Leeford Healthcare Limited, Ludhiana vs Pr. Cit (Central), Ludhiana on 29 July, 2022

[Cites 28, Cited by 1]

Income Tax Appellate Tribunal - Chandigarh

Leeford Healthcare Limited, Ludhiana vs Pr. Cit (Central), Ludhiana on 29 July, 2022

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ,च डीगढ़
I N T H E I NC OM E T A X A P PEL L A TE T RI B U N AL
D I V I S I O N BE NC H , " A" , CH A ND I G A R H

BEFORE SHRI N.K. SAINI, VICE PRE SIDENT &
SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER

आयकरअपीलसं./ITA Nos.343 to 353 /C H D / 2 0 2 2
नधारणवष / Assessment Years : 2 0 0 8 - 0 9 to 2018-19
Leeford Healthcare Limited, बनाम The PCIT,
Leo House, Dugri Dhangra Road, (Central),
Shaheed Bhagat Singh Nagar, Ludhiana
Ludhiana -141116
थायीलेखासं./PAN NO: AABCL1851A
अपीलाथ /Appellant यथ /Respondent

नधा रतीक ओरसे/Assessee by : Sh. Sudhir Sehgal, Advocate, and
Shri Hitesh Bakoo, CA
राज वक ओरसे/ Revenue by : Sh. VivekNangia, CIT DR

सुनवाईक तार#ख/Date of Hearing : 28.06.2022
उदघोषणाक तार#ख/Date of Pronouncement : 29.07.2022

आदे श/Order

Per Bench :

All these appeals have been preferred by the Assessee as per the

following details:-

S. No. ITA No. Assessment CIT(A) order
year dated
1 343/Chd/ 2022 2008-09 30.03.2022
2 344/Chd/ 2022 2009-10 30.03.2022
3 345/Chd/ 2022 2010-11 30.03.2022
4 346/Chd/ 2022 2011-12 30.03.2022
5 347/Chd/ 2022 2012-13 30.03.2022
6 348/Chd/2022 2013-14 30.03.2022
7 349/Chd/2022 2014-15 30.03.2022
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8 350/Chd/2022 2015-16 30.03.2022
9 351/Chd/2022 2016-17 30.03.2022
10 352/Chd/2022 2017-18 30.03.2022
11 353/Chd/2022 2019-20 30.03.2022

1.1 Since these appeals involved identical issues, they were heard

together and are being disposed of by this common order for the sake of

convenience.

2.0 The facts in brief are that the main issue in all the years under

appeal (wherein action u/s 263 of the Income Act, 1961 [in short 'the

Act'] has been initiated) is expenditure incurred on distribution of

gifts / freebies to doctors and Medical Practitioners in the form of

televisions, laptops, electronic goods, mobiles, sponsorship of tours and

conferences and distribution of other similar items which have been

charged as expenditure in the Profit and Loss Account under the head

'Business Promotion Expenditure'. In all the years under appeal, it is

the opinion of the Ld. Principle Commissioner of Income Tax (PCIT)

that such expenditure was not allowable in terms of Explanation to

section 37(1) of the Act being expenditure for a purpose which was an

offence or was prohibited under the law.

3.0 At the request of the Ld. AR, ITA No. 345/Chd/2022 pertaining to

AY 2010-11 was taken as the lead case. The brief facts of the case in

Assessment Year 2010-11 are that the assessee is a limited company and
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for the year under consideration, the return of income was filed

declaring income at Rs. 2,51,98,090/-. A search and seizure operation

u/s 132(1) of the Act was carried out at the business premises of the

assessee company on 23.03.2018. In view of the search having been

carried out, the assessee's case was reopened after recording of reasons

and recording of satisfaction and notice u/s 153A of the Act was issued.

In response to the said notice the assessee submitted that the original

return filed may be treated as the return filed in response to the notice

issued u/s 153A of the Act. The assessment u/s 153A was completed

after making an addition Rs. 52,03,425/- on account of difference in

valuation in the construction of the office-cum- godown building of the

assessee company.

3.1 Thereafter, the Ld. PCIT Ludhiana issued notice u/s 263 of the Act

on the reasoning that the expenditure on account of business promotion

was not allowable u/s 37(1) of the Act and although the assessee

objected to the initiation of Revisionary proceedings, the Ld. PCIT did

not accept the contentions of the assessee and proceeded to hold that the

Assessing officer (AO) had accepted the explanation of the assessee in

this regard without proper analysis of the nature of expenditure and

without verification of the beneficiaries of the gifts and the freebies

distributed and, therefore, apparently the AO had passed the assessment

order without examining the issue and without calling for proper details

and without carrying out the necessary verification which resulted in the
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assessment order being erroneous and prejudicial to the interest of the

Revenue. The Ld. PCIT proceeded to set aside the assessment order with

a direction to frame fresh assessment.

3.2 Now, the assessee had approached this Tribunal challenging the

action of the Ld. PCIT in setting aside the assessment order by raising

the following grounds of appeal:

1. That the Ld. PCIT (Central), Ludhiana has erred in assuming the
jurisdiction to issue notice u/s 263 of the Income Tax Act, 1961 and,
thereby, cancelling the assessment already framed by the AO vide
order dated 30.12.2019 to the file of the Assessing Officer, with the
direction to pass the assessment order, afresh in accordance with
law, after granting sufficient opportunity to the assessee.

2. That the order as passed by the Ld.. PCIT (Central), Ludhiana is
void-ab-initio since, while passing the order, the Ld.. PCIT has not
heLd. that the assessment as framed by the Assessing Officer vide
order dated 30.12.2019, is erroneous and prejudicial to the interest
of revenue and having not satisfied the basic condition, for
cancelling the valid assessment order of the Assessing Officer vide
order dated 30.12.2019, the order as passed by the Ld.. PCIT
(Central), Ludhiana is non-est.

3. Notwithstanding, the above said grounds of appeal, the Ld.. PCIT
(Central), Ludhiana, having considered the replies filed by the
assessee, on the issue of expenditure under the head 'business
promotion', which did not include any gifts/freebis to the doctors
and Medical Professionals, during the course of original
assessment proceedings and during the course of assessment
proceedings u/s 153A/143(3) and, therefore, setting aside the issue,
again to the file of the AO, is wholly misconceived and not proper.

4. That the Ld. PCIT (Central), Ludhiana having noted the fact from
the assessment file that no expenditure was incurred on account of
any gifts/ freebis to the doctors/medical professional and the
Assessing Officer, also having applied mind on the same issue, both
during the course of original assessment u/s 143(3) and the
assessment u/s 153A/143(3), the setting-aside of the assessment as
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framed, after due application of mind by the AO, is against the facts
& circumstances of the case and the settled law on the subject.

5. That the Ld. PCIT (Central), Ludhiana has erred in hoLd.ing that
there was 'lack of enquiry' on the issue of gifts/freebis, as it has
been categorically stated that there was no such gifts/freebis to the
doctors as per the assessment records of the assessee and, thus, the
cancellation of the assessment, already framed vide order dated
30.12.2019, after due application of mind by the Ld.. Assessing
Officer is wholly improper.

