of the CITA(A) directing the Assessing Officer to exclude the cost attributable 27.02 acres of land at Aligarh (out of 40.87 acres of land of FPD) while recomputing capital gain on the sale of family products division (FPD) & also in holding that no cost of acquisition has been incurred by the assessee on transferred capital asset in question even though the cost of acquisition in respect of the said land at Aligarh was to taken at Rs. Nil or fair market value of this land as on 1[st] day of April, 1981 at the option of the assessee as per provisions of the section 55(2)(b)(2) of the Income Tax Act? (i)Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding the transfer of Family Products Undertaking by the assessee company to M/s. Heinz India Pvt. Ltd. as Slump sale despite the fact that the cost of acquisition of the asset was ascertainable and the consideration received was also capable of being allocated to each assets including the depreciable assets? (i)Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in holding the transfer of Family Products Undertaking by the assessee company to M/s. Heinz India Pvt. Ltd. as Slump sale despite the fact that the cost of acquisition of the asset was ascertainable and the consideration received was also capable of being allocated to each assets including the depreciable assets? (j)Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the order of the CIT(A) in holding that no expenditure was involved in earning dividend and directing to allow deduction u /s. 80M on the entire dividend income received? (k) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the order of the CIT(A) in holding that payment made to Glaxo Sports Club do not fall within the purview of section 40A(9) of the Income Tax Act? (l) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the order of the CIT(A) in holding that premium payable on the redemption of Debentures is a revenue expenditure allowable on year to year basis for the period of the Debentures? (m) Whether on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the order of the CIT(A) in holding that the amount of Rs.30 Crores received by the assessee as non-complete fees from M/s. Plasmon Dietetia Alimentari, S. P. A (PDA) was neither taxable as capital nor as revenue receipt u/s 29(va) and/or section 55(2)(a) of the Income Tax Act? 2So far as Question (a) is concerned, Counsel for the parties state that by the impugned order, the Tribunal has allowed the Respondent-Assessee's claim by following its order for the Assessment Year 1990-91 (being Income Tax Appeal No.4494/M/99 dated 28[th] July, 2008). The Counsel for the Revenue states that the order of the Tribunal for the Assessment Year 1994-95 has been accepted by the Revenue. In view of the above, we see no reason to entertain Question (a). 3So far as Question (b) is concerned, the Tribunal by its impugned order has allowed the claim of the Respondent-Assessee for canteen supplies and provisions by following its order for the Assessment Year 1994-95 (being Income Tax Appeal No.4494/M/99 dated 28[th] July, 2008). The Counsel for the Revenue informed us that the order of the Tribunal for the Assessment Year 1994-95 has been accepted by the Revenue. In view of the above, we see no reason to entertain Question (b). 4So far as Question (c) is concerned, the Tribunal has relied upon its order in the Respondent-Assessee's own case for the Assessment S.R.JOSHI5 of 9 Year 1994-95 (being Income Tax Appeal No.4494/M/99 dated 28[th] July, 2008). The Counsel for the Revenue states that the order of the Tribunal for the Assessment Year 1994-95 has been accepted by the Revenue. In view of the above, we see no reason to entertain Question (c). 5So far as Question (d) is concerned, the Tribunal by its impugned order has followed its order in the Respondent-Assessee's own case for the Assessment Year 1994-95 (being Income Tax Appeal No.4494/M/99 dated 28[th] July, 2008) allowing depreciation on share dilution expenses capitalized under the head “plant & machinery”. The Counsel for the Revenue informed us that identical issue was challenged by the Revenue in this Court for the Assessment Year 1986-87 being Income Tax Appeal No.972 of 2009. On 5[th] March, 2012, this Court refused to entertain the aforesaid question as framed in Income Tax Appeal No.972 of 2009 for the Assessment Year 1986-87. In view of the above, we see no reason to entertain Question (d). 