TMI Blog2012 (9) TMI 757X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee is bogus, the same cannot be disallowed merely on the ground that the claim of the assessee is excessive. In the facts and circumstances of the case when the actual expenditure incurred by the assessee has not been doubted and the payment has been made to the various Medical Representatives, who are not related parties of the assessee, than no adhoc disallowance is called for on account of excess PSR expenses and PSR salary. Dis-allowance deleted – Decided in favor of assessee - I .T.A. No.6224/Mum /2007, I .T.A. No.1948/Mum /2009, I .T.A. No.6187/Mum /2007, I .T.A. No.2460/Mum /2009 - - - Dated:- 4-7-2012 - SHRI G E VEERABHADRAPPA SHRI VIJAY PAL RAO, JJ. Appellant by : Sh H S Parikh Respondent by : Sh P K B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to the gross profit of preceding year at 48.23%. The assessee claimed pharmaceutical sales representative (PSR) expenses of Rs. 19,19,329/- and PSR salary of Rs. 16, 61, 617/-. On a query from the Assessing Officer, the assessee explained that the assessee employed 47 Medical Representatives spread over several states, resulting in sales of about Rs.. 2.35 lakhs per medical representative. The assessee has also furnished PSR details and details of salary and expenses before the Assessing Officer. The Assessing Officer asked the assessee to prove that the PSR expenses are incurred wholly and exclusively for assessee's business. 3.1 In response, the assessee produced some vouchers pertaining to Indoor medical representatives. The As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamined the same. 3.3 The Commissioner of Income Tax(Appeals), after considering the contentions of the assessee has held that in view of the fact that the complete information was not furnished by the assessee, the genuineness of the expenditure is not free from doubt; however, the claim is restricted to 28% of the sales instead of15% allowed by the Assessing Officer. 4 Both, assessee as well as revenue are aggrieved by the impugned order of the Commissioner of Income Tax(Appeals). The assessee has challenged the allowance of claim only to the extent of 28% of sale instead of 32.4% as claimed by the assessee whereas the revenue has challenged the relief granted by the Commissioner of Income Tax(Appeals) from 15% to 28% of sales. 5 We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veyance, incentives and publicity is the major expenditure. He has relied upon the decision of Hon ble Calcutta High Court in case of Ravi Marketing P. Ltd. v. Commissioner of Income-tax reported in 280 ITR 519 as well as decision of Hon ble Punjab and Haryana High Court in case of CIT vs S.S P (P) Ltd 19 income tax matters 141. 5.1 On the other hand, the ld DR has submitted that to verify the genuineness of the expenditure claimed by the assessee, the Assessing Officer asked the assessee to furnish the entire details and complete vouchers as well as the applications of the Medical Representatives engaged by the assessee. The assessee could not furnish the complete record and details; therefore, the Assessing Officer has taken a just and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d circumstances of the present case an adhoc disallowance, on the ground of excessive claim, is not justified. 6.2 The assessee has elaborately explained before the Commissioner of Income Tax (Appeals) that in the business of ethical marketing of pharmaceutical products, a team of Medical Representative is engaged, trained and developed to sell the targeted set of products. It is also a matter of fact that the marketing of pharmaceutical products involves substantial expenses in the form of salary, daily allowances and travelling/conveyance allowances to be paid to the Medical Representatives as well as the literature material and sample products. 7 In the facts and circumstances of the case when the actual expenditure incurred by the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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