6. That the Ld. PCIT (Central), Ludhiana has wrongly referred to the
'Medical Counsel Regulation Act, 2002' and also to the CBDT
Circular No. 5 of 2012 dated 01.08.2012 and the judgment of the
'Apex Court' in the case of 'Apex Laboratories Pvt. Ltd.' in para 5.8
of the order, regarding the provision by law of the gifts/freebis to
the medical practitioner, since it is an accepted fact and borne out
from the assessment records of the assessee, that no such gifts
/freebis had been given to the medical practitioners and hence,
reliance by the Ld.. PCIT (Central), Ludhiana on said circulars and
of the Apex Court judgment is improper.

7. Notwithstanding with the above said grounds of appeal, the Ld.
PCIT (Central), Ludhiana has wrongly assumed the jurisdiction u/s
263 on the basis of the audit objection, which was not accepted by
the department and no valid jurisdiction could have been assumed
by the Ld.. PCIT (Central), Ludhiana on the basis of audit objection
as per the binding judgment of the Jurisdictional Bench of the ITAT,
Chandigarh Bench and of the Hon'ble Punjab & Haryana High
Court.

8. That the appellant craves leave to add, amend, alter any of the
above grounds during the appellate proceedings have been
considered.

4.0 The Ld. AR (Authorised Representative) submitted that the

assessee company has been in existence for the past 16 years and was

mainly engaged in the business of manufacturing generic medicines,

health care products etc. and for the marketing function, the assessee
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company had appointed distributors / stockists all over India who only

handle the sales and distribution and that further the assessee company

had no direct link or connection with the doctors / medical practitioners.

It was submitted that regular books of accounts have been maintained by

the assessee and the books of account are also regularly audited and the

returns of income have also been filed on the basis of such audited

books of account. It was submitted that the assessee company was from

time to time assessed u/s 143(3) of the Act also but no major additions

or disallowances had been made. He drew our attention to a Chart

showing the status of original assessments from Assessment Years (AY)

2008-09 to 2018-19 to buttress that no major disallowances or additions

have been made. This chart is being reproduced herein under for a

ready reference:
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4.1 The Ld. AR further submitted that there was a search and seizure

operation at the business premises of the assessee on 23.03.2018 and the

assessee surrendered a sum of Rs. 5,00,23,500/- in the hands of the

company as well as one of the directors. It was submitted that this

surrender was also duly disclosed in the return of income and tax at the

rate of 78% u/s 115BBE of the Act was also paid by the company as

well as the director. It was further submitted that further some

additions were also made in the assessments framed u/s 153A of the Act

but the assessee did not enter into any litigation but settled the dispute

by availing the benefit of the 'Vivad se Vishvas Scheme'.

4.2 It was submitted that subsequent to all this, the Ld. PCIT,

Ludhiana proceeded to issue show cause notices u/s 263 of the Act for

AY 2008-09 to AY 2018-19 on almost identical reasoning and wordings

and the main reason for the issuance of the show cause notices was that

as per the Ld. PCIT, the assessee's claim of business promotion

expenses in the profit and loss account was not an allowable expenditure

in terms of the Explanation to section 37(1) of the Act. He drew our

attention to the copy of the show cause notice for AY 2010-11 wherein,

the main issue raised by the Ld. PCIT has been highlighted in paragraph

2 as under:-

"The assessee is in the business of manufacturing
and distribution of medicine. In this industry/trade,
it is observed that companies/entities incur huge
expenditure under the head Business Promotion, this
includes distribution of gifts and freebies to
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Doctors/Medical Professionals in the form of TV I
Laptops/Electronics Goods/Mobile/Tour including
sponsoring conference/Foreign Tour and
Distributing similar goods, smaller goods. This
expenditure is not allowable as per the provisions of
section 37(1) read with explanation of the Income
Tax Act, 1961. The Assessing Officer while
completing the assessment in the case of Pharma
companies is required to conduct enquiries and call
for details of Business Promotion and Similar
Expenses like travel and to identify expenditure not
allowable and to disallow the same while completing
the assessment".

4.3 It was further submitted by the Ld. AR that in the same show

cause notice in paragraph 3, the Ld. PCIT has referred to the

Regulations framed by the Medical Council of India and has also

referred to the CBDT Circular of 2012 and has thereafter stated that

pharmaceutical companies were specifically prohibited to give any

consideration in the nature of gifts, travel and hospitality facilities, cash

or monetary grants or any other gifts or grants to Medical Practitioners

or doctors. It was submitted that the Ld. PCIT had observed that the

expenditure booked by the assessee under the head 'business promotion

expenses' had been allowed by the AO without conducting necessary

verification and inquiries into the nature of such expenditure thereby

resulting in the assessment being rendered erroneous as well as

prejudicial to the interest of the Revenue.

4.4 The Ld. AR submitted that the assessee had submitted identical/

common replies to the Ld. PCIT in response to the said show cause
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notices but such replies of the assessee did not find any favour with the

Ld. PCIT and the Ld. PCIT had observed that such business promotion

expenditure was not an allowable expenditure in terms of section37(1)

of the Act and had referred once again to the Regulations issued by the

Medical Council of India before setting aside the assessment orders on

the ground that the AO had not conducted due and relevant inquiries in

this regard.

4.5 The Ld. AR submitted that the show cause notices and the orders

passed u/s 263 of the Act were almost on identical lines in all the years

under consideration except for AY 2017-18, wherein, there was an

additional issue relating to transfer pricing. The Ld. AR submitted that

on the issue of allowbililty of business promotion expenditure and on

the issue of whether or not the AO had made relevant and proper

inquiries, his arguments were also going to be identical.

5.0 However, for the sake of completeness, the grounds raised by the

assessee in all the other appeals are also being reproduced herein

under:-

343/Chd/2022 (A.Y. 2008-09)

1. That the Ld. PCIT (Central), Ludhiana has erred in assuming the
jurisdiction to issue notice u/s 263 of the Income Tax Act, 1961
and, thereby, cancelling the assessment already framed by the AO
vide order dated 30.12.2019to the file of the Assessing Officer,
with the direction to pass the assessment order, afresh in
accordance with law, after granting sufficient opportunity to the
assessee.
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2. That the order as passed by the Ld. PCIT (Central), Ludhiana is
void-ab-initio since, while passing the order, the Ld. PCIT has
notheld that the assessment as framed by the Assessing Officer
vide order dated 30.12.2019, is erroneous and prejudicial to the
interest of revenue and having not satisfied the basic condition, for
cancelling the valid assessment order of the Assessing Officer vide
order dated 30.12.2019, the order as passed by the Ld.. PCIT
(Central), Ludhiana is non-est.

3. Notwithstanding, the above said grounds of appeal, the Ld.. PCIT
(Central), Ludhiana, having considered the replies filed by the
assessee, on the issue of expenditure under the head 'business
promotion', which did not include any gifts/freebis to the doctors
and Medical Professionals. during the course of original
assessment proceedings and during the course of assessment
proceedings u/s 153A/143(3) and, therefore, setting aside the
issue, again to the file of the AO, is wholly misconceived and not
proper.

