The Commissioner Of Income Tax – 2, Mumbai v. Sankalp Consumer Products Private Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL (L) NO.153 OF 2013ANDINCOME TAX APPEAL (L) NO.154 OF 2013ANDINCOME TAX APPEAL (L) NO.157 OF 2013ANDINCOME TAX APPEAL (L) NO.158 OF 2013 The Commissioner of Income Tax – 2, MumbaiVersusSankalp Consumer Products Private Limited ..Appellant. ..Respondent. Mr.Suresh Kumar for the appellant.None for the respondent. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 19[th] March 2013 P.C. : Office objections waived. 2.In these appeals by the Revenue for assessment years 2003-04, 2004-05, 2005-06 and 2006-07, following common question of law has been proposed for our consideration. “Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in upholding the order of the CIT (A), allowing the entire claim of expenses towards sales promotion ?” 3.The respondent – assessee is engaged in the business of providing services for marketing consumer products belonging to various multinational companies. In the course of its marketing business, the respondent – assessee has debited a sum of Rs.2.38 crores towards sales promotion expenses. The assessing officer disallowed an amount of Rs.3.75 crores being the amount paid to various parties as sales promotion expenses on the ground that the payment made to these parties were not genuine. The Commissioner of Income Tax (A) allowed the appeal, holding that the respondent – assessee was dealing with the organizations of repute such as Cadbury India Limited etc and many of the clients have reimbursed the expenses to the respondent – assessee. 4.On further appeal by the Revenue, the Tribunal while upholding the order of the Commissioner of Income Tax (A) held that the payment made for sales promotion expenses has to be allowed and it cannot be disallowed merely because the persons to whom the payments were being made did not file their sales-tax returns. The test to be applied is whether in the light of Section 37 of the Income Tax Act, 1961 ('Act' for short), the expenditure was of revenue nature and incurred for the purposes of business and the provisions of Section 68 of the Act cannot be invoked while considering the expenditure incurred on sales promotion as sought to be done by the assessing officer. The Tribunal while upholding the order of the Commissioner of Income Tax (A) held that the expenses were actually incurred for the purposes of business and, therefore, allowed under Section 37 of the Act. 5.The conclusion in the impugned order is based on concurrent finding of fact arrived at by the Commissioner of Income Tax (A) and the Tribunal. In these circumstances, we see no reason to entertain the proposed question of law. Accordingly, all the four appeals are dismissed with no order as to costs. (M.S. Sanklecha, J.) (J.P. Devadhar, J.)