TMI Blog2019 (7) TMI 537X X X X Extracts X X X X X X X X Extracts X X X X ..... and exclusively referred to in Section 37. No hesitation to concur with the conclusion drawn by the CIT(A) for allowability of discounts given to stockiests/distributors etc. However, we are unable to understand the reasoning of the CIT(A) for discarding the claim of discount expenditure paid to the Doctors. When the test of commercial expediency applied in its natural perspective, there is no reason to exclude Doctors purchasing medicines from C F agents for the purpose of eligibility of discount payments. We thus set aside the action of the CIT(A) to this extent and direct the AO to allow the trade discount paid to all parties including Doctors as ordinary business expenditure. - Decided in favour of assessee. Disallowance of administrative expenditure calculated in terms of Rule 8D(2)(iii) r.w.s. 14A - disallowance of administrative expenses - HELD THAT:- In the identical facts, the issue in the instant assessment year is also remitted back to the file of the AO for re-computation of disallowance under Rule 8D(2)(iii) of the IT Rules with reference to these investments which have actually yielded exempt income instead of gross investments. Eligibility of interest ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal in ITA No. 1989/Ahd/2017 concerning AY 2013-14. ITA No. 1989/Ahd/2017-AY-2013-14 (Assessee s appeal) 4. The grounds of appeal raised by the assessee read as under:- 1. The order passed by the Learned Commissioner of Income-tax (Appeals) [hereinafter referred to as 'the Ld. CIT(A)'] is bad in law and on facts. 2. Re: Disallowance of discount offered to doctors - ₹ 17,43,519/- 2.1 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has grossly erred in confirming the disallowance of ₹ 17,43,519/- made by the Assessing Officer by merely relying on the order of its predecessor for AY 2012-13 without appreciating that the discounts were offered to medical professionals for promoting the Appellant's business and that the expenses were wholly and exclusively incurred for the purposes of its business. 2.2 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) grossly erred in not appreciating that the said discounts have been given to medical professionals, in terms of the Appellant's universal di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14, 2511, 3415, 2512 2513/Ahd/2015 Ors. order dated 29.03.2019concerning AYs. 2008-09 to 2011-12. The relevant operative para concerning AY 2009-10 dealing with issue reads as under: 11.9 We have carefully considered the rival submissions on the issue. The maintainability of discount on sales is in question. It is the case of the Revenue that the assessee is supplying medicines to its C F agents for its ultimate sale in the market for consumption. The discounts were given by the assessee company to the distributors, retailers, dealers, Doctors associated to C F agent and who were not directly dealing with assessee and therefore expenses incurred towards discount payment by the assessee has no nexus with the sales made by it to the C F agents. The AO accordingly is of the view that such indirect discounts to the customers of its agents are not allowable expenditure. 11.10 We do not see any iota of merit in such plea. The discounts given to the customers/ultimate consumer has direct bearing on the potential turnover of the company. It is well settled that the test of the commercial expediency cannot be reduced to the shape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.1 When the matter was called for hearing, the learned Senior Counsel for the assessee sought limited direction for computation of disallowance of administrative expenses only with reference to investments which have actually yielded exempt income in tune with ACIT vs. Vireet Investments Ltd. 165 ITD 27 (SB). 8.2 Identical issue has been dealt with by the ITAT in 3049/Ahd/2014 Ors. concerning AY 2008-09 to 2011-12. The relevant operative para concerning AY 2010-11 in para no. 18.4 of the order dealing with the issue reads as under: 18.4 Turning to the cross grievance of the assessee disallowance sustained under s.14A of the Act, we observe that the assessee suo motu has disallowed ₹ 50,000/- for earning of exempt income which is rightly reckoned to be direct expenditure under Rule 8D(2)(i) of the Rules in the absence of any supporting material to the contrary. The Revenue authorities, in our view, have also rightly invoked formula under Rule 8D(2)(iii) for disallowance of management and general expenses deemed to be attributable to tax free income. However, the disallowance is require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reproduced hereunder: 10.6 In parity with the decision of the co-ordinate bench, we are in agreement with the plea of the assessee that merely because the assessee company is paying huge interest on outstanding credit balance to Sun Pharma while no interest is being charged by the assessee from its debtors cannot be the justifiable reason for resorting to the disallowance of interest. As pointed out on behalf of the assessee, we also note that the Hon ble Gujarat High court has also approved the order of the ITAT concerning AYs 1997-98 in CIT vs. Aditya Medisales Ltd. Tax Appeal No. 559 of 2009 judgment dated 04.05.2010 towards deletion of disallowance made on account of excess interest payment under s.40A(2)(a) of the Act. Thus, the issue stands concluded in favour of the assessee by the jurisdictional High Court. The issue having been already examined in the earlier years, we do not see any reason to look afresh. Therefore, we decline to interfere with the order of the CIT(A) in this regard. Consequently, Ground No.1 of the Revenue s appeal is dismissed. 12.2 In parity with the view already taken in the identical circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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