4. That the Ld. PCIT (Central), Ludhiana having noted the fact from
the assessment file that no expenditure was incurred on account of
any gifts/freebis to the doctors/medical professional and the
Assessing Officer, also having applied mind on the same issue,
both during the course of original assessment u/s 143(3) and the
assessment u/s 153A/143(3), the setting-aside of the assessment as
framed, after due application of mind by the AO, is against the
facts & circumstances of the case and the settled law on the
subject.

6. That the Ld.. PCIT (Central), Ludhiana has wrongly refer to the
'Medical Counsel Regulation Act, 2002' and also to the CBDT
Circular No. 5 of 2012 dated 01.08.2012 and the judgment of the
'Apex Court' in the case of 'Apex Laboratories Pvt. Ltd.' in para
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5.8 of the order, regarding the provision by law of the gifts/freebis
to the medical practitioner, since it is an acceded fact and borne
out from the assessment records of the assessee, that no such
gifts/freebis had been given to the medical practitioners and hence,
reliance by the Ld.. PCIT (Central), Ludhiana on said circulars
and of the Apex Court judgment is improper.

7. Notwithstanding with the above said grounds of appeal, the Ld..
PCIT (Central), Ludhiana has wrongly assumed the jurisdiction
u/s 263 on the basis of the audit objection, which was not accepted
by the department and no valid jurisdiction could have been
assumed by the Ld.. PCIT (Central), Ludhiana on the basis of audit
objection as per the binding judgment of the Jurisdictional Bench
of the ITAT, Chandigarh Bench and of the Hon'ble Punjab &
Haryana High Court.

8. That the appellant craves leave to add, amend, alter any of the
above grounds during the appellate proceedings have been
considered.

344/Chd/2022 (A.Y. 2009-10)

2. That the order as passed by the Ld. PCIT (Central), Ludhiana is
void-ab-initio since, while passing the order, the Ld. PCIT has not
hel. that the assessment as framed by the Assessing Officer vide
order dated 30.12.2019, is erroneous and prejudicial to the interest
of revenue and having not satisfied the basic condition, for
cancelling the valid assessment order of the Assessing Officer vide
order dated 30.12.2019, the order as passed by the Ld.. PCIT
(Central), Ludhiana is non-est.

3. Notwithstanding, the above said grounds of appeal, the Ld.. PCIT
(Central), Ludhiana, having considered the replies filed by the
assessee, on the issue of expenditure under the head 'business
promotion', which did not include any gifts/freebis to the doctors
and Medical Professionals, during the course of original
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assessment proceedings and during the course of assessment
proceedings u/s 153A/143(3) and, therefore, setting aside the issue,
again to the file of the AO, is wholly misconceived and not proper.

4. That the Ld.. PCIT (Central), Ludhiana having noted the fact from
the assessment file that no expenditure was incurred on account of
any gifts/freebis to the doctors/medical professional and the
Assessing Officer, also having applied mind on the same issue, both
during the course of original assessment u/s 143(3) and the
assessment u/s 153A/143(3), the setting-aside of the assessment as
framed, after due application of mind by the AO, is against the facts
& circumstances of the case and the settled law on the subject.

5. That the Ld.. PCIT (Central), Ludhiana has erred in hoLd.ing that
there was 'lack of enquiry' on the issue of gifts/freebis, as it has
been categorically stated that there was no such gifts/freebis to the
doctors as per the assessment records of the assessee and, thus, the
cancellation of the assessment, already framed vide order dated
30.12.2019, after due application of mind by the Ld.. Assessing
Officer is wholly improper.

6. That the Ld. PCIT (Central), Ludhiana has wrongly referred to the
'Medical Counsel Regulation Act, 2002' and also to the CBDT
Circular No. 5 of 2012 dated 01.08.2012 and the judgment of the
'Apex Court' in the case of 'Apex Laboratories Pvt. Ltd.' in para 5.8
of the order, regarding the provision by law of the gifts/freebis to
the medical practitioner, since it is an accepted fact and borne out
from the assessment records of the assessee, that no such
gifts/freebis had been given to the medical practitioners and hence,
reliance by the Ld.. PCIT (Central), Ludhiana on said circulars and
of the Apex Court judgment is improper.

7. Notwithstanding with the above said grounds of appeal, the Ld..
PCIT (Central), Ludhiana has wrongly assumed the jurisdiction u/s
263 on the basis of the audit objection, which was not accepted by
the department and no valid jurisdiction could have been assumed
by the Ld.. PCIT (Central), Ludhiana on the basis of audit objection
as per the binding judgment of the Jurisdictional Bench of the ITAT,
Chandigarh Bench and of the Hon'ble Punjab & Haryana High
Court.

8. That the appellant craves leave to add, amend, alter any of the
above grounds during the appellate proceedings have been
considered.
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346/Chd/2022 (2011-12)

1. That the Ld.. PCIT (Central), Ludhiana has erred in assuming the
jurisdiction to issue notice u/s 263 of the Income Tax Act, 1961 and,
thereby, cancelling the assessment already framed by the AO vide
order dated 30.12.2019 to the file of the Assessing Officer, with the
direction to pass the assessment order, afresh in accordance with
law, after granting sufficient opportunity to the assessee.

2. That the order as passed by the Ld.. PCIT (Central), Ludhiana is
void-ab-initio since, while passing the order, the Ld.. PCIT has not
held that the assessment as framed by the Assessing Officer vide
order dated 30.12.2019, is erroneous and prejudicial to the interest
of revenue and having not satisfied the basic condition, for
cancelling the valid assessment order of the Assessing Officer vide
order dated 30.12.2019, the order as passed by the Ld.. PCIT
(Central), Ludhiana is non-est.

Officer is wholly improper.

6. That the Ld. PCIT (Central), Ludhiana has wrongly referred to the
'Medical Counsel Regulation Act, 2002' and also to the CBDT
Circular No. 5 of 2012 dated 01.08.2012 and the judgment of the
'Apex Court' in the case of 'Apex Laboratories Pvt. Ltd.' in para 5.8
of the order, regarding the provision by law of the gifts/freebis to
the medical practitioner, since it is an accepted fact and borne out
from the assessment records of the assessee, that no such
gifts/freebis had been given to the medical practitioners and hence,
reliance by the Ld.. PCIT (Central), Ludhiana on said circulars and
of the Apex Court judgment is improper.

7. Notwithstanding with the above said grounds of appeal, the Ld..
PCIT (Central), Ludhiana has wrongly assumed the jurisdiction u/s
263 on the basis of the audit objection, which was not accepted by
the department and no valid jurisdiction could have been assumed
by the Ld.. PCIT (Central), Ludhiana on the basis of audit objection
as per the binding judgment of the Jurisdictional Bench of the ITAT,
Chandigarh Bench and of the Hon'ble Punjab & Haryana High
Court.

8. That the appellant craves leave to add, amend, alter any of the
above grounds during the appellate proceedings have been
considered.

347/Chd/2022(A.Y. 2012-13)

2. That the order as passed by the Ld.. PCIT (Central), Ludhiana is
void-ab-initio since, while passing the order, the Ld. PCIT has not
held that the assessment as framed by the Assessing Officer vide
order dated 30.12.2019, is erroneous and prejudicial to the interest
of revenue and having not satisfied the basic condition, for
cancelling the valid assessment order of the Assessing Officer vide
order dated 30.12.2019, the order as passed by the Ld.. PCIT
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(Central), Ludhiana is non-est.

