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2016 (2) TMI 263 - ITAT MUMBAI

2016 (2) TMI 263 - ITAT MUMBAI - TMI - Disallowance of sales promotion expenses - AO disallowed by invoking Explanation to Section 37(1) and CBDT Circular dated 1-8-2012 - Held that:- As receiving of gifts by doctors was prohibited by MCI guidelines, giving of the same by manufacturer is not prohibited under any law for the time being in force. Giving small gifts bearing company logo to doctors does not tantamount to giving gifts to doctors but it is regarded as advertising expenses. As regards .....

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-2014, whereas the relevant assessment year under consideration is 2010-2011 and 2011-2012. Accordingly, we do not find any merit in the disallowance - Decided in favour of assessee

Addition on account of forfeiture of warrant application money - Held that:- As found that warrants were converted into shares, however, money contributions did not contribute these warrants into shares, therefore, their contributions were forfeited which was treated by assessee as capital receipts. The is .....

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BR> Disallowance u/s.14A r.w.rule 8D - Held that:- No merit for the disallowance so made u/s.14A, when there is no exempt income during the year under consideration.- Decided in favour of assessee - ITA No.6429, 6428/Mum/2012, ITA No.11/Mum/2012 - Dated:- 23-12-2015 - SHRI R.C.SHARMA, AM AND SHRI SANDEEP GOSAIN, JM For The Assessee by : Shri R.C.Jain & Sh. Ashok Bansal For The Revenue : Shri Ranjeesh K. Arvind ORDER PER R.C.SHARMA (A.M): These are the cross appeals filed by the assessee and .....

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arious pharmaceuticals products and having sales within and outside India. During the year under consideration, the assessee had debited an amount of ₹ 4,32,11,406/- under the head sales promotion expenses‟. Accordingly the details were called for and noticed that an amount of ₹ 22,45,000/- was relating to freebies given to medical practitioners. The AO disallowed ₹ 22,45,000/- by invoking Explanation to Section 37(1) and CBDT Circular dated 1-8-2012. 4. By the impugned o .....

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have been sponsoring practicing doctors to attend prestigious conferences so that they gather contemporary knowledge about management of certain illness/disease and learn about newer therapies. We found that the disallowance was made by the AO by relying on the CBDT Circular dated 01.08.2012 onwards. However, the Circular was not applicable because it was introduced w.e.f.01.08.2012. i.e. assessment year 2013-2014, whereas the relevant assessment year under consideration is 2010-2011 and 2011-20 .....

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7; 10 each at a premium of ₹ 36 pr share to promoter family. Assessee received 10% of warrant price on allotment, that is, ₹ 4.60 per warrant aggregating to ₹ 14,95,000/-. Balance amount was to be received within 18 months as per SEBI guidelines. However, due to fall in share price of company, warrant holders did not avail the option for conversion of the warrants into equity shares within the stipulated time as per SEBI(DIP) guidelines and as per the terms of the issue within .....

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the submissions of the appellant, order of the AO and facts of the case carefully, it is noticed that during the year under consideration, the assessee has raised capital through issue of convertible warrants which were to be converted into equity shares. During the year under consideration, these warrants were converted into equities. However, many of the contributors did not opt for conversion. As a result, their contribution of warrants was forfeited. Thus, it has resulted into forfeiture of .....

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d back to the taxable income. On the other hand, the AR of the appellant has submitted that the decisions of Hon'ble Supreme Court in case of T.V.Sundaram Iyengar & Sons Ltd. was related to write off of credit balances in deposit account in the course of trading transactions and that write back thereof was taken to profit & loss account. In the case of Solid Containers Ltd., it was a case of write back of loan taken for business purposes. Thus, both the cases deal with the amounts cr .....

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t in case of Travancore Rubber & Tea Company Ltd. Vs. CIT 243 ITR 158. Thus, it was argued that since it was a capital receipt, therefore, the addition made by the A.O. is not called for. From the perusal of the submissions and facts of the case, it is clear that the assessee has raised capital through issue of convertible warrants which were to be converted into equity shares is an undisputed fact. During the year under consideration, the warrants were converted into shares, but many contri .....

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e present case as submitted by the appellant. Both these cases are relating to write off of credit balances and write back of loan taken for business purposes respectively. But in the present case, it is a case of forfeiture of liability on account of warrants which were to be converted into equity shares. The case of the appellant is squarely covered by the decision of hon'ble Supreme Court in case of Travencore Rubber & Tea Company Ltd. (supra) where it is held that if the agreed sums .....

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nd that warrants were converted into shares, however, money contributions did not contribute these warrants into shares, therefore, their contributions were forfeited which was treated by assessee as capital receipts. The issue is squarely covered by the decision of Hon‟ble Supreme Court in the case of Travencore Rubber & Tea Company Ltd. (supra). The case laws relied on by the AO are not applicable to the facts of the instant case, which has elaborately dealt by the CIT(A) in his orde .....

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