5So far as Question (d) is concerned, the Tribunal by its impugned order has followed its order in the Respondent-Assessee's own case for the Assessment Year 1994-95 (being Income Tax Appeal No.4494/M/99 dated 28[th] July, 2008) allowing depreciation on share dilution expenses capitalized under the head “plant & machinery”. The Counsel for the Revenue informed us that identical issue was challenged by the Revenue in this Court for the Assessment Year 1986-87 being Income Tax Appeal No.972 of 2009. On 5[th] March, 2012, this Court refused to entertain the aforesaid question as framed in Income Tax Appeal No.972 of 2009 for the Assessment Year 1986-87. In view of the above, we see no reason to entertain Question (d). 6So far as Question (e) is concerned, the Tribunal follows its order in the Respondent-Assessee's own case for the Assessment Year 1994-95 (being Income Tax Appeal No.4494/M/99 dated 28[th] July, 2008). The Counsel for the Revenue informed us that the order of the Tribunal for the Assessment Year 1994-95 has been accepted by the Revenue. In view of the above, we see no reason to entertain Question (e). 7So far as Question (f) is concerned, we find that the impugned order of the Tribunal has followed its order in the Respondent-Assessee's own case for the Assessment Year 1994-95 (being Income Tax Appeal No.4494/M/99 dated 28[th] July, 2008). The Counsel for the Revenue states that the order of the Tribunal for the Assessment Year 1994-95 has been accepted by the Revenue. In view of the above, we see no reason to entertain Question (f). 8So far as Question (g) is concerned, the Counsel for the Revenue pointed out that an identical issue was raised by the Revenue in respect of Respondent-Assessee's own case in this Court being Income Tax Appeal No.972 of 2009. This Court by an order dated 5[th] March, 2012 refused to entertain the identical question as framed herein above. In the circumstances, we see no reason to entertain Question (g). 9So far as Questions (h) and (i) are concerned, question (i) is a mere facet of question (h). The Tribunal by its impugned order has concluded that the sale of Respondent-Assessee's Family Production Division was a slump sale. This conclusion was reached on the finding of fact that no evidence has been brought on record to show that valuation has been done by any of the parties on asset to asset basis before the S.R.JOSHI7 of 9 Family Production Division was agreed to be sold for a consideration of Rs.180 Crores. Further, the Tribunal also held that before introduction of section 50B of the Income Tax, 1961 w.e.f. 1[st] April, 2000, no capital gain could be said to arise in case of slump sale. In view of the above, we see no reason to entertain Questions (h) and (i). 10So far as Question (j) is concerned, we find that by the impugned order, the Tribunal has upheld the order of CIT(A) by relying upon its order in Respondent-Assessee's own case for the Assessment Year 1994-95 (being Income Tax Appeal No.4494/M/99 dated 28[th] July, 2008). We are informed that the order of the Tribunal for the Assessment Year 1994-95 has been accepted by the Revenue. Further, the Tribunal has also followed the decision of this Court in the matter of CIT v/s. General Insurance Corporation of India reported in 254 ITR page 204. In view of the above, we see no reason to entertain Question (j). 11So far as Question (k) is concerned, Counsel for the Revenue states that in respect of the same Respondent-Assessee, the Revenue had filed an Appeal against the order of the Tribunal for the Assessment Year 1991-92 in this Court being Income Tax Appeal No.1033 of 2009. This Court by order dated 5[th] March, 2012 refused to entertain an identical issue as raised by the Revenue. In view of the above, we see no reason to 11So far as Question (k) is concerned, Counsel for the Revenue states that in respect of the same Respondent-Assessee, the Revenue had filed an Appeal against the order of the Tribunal for the Assessment Year 1991-92 in this Court being Income Tax Appeal No.1033 of 2009. This Court by order dated 5[th] March, 2012 refused to entertain an identical issue as raised by the Revenue. In view of the above, we see no reason to 12So far as Question (l) is concerned, we find that the Tribunal has relied upon its own order in the Respondent-Assessee's own case (being Income Tax Appeal No.4494/M/99 dated 28[th] July, 2008) to allow the claim of the Respondent-Assessee. The Counsel for the Revenue states that the order of the Tribunal for the Assessment Year 1994-95 has been accepted by the Revenue. In view of the above, we see no reason to entertain Question (l). 13So far as Question (m) is concerned, we find that the Tribunal has upheld the order of the CIT(A) holding that non-compete fees were not taxable by following decision of this Court in the matter of CIT v/s. Narendra D. Desai reported in 214 CTR 190. In view of the above, we see no reason to entertain Question (m). 14Accordingly, appeal is dismissed with no order as to costs. (M.S.SANKLECHA,J.) (J.P.DEVADHAR,J.)