6. That the Ld.. PCIT (Central), Ludhiana has wrongly referred to the
'Medical Counsel Regulation Act, 2002' and also to the CBDT
Circular No. 5 of 2012 dated 01.08.2012 and the judgment of the
'Apex Court' in the case of 'Apex Laboratories Pvt. Ltd.' in para 5.8
of the order, regarding the provision by law of the gifts/freebis to
the medical practitioner, since it is an accepted fact and borne out
from the assessment records of the assessee, that no such
gifts/freebis had been given to the medical practitioners and hence,
reliance by the Ld.. PCIT (Central), Ludhiana on said circulars and
of the Apex Court judgment is improper.

7. Notwithstanding with the above said grounds of appeal, the Ld..
PCIT (Central), Ludhiana has wrongly assumed the jurisdiction u/s
263 on the basis of the audit objection, which was not accepted by
the department and no valid jurisdiction could have been assumed
by the Ld.. PCIT (Central), Ludhiana on the basis of audit objection
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as per the binding judgment of the Jurisdictional Bench of the ITAT,
Chandigarh Bench and of the Hon'ble Punjab & Haryana High
Court.

8. That the appellant craves leave to add, amend, alter any of the
above grounds during the appellate proceedings have been
considered.

348/Chd/2022(A.Y. 2013-14)

7. Notwithstanding with the above said grounds of appeal, the Ld..
PCIT (Central), Ludhiana has wrongly assumed the jurisdiction u/s
263 on the basis of the audit objection, which was not accepted by
the department and no valid jurisdiction could have been assumed
by the Ld.. PCIT (Central), Ludhiana on the basis of audit objection
as per the binding judgment of the Jurisdictional Bench of the ITAT,
Chandigarh Bench and of the Hon'ble Punjab & Haryana High
Court.

8. That the appellant craves leave to add, amend, alter any of the
above grounds during the appellate proceedings have been
considered.

349/Chd/2022 (A.Y. 2014-15)

2. That the order as passed by the Ld. PCIT (Central), Ludhiana is
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void-ab-initio since, while passing the order, the Ld. PCIT has not
held that the assessment as framed by the Assessing Officer vide
order dated 30.12.2019, is erroneous and prejudicial to the interest
of revenue and having not satisfied the basic condition, for
cancelling the valid assessment order of the Assessing Officer vide
order dated 30.12.2019, the order as passed by the Ld.. PCIT
(Central), Ludhiana is non-est.

7. Notwithstanding with the above said grounds of appeal, the Ld..
PCIT (Central), Ludhiana has wrongly assumed the jurisdiction u/s
263 on the basis of the audit objection, which was not accepted by
the department and no valid jurisdiction could have been assumed
by the Ld.. PCIT (Central), Ludhiana on the basis of audit objection
as per the binding judgment of the Jurisdictional Bench of the ITAT,
Chandigarh Bench and of the Hon'ble Punjab & Haryana High
Court.

8. That the appellant craves leave to add, amend, alter any of the
above grounds during the appellate proceedings have been
considered.

350/Chd/2022(A.Y. 2015-16)

2. That the order as passed by the Ld. PCIT (Central), Ludhiana is
void-ab-initio since, while passing the order, the Ld. PCIT has not
held that the assessment as framed by the Assessing Officer vide
order dated 30.12.2019, is erroneous and prejudicial to the interest
of revenue and having not satisfied the basic condition, for
cancelling the valid assessment order of the Assessing Officer vide
order dated 30.12.2019, the order as passed by the Ld.. PCIT
(Central), Ludhiana is non-est.

4. That the Ld.. PCIT (Central), Ludhiana having noted the fact from
the assessment file that no expenditure was incurred on account of
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any gifts/freebis to the doctors/medical professional and the
Assessing Officer, also having applied mind on the same issue, both
during the course of original assessment u/s 143(3) and the
assessment u/s 153A/143(3), the setting-aside of the assessment as
framed, after due application of mind by the AO, is against the facts
& circumstances of the case and the settled law on the subject.

7. Notwithstanding with the above said grounds of appeal, the Ld..
PCIT (Central), Ludhiana has wrongly assumed the jurisdiction u/s
263 on the basis of the audit objection, which was not accepted by
the department and no valid jurisdiction could have been assumed
by the Ld.. PCIT (Central), Ludhiana on the basis of audit objection
as per the binding judgment of the Jurisdictional Bench of the ITAT,
Chandigarh Bench and of the Hon'ble Punjab & Haryana High
Court.

8. That the appellant craves leave to add, amend, alter any of the
above grounds during the appellate proceedings have been
considered.

351/Chd/2022(A.Y. 2016-17)
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2. That the order as passed by the Ld.. PCIT (Central), Ludhiana is
void-ab-initio since, while passing the order, the L.. PCIT has not
held that the assessment as framed by the Assessing Officer vide
order dated 30.12.2019, is erroneous and prejudicial to the interest
of revenue and having not satisfied the basic condition, for
cancelling the valid assessment order of the Assessing Officer vide
order dated 30.12.2019, the order as passed by the Ld.. PCIT
(Central), Ludhiana is non-est.

6. That the Ld.. PCIT (Central), Ludhiana has wrongly referred to the
'Medical Counsel Regulation Act, 2002' and also to the CBDT
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Circular No. 5 of 2012 dated 01.08.2012 and the judgment of the
'Apex Court' in the case of 'Apex Laboratories Pvt. Ltd.' in para 5.8
of the order, regarding the provision by law of the gifts/freebis to
the medical practitioner, since it is an accepted fact and borne out
from the assessment records of the assessee, that no such
gifts/freebis had been given to the medical practitioners and hence,
reliance by the Ld.. PCIT (Central), Ludhiana on said circulars and
of the Apex Court judgment is improper.

7. Notwithstanding with the above said grounds of appeal, the Ld..
PCIT (Central), Ludhiana has wrongly assumed the jurisdiction u/s
263 on the basis of the audit objection, which was not accepted by
the department and no valid jurisdiction could have been assumed
by the Ld.. PCIT (Central), Ludhiana on the basis of audit objection
as per the binding judgment of the Jurisdictional Bench of the ITAT,
Chandigarh Bench and of the Hon'ble Punjab & Haryana High
Court.

8. That the appellant craves leave to add, amend, alter any of the
above grounds during the appellate proceedings have been
considered.

352/Chd/2022(A.Y. 2017-18)

2. That the order as passed by the Ld. PCIT (Central), Ludhiana is
void-ab-initio since, while passing the order, the Ld. PCIT has not
held that the assessment as framed by the Assessing Officer vide
order dated 30.12.2019, is erroneous and prejudicial to the interest
of revenue and having not satisfied the basic condition, for
cancelling the valid assessment order of the Assessing Officer vide
order dated 30.12.2019, the order as passed by the Ld.. PCIT
(Central), Ludhiana is non-est.

3. Notwithstanding, the above said grounds of appeal, the Ld. PCIT
(Central), Ludhiana, having considered the replies filed by the
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assessee, on the issue of expenditure under the head 'business
promotion', which did not include any gifts/freebis to the doctors
and Medical Professionals, during the course of original
assessment proceedings and during the course of assessment
proceedings u/s 153A/143(3) and, therefore, setting aside the issue,
again to the file of the AO, is wholly misconceived and not proper.

7. That the Ld.. PCIT (Central), Ludhiana has erred in setting-aside
the issue to the file of the Assessing Officer on the issue of non-
making of TP reference as per his finding in para 6.2 of the order,
without considering the facts that in the case of the other concern,
for which, the TP reference was made i.e. 'All Kind Healthcare
Unit', TP reference had been made, no adverse order was passed by
the TPO and, therefore it wouLd. be futile exercise to set-aside the
case to the file of the AO on this issue.
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8. Notwithstanding with the above said grounds of appeal, the Ld..
PCIT (Central), Ludhiana has wrongly assumed the jurisdiction u/s
263 on the basis of the audit objection, which was not accepted by
the department and no valid jurisdiction could have been assumed
by the Ld.. PCIT (Central), Ludhiana on the basis of audit objection
as per the binding judgment of the Jurisdictional Bench of the ITAT,
Chandigarh Bench and of the Hon'ble Punjab & Haryana High
Court.

9. That the appellant craves leave to add, amend, alter any of the
above grounds during the appellate proceedings have been
considered.

353/Chd/2022(A.Y. 2018-19)

2. That the order as passed by the Ld. PCIT (Central), Ludhiana is
void-ab-initio since, while passing the order, the Ld. PCIT has not
held that the assessment as framed by the Assessing Officer vide
order dated 30.12.2019, is erroneous and prejudicial to the interest
of revenue and having not satisfied the basic condition, for
cancelling the valid assessment order of the Assessing Officer vide
order dated 30.12.2019, the order as passed by the Ld.. PCIT
(Central), Ludhiana is non-est.

Assessing Officer, also having applied mind on the same issue, both
during the course of original assessment u/s 143(3) and the
assessment u/s 153A/143(3), the setting-aside of the assessment as
framed, after due application of mind by the AO, is against the facts
& circumstances of the case and the settled law on the subject.

7. Notwithstanding with the above said grounds of appeal, the Ld..
PCIT (Central), Ludhiana has wrongly assumed the jurisdiction u/s
263 on the basis of the audit objection, which was not accepted by
the department and no valid jurisdiction could have been assumed
by the Ld.. PCIT (Central), Ludhiana on the basis of audit objection
as per the binding judgment of the Jurisdictional Bench of the ITAT,
Chandigarh Bench and of the Hon'ble Punjab & Haryana High
Court.

8. That the appellant craves leave to add, amend, alter any of the
above grounds during the appellate proceedings have been
considered.

6.0 The Ld. AR submitted that the issue of freebies or gifts which are

given to stockists and distributors are not covered by the guidelines

issued by the Medical Council of India and that the guidelines/
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regulations were only applicable in the case of medical practitioners and

/ or doctors. It was submitted by the Ld. AR that it was apparent from

the assessment proceedings that the different AOs in the captioned

assessment years under appeal (both in the original assessment

proceedings u/s 143(3) of the Act and assessment proceedings u/s 153A)

had duly inquired into the issue of freebies and gifts but since there was

no link or connection to be found between such freebies/gifts and

medical practitioners / doctors, the issue of making any disallowance u/s

37(1) of the Act did not arise. It was submitted that the fact of not

having given any freebies or gifts to doctors / medical practitioners had

been the subject matter of verification and inquiries by the various AOs

and, therefore, there was due application of mind on the part of the AO.

6.1 Thereafter, the Ld. AR referred to the following copies of the

replies submitted before the AO for the various AYs under

consideration:

6.2.1 Assessment Year 2010-11:

i) The Ld. AR referred to certified copy of the reply, dated

08.01.2013 as obtained from the DCIT, CC-III, Ludhiana and as

submitted during the original assessment proceedings for AY

2010-11 and referred to S.No.9 of the reply at page 2 of the Paper

Book-1, in which, the following submissions were made:-
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"9. Copies of bills above Rs. 50000/- expended under
head Business Promotion during the assessment year
2010-2011 are enclosed.
The business promotion expenses incurred by the
company during the assessment year 2010-2011 are on
account of promotional items purchased by the company
and dispatched to the distributers/ stockiests on schemes
given by the company from time to time to enhance the
sales. The company usually gives the schemes to its
distributors/ stockiests/ retailers to provide the
promotional items free of cost on achievement of sales
targets given by the company. Please find enclosed as
sample copy of one of scheme circulated during the
financial year 2009-2010. Also find enclosed 5 Sales
Bills (as sample Bills) giving proof of Promotional items
being dispatched to distributors.
Further Business promotion expenses also includes the
expenses on account of purchase of catalogues, visual
aids and price lists of the company to be circulated to
the distributors/ stockiest/ retailers and to the marketing
staff of the company. "

6.2.2 The Ld. AR further referred to the numerous details filed

during the original assessment proceedings such as certified ledger copy

of the business promotion expenses in the books of accounts of the

assessee for assessment year 2010-2011, which described the nature and

description of each and every expenditure as made under this head,

along with 'brochure of various promotion schemes' launched for the

Distributors/Stockists of the company, certified sample copies of the

sale bills issued to Distributors/Stockists, wherein along with the sale of

'Generic Medicines', certain promotional items were given as "Free" in

the form of gift items, to prove that none of the gift/Freebies, have been

given to Doctors/Medical Practitioners. The Ld. AR also referred to

certified copy of the order sheet entries in respect of proceedings of
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'scrutiny case, for AY 2010-11 and specifically referred to the order

sheet entries, dated 08.01.2013, 16.01.2013 and 18.01 2013, as per page

nos. 22 & 23 of Paper Book-1, which are being reproduced as under:-

"08.01.2013: Present Sh. Vikas Garg, Counsel of assessee,
filed reply to the queries raised in last discussion.
The Photocopy of bills were perused & returned back. The
counsel was ordered to file the details of the following:
(a) To produce the original bills of expenses:
(i) Business promotion
(ii) Travelling
(iii) Advertisement
(b) High amount of rate of interest paid to some parties on
unsecured loans.
(c)Interest capitalization on building under construction
(d)Basis of surrender during survey
(e)Basis of share capital for shares issued during the year,
along with the bank account
(f) Details of amount reduced from computation u/s 40A
Next date of hearing 16/01/2013
16.01.2013: Present Mr. Vikas Garg, filed reply for the
queries raised in last discussion. Asked to produce the
original bills of business promotion expenses, advertisement,
building construction for verification. Next date of hearing
18/01/2013.
18.01.2013: Present Mr. Vikas Garg, produced the bills of the
expenses (as noted) which were text checked. Further query
was raised with respect to certain bills. Next date of hearing
28.01.2013."

6.2.3 The Ld. AR, thereafter, referred to assessment order, as

passed originally vide order dated 11.02.2013, wherein no adverse view

had been taken in respect of issue of 'Business Promotion Expenses' and

it was further argued that detailed enquiries had been made about the

nature of expenditure booked under head Business Promotion Expenses
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and that it is clearly borne out that no "Freebies/Gifts" had been given

to Medical Practitioners/Doctors and that the same had been verified

during the course of original assessment proceedings.

6.3.0 Assessment Year 2011-12:

Similarly, the Ld. AR brought to our attention that the original

assessment for AY 2011-12 was also framed u/s 143(3) and that this

issue was again the subject matter of examination/verification by the AO

concerned and that a copy of reply dated 21.11.2013 had been placed at

page 27 of Paper Book-1, wherein, the details of various expenses

debited in the profit and loss account along with 'Business Promotion'

expenses had been submitted and copies of bills with dates and

narrations of each item had been filed at pages 28 to 46 of the Paper

Book-1.

6.3.1 The Ld. AR further referred to reply dated 20.12.2013 as

filed during the course of assessment proceedings and wherein in reply

to certain queries at page 48, party wise details of the 'Business

Promotion' expenses had been submitted at that time to the Assessing

Officer as per copy placed at pages 49 to 51 along with complete

addressees of the persons to whom the freebies/gifts were handed out.

The Ld. AR further brought to our attention that such 'Promotional

Schemes' were meant only for the Distributors/consignee sale

agents/stockists and that the 'scheme documents were furnished to the
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Assessing Officer, along with some photographs of the items so

distributed. The Ld. AR then referred to the order sheet entries at pages

69 to 74 and he specifically referred to the order sheet entry dated

16.01.2014 placed at page 72 of the Paper Book and he invited our

attention to the following order sheet entries dated 16.01.2014:

"16.01.2014" Sh. Vikas Garg C.A attended & filed details.
He is asked to file the following.
(1)Details as per Sr. no. 6, 12, 13 (reasons) of o/s dt
03.12.202013 7 & 21 (address) of Notice dt. 26.07.2013.
(2)Explain why excessive interest to B.S. Gill should not be
disallowed.
(3) Justify abnormal increase in selling expenses like
advertisement, business promotion, rebate & discount.
Submit confirmation.
Hearing is fixed for dt. 29.01.2014 at 11 pm."

6.3.2 The Ld. AR then referred to the assessment order for AY

2011-12, placed at paper book pages 75 to 78 and submitted that after

due examination by the Assessing Officer on the issue of 'Business

Promotion Expenses', no adverse view had been drawn by the Assessing

Officer.

6.4.0 Assessment Year 2012-13:

The Ld. Counsel AR referred to reply dated 09.03.2015 as submitted

during original assessment proceedings wherein the ledger copy of the

'Business Promotion Expenses' along with the vouchers had been

enclosed, giving all such details as placed at pages 80 to 96 of the Paper

Book-1 along with copies of the bills at pages 97 to 105 and the order
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sheet entries as placed at pages 106 to 111 and it was submitted that

after examining these details and documents, the AO did not take any

adverse view vis-à-vis the business promotion expenses.

6.5.0 Assessment year 2014-15:

The Ld. AR submitted that the original assessment for this year was also

taken under scrutiny and the issue of the 'Business Promotion Expenses'

and its nature was examined in depth. Reference was made to the reply,

dated 01.12.2016, placed in Paper Book-1, page 116 wherein copy of the

ledger account along with vouchers of Business Promotion' expenses

were to the Assessing Officer. Our attention was also drawn to the

certified copies of the various 'Incentives schemes' of the company for

'Stockists and Distributors' which were placed at pages 129 to 149 of

Paper Book-1 and the Ld. AR specifically referred to pages 145 to 149

of the Paper Book-1, wherein certain 'Incentive Schemes' for the

Authorized Stockists have been mentioned. The Ld. AR also drew our

attention to the 'order sheet entries' for the said year, placed at pages

150 to 156 of the Paper Book-1. He specifically drew our attention to

page 152 wherein the concerned Assessing Officer had called for details

of the 'Business Promotion' expenses and the order sheet entries which

demonstrated that detailed examination had been carried out by the

Assessing Officer on the issue. The Ld. AR also referred to the original

Assessment order for AY 2014-15 and submitted that no adverse view
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had been taken by the Assessing Officer vis-à-vis Business Promotion

Expenses.

6.6 The Ld. AR, on the strength of the original assessments

framed, argued that since the original assessment orders have been

passed after detailed scrutiny and especially the issue of 'Business

Promotion' expenses had been examined/verified and is part of the

record of the Assessing Officer's file in the assessments framed u/s

153A/143(3), which are now the subject matter of revisionary

proceedings u/s 263 by the Ld. PCIT, (Central), Ludhiana. It was further

submitted by the Ld. AR that for AY 2015-16 in the assessment order

framed u/s 153A, there is a reference to this very issue of the nature of

'Business Promotion expenses debited to profit and loss account which

reads as under:-

"5. The assessee deals in marketing and trading of Generic
pharmaceutical, Healthcare and cosmetic products all
over India and appointed numbers of C & F agent for
distribution and sale of goods. Since the company deals in
the generic goods which does not require any prescription
from any Doctor/ medical practitioner and the company
had not paid any type of gift or cash or otherwise to any
such professional.
6. Further clarified that the company had policy of
Business Promotion to give some free gifts to the dealers
as quantity discount which is purely for the purpose of
sales increment. The total such material purchased and
delivered had duly been accounted for in the books of
accounts. The prescribed rate list of the assessee is
attached herewith as a proof of sales promotion. "
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6.7 Our attention was further drawn by the Ld. AR to the order

sheet entries at pages 168 to pages 180 of the 'Paper Book', wherein at

page 171 of the order sheet entries, dated 01.11.2019, there is a query

raised with regard to the business promotion expenses, which is being

reproduced as under:-

"Kindly give details of the services received from the
commission agents together with the agreements enter with
them, the basis of the commission paid and the percentage
of the commission paid viz. a viz. sales. Also submit the
certified copies of the ledger accounts of all the commission
agents above Rs.10) lac.
(i) Kindly give reason for increase in the following other
expenses in F.Y. 2014-15 w.r.t. F.Y. 2013-14:
a) Advertisement expenses increased from 4.11% of the
sales to 7.78 % of the sales in F.Y. 2014-15.
b) Business Promotion expense - increasing from 3.06%
of the sales to 3.42% of the sales in F. Y. 2014-15.
c) Scheme, Rebate & Discount increased from 2.55% of
the sales to 6.58% of the sales in F.Y. 2014-15.
d) Travelling and other expenses employees increased
from 2.07% of the sales to 2.45%) of the sales in F.Y.
2014-15.
Justify your reply with documentary evidence.
(ii) Kindly submit certified copy of the Form 3CD.
(iv) Kindly give reason for mismatch of amount paid to
related person u/s 40A(2)(b) in Audit report and ITR
Kindly submit the complete reply of the above also on
05.11.2019. As per the request of the counsels, the case is
adjourn to 05 11.2019. "

6.8 The Ld. AR further referred to the chart placed at Paper Book-3, at

page 1 giving a snap-shot of the 'Business Promotion' expenses booked

in different assessment years and brought to the notice of the Bench that

seven assessments had been framed u/s 143(3) as per chart hereunder:-
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Details of business promotion expenses for AY 2008-09 to 2018-19 and
completion of assessment proceedings originally and in the order u/s
153A/143(3)
Assessment Business Relevant Page Original Date of Original Date of
Year Promotion of Paper book assessment assessment u/s assessment
Expenses u/s 143(3)

u/s 153A
2008-09 1741223 7 143(l)(a) N.A. 30.12.2019
2009-10 11011055 17 143(3) 07.12.2011 30.12.2019
2010-11 20423090 27 143(3) 11.02.2013 30.12.2019
2011-12 40255106 37 143(3) 27.02.2014 30.12.2019
2012-13 31322845 49 143(3) 19.03.2015 30.12.2019
2013-14 36537940 61 143(l)(a) N.A. 30.12.2019
2014-15 55875725 74 143(3) 16.10.2017 30.12.2019
2015-16 105445890 89 143(3) 25.09.2017 30.12.2019
2016-17 94797688 104 143(l)(a) N.A. 30.12.2019
2017-18 12725 7175 121 143(1) (a) N.A. 30.12.2019
2018-19 129255390 138 143(3) 30.12.2019 N.A.

6.9 The Ld. AR further submitted that with the above background and

verification of the 'Business Promotion expenses in different years, the

assessments framed u/s 153A/143(3) were taken up simultaneously by

the issuance of notices u/s 153A firstly for six assessment years and,

later on, for the preceding four assessment years and all the search

assessments were taken up together and that the date of issuance of

notices u/s 153A/142(1) in six assessment years was the same and for

the preceding four assessment years also is the same. It was further

submitted that only one Assessing Officer was seized of the search

assessments for all the years under consideration and he had proceeded

to frame the assessments simultaneously on one single day i.e. on

30.12.2019 and had also verified this 'Business Promotion expenses' in

detail and this fact coupled with the earlier detailed
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enquiries/investigation/examinations made by the different Assessing

Officers in original assessment proceedings left no doubt that the AO

had applied his mind to the issue of business promotion expenses in

detail. Our attention was also drawn to the Annotated Report' of the

Assessing Officer submitted to the Pr. Commissioner of Income Tax

(Central) and further our attention was also drawn to the following chart

depicting the sequence of search assessments u/s 153A/143(3): -

CHART SHOWING SEQUENCE OF EVENTS DURING SEARCH
ASSESSMENTS
Sr. ASSESSMENT SECTION DATE OF DATE OF DATE OF DATE OF
NO. YEAR UNDER WHICH ISSUE OF FILING ISSUE OF PASSING
PROCEEDINGS NOTICE U/S ITR U/S NOTICE OF ORDER

INITIATED 153A/143(2) 153A/139(1) U/S 142(1) 1 2008-09 153A 19.09.2019 02.12.2019 07.10.2019 30.12.2019 2 2009-10 153A 19.09.2019 03.12.2019 07.10.2019 30.12.2019 3 2010-11 153A 19.09.2019 03.12.2019 07.10.2019 30.12.2019 4 2011-12 153A 19.09.2019 03.12.2019 07.10.2019 30.12.2019 5 2012-13 153A 25.02.2019 09.09.2019 23.09.2019 30.12.2019 6 2013-14 153A 25.02.2019 09.09.2019 23.09.2019 30.12.2019 7 2014-15 153A 25.02.2019 09.09.2019 23.09.2019 30.12.2019 8 2015-16 153A 25.02.2019 09.09.2019 23.09.2019 30.12.2019 9 2016-17 153A 25.02.2019 09.09.2019 23.09.2019 30.12.2019 10 2017-18 153 A 25.02.2019 09.09.2019 23.09.2019 30.12.2019 11 2018-19 143(3) 25.02.2019 30.11.2018 23.09.2019 30.12.2019 6.10 Referring to the above chart, the Ld. AR submitted that it is proved beyond any doubt that all the search assessments proceeded on a similar pattern and on same dates, which are proved from the order sheet entries of search assessments placed at pages 1 to 79 of Paper Book-V. It was further argued by the Ld AR that since this issue had been examined threadbare in the original assessment proceedings and in 36 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana the proceedings u/s 153A and coupled with the fact that no incriminating material or otherwise any other evidence had been found during the course of search that any "Freebies/Gifts" was given to the Doctors/Medical Practitioners, therefore, the findings of the Ld. PCIT (Central) with regard to setting aside of the assessments for making enquiries, relating to the nature of 'Business Promotion' expenses was misconceived. It was further argued that it is settled law that the search assessments have to be framed on the basis of incriminating material found during the course of search and since no incriminating material had been found for any of the years on this issue of 'Business Promotion Expenses', the entire basis for setting aside the already completed assessments was against the facts and circumstances of the case. Reliance was placed on the following judgments by the Ld. Counsel as under:-

i). CIT (Central)-III vs Kabul Chawla [2015] 61 taxmann.com 412

ii). Principal CIT-9 vs Ram Avtar Verma [2017] 88 taxmann com 666

iii).PCIT-1 v. Devangi [2-017] 88 taxmann.com 610

iv). PCIT, Central IT New Delhi v Meeta Gutgutia [2018] 96 taxmann.com 468

v). PCIT-V vs Vikas Gutgutia [2017] 88 taxmann.com 605

vi). Judgement of Chandigarh Bench of the ITAT in the case of Shri Tarun Jain & Others in ITA No. 625 & 626/Chd2019 vide order, dated 27.01.2020 6.11 The Ld. AR further submitted detailed arguments on the basis of various contentions of the Ld. PCIT from Para 5.4.1 to Para 5.13, which are summarized as under:-

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Leeforad Healthcare Limited, Ludhiana

a). Since no incriminating material had been found with respect to "Freebies / Gifts to Doctors/Medical Practitioners, no adverse view can be taken in respect of 'Business Promotion' expenses as claimed in the return of income as per the binding judgment in the case of 'Kabul Chawla's (supra) case and various other judgments of different Hon'ble High Courts and of the Co-ordinate Benches, particularly the order of the Chandigarh Bench as cited 'Supra".

b). The original assessments having merged with the assessments as framed u/s 153A/143(3), the Assessing Officer was well aware of the detailed investigations/examinations/enquiries made by different Assessing Officers in the original assessment proceedings and in the assessments farmed u/s 153A.

c). Since, there is no link or connection of the assessee company with the Doctors/Medical Practitioners, there is no question of giving "Freebies/Gifts" to Doctors/Medical Practitioners and rather, there is evidence on record in the shape of various promotional/incentive schemes meant only for the Stockiets/Distributors which has led to substantial increase in the turnover of the assessee/ profits of the company in subsequent years.

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d). The guidelines of the 'Medical Council of India' are not applicable to the Stockists/Distributors, since they are not Medical Professionals and Promotional Incentives/Schemes are offered for 'Business expediency' only.

e). Reliance was placed by the Ld. AR on various judgments, including that of the Hon'ble Apex Court and of the Jurisdictional High Court in the case of 'Leader Valves Ltd. reported in 295 ITR 273 (P&H), ITR 410 of Dalmia Dadri Cement Ltd. that if one issue has been examined in the case of same assessee, then no adverse view can be taken, if that issue has been accepted, until or unless, the facts are not similar. It was argued that issue of 'Business Promotion' expenses had been examined in different years and hence there being no change of facts, even on merits, on the principle of consistency, the said "Business Promotion"

expenses were allowable.

6.12 The Ld. AR argued that, thus, it was apparent that issueof gifts and freebies have been examined thoroughly by the various AOs during the course of original assessment and, therefore, the Ld. PCIT had wrongly concluded that this issue had not been examined by the AO making the assessment orders erroneous as being prejudicial to the interest of the Revenue.

ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana 6.13 It was further submitted that there was no link or connection of the assessee company with Doctors and Medical Practitioners and, therefore, there was no question giving any freebies or gifts to any Medical Practitioners / Doctors and as such the provisions of section 37(1) would not be attracted in assessee's case and, therefore, for this reason the guidelines issued by the Medical Council of India were also not applicable in the case of the assessee. It was also submitted that Medical Practitioners or Doctors, usually, as a matter of general practice, do not prescribe any generic medicines, whereas the assessee, undisputedly, was manufacturing generic medicines and, therefore, for this reason also it could not be said that the Ld. PCIT had rightly set aside the assessment order.

6.14 Thus, in nutshell, the main thrust of argument was that the assessee had submitted plethora of documents and other evidences before the AO as well as the Ld. PCIT to prove that the impugned business promotion expenses wetre not incurred for providing any freebies or gifts to doctors or medical practitioners and that further there was due application of mind and detailed inquiries by the AO and as such in view of such detailed inquires and such due application of mind, the revisionary proceedings were bad in law and were liable to be quashed. The Ld. AR placed reliance on numerous judicial precedents for the proposition that where there has been due application of mind by 40 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana the AO, the Ld. PCIT cannot legally have recourse of provisions of section 263 of the Act.

6.15 With reference to AY 2017-18, the Ld. AR further submitted that the Ld. PCIT has raised another issue in this year that being non reference to the Transfer Pricing Office with regard to specified domestic transactions. It was fairly accepted by the Ld. AR that the said reference was mandatorily required to be made. It was submitted that the issue of making the reference to the Transfer Pricing Officer may be sent back to the AO for the limited purpose of making the reference to the Transfer Pricing Officer.

7.0 In response to the arguments by the Ld.AR, the Ld. CIT DR submitted that the issue nature of the business promotion expenses had not been verified by the AO in all the assessments framed u/s 143(3) of the Act and it was also submitted that the action u/s 263 of the Act had been taken in respect of assessments u/s 153A and, therefore, even if the issue had been examined in the original assessment proceedings u/s 143(3) of the Act, the same would not be having any relevance here. It was further argued by the Ld. CIT DR that even some of the assessments viz. for AYs 2008-09, 2013-14 and 2017-18 had been originally framed u/s 143(1) (a) of the Act and further for two assessment years viz. 2009- 10 and 2015-16, assessments had been framed u/s 143(3) but as per records, no inquiry or investigation had been made by the AO concerned 41 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana in respect of Business Promotion Expenses and as such the Ld. PCIT had rightly cancelled the assessments. The Ld. CIT DR pointed out that even if some examination or verification of the issue had been carried out by the AO in one or few of the assessment years, the same could not be applied for all the assessment years as each year is a separate year and assessment has to be completed on the facts and records available for that particular assessment year.

7.1 It was further argued by the Ld. CIT DR that it is not necessary that there should be any incriminating material for the purpose of making any addition in search assessments because section 153A of the Act is a complete code in itself and under the provisions of the said section, assessments have to be completed based on the complete record before the AO including incriminating material found during the course of search but the additions or disallowances cannot be restricted only to incriminating material found during the course of search. The Ld. CIT DR emphasized that in terms of provisions of section 153A both disclosed as well as undisclosed income has to be brought to tax and, therefore, to say that additions can be based only incriminating material found during the course of search is not the correct interpretation of law.

7.2 Drawing our attention to the contents of the show cause notice, the Ld. CIT DR submitted that the Ld. PCIT had duly taken note of the fact 42 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana that the AO, during the course of assessment proceedings, had not examined the issue of Business Promotion Expenses and there was not even any kind of analysis carried out by the AO to examine the nature of Business Promotion Expenses. It was submitted by the Ld. CIT DR that a perusal of the assessment records would show that the AO has not carried out any kind of inquiry into the nature of expenditure pertaining to business promotion, whereas, the AO was required to properly evaluate the various evidences filed by the assessee. The Ld. CIT DR emphasized that the AO had failed to verify whether the freebies / gifts distributed by the assessee company were given to Medical Practitioners or to other parties like distributors and stockists as is being claimed by the assessee. It was submitted that, therefore, this lack of inquiry on the part of the AO had rendered the assessment orders erroneous as far as being prejudicial to the interest of the Revenue and therefore, the Ld. PCIT had rightly set aside all the assessment orders in the present set of appeals.

8.0 In the rejoinder, the Ld. AR reiterated that detailed queries had been raised with respect to the Business Promotion Expenses by the AO which was very much evident from the various replies and copies of the order sheet entries which have been filed by the assessee and since the assessments were being taken up simultaneously by the AO, the assessee had also submitted replies on identical lines and, therefore, to say that the AO had missed out on raising queries in some of the assessment 43 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana years is not correct. It was submitted that it was only on the basis of the replies furnished by the assessee in response to the queries that the AO had reached the conclusion that no freebies or gifts were given to any Medical Practitioners or doctors thereby enabling him to form an opinion that Explanation to Section 37(1) of the Act was not attracted in the assessee's case and that the amount of expenditure claimed under the head 'Business Promotion Expenses' was an allowable expenditure. It was submitted that the AO had reached this conclusion after due application of mind although he might not have elaborated the same in the assessment orders but it would not mean that the AO had failed to conduct the requisite enquires on the issue.

9.0 We have gone through the rival submissions and have also perused the records as well as the impugned orders. It appears that the Ld. PCIT (Central), Ludhiana initiated the proceedings u/s 263 on the basis of the judgment of the Hon'ble Apex Court' in the case of 'Apex Laboratories Pvt. Ltd. vs. DCIT in Civil Appeal No. 1554 of 2022 vide judgment dated 22.02.2022 and the contention of the Ld. AR has been that the assessee has no link or connection with the Medical Practitioners/Doctors, since it is not giving any 'Freebies/Gifts' to the Doctors/Medical Practitioners.

9.1 We have also carefully considered the submissions of the Ld. AR that in the original assessment proceedings for AY 2010-11,2011-12, 44 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana 2012-13, 2014-15 that the issue of 'Business Promotion" expenses was the subject matter of detailed enquiries/examinations/verifications by the different Assessing Officers during the course of original assessment proceedings and the same is evidenced by various replies/documentary evidences and text/brochures of the various 'Promotional/ Incentive Schemes', as launched from time to time for the benefit of the Stockists/ Distributors, to whom various items were given as 'Freebies/Gifts' and for which, copies of the sample bills, etc also have been furnished. Thus, in view of these documentary evidences and replies, the contention of the assessee in this regard appears to be correct. 9.2 We also note that it is also borne out from the records that seven assessments originally have been framed u/s 143(3) of the Act and it is also a fact that the question as to whether or not the promotional/incentive schemes of the company were meant only for Stockists/Distributors and the nature and details of expenses under the head 'Business Promotion' expenses had elaborately been explained in the original assessment proceedings. It is also seen that in AY 2010-11, there is a specific reply dated 08.01.2013 relating to the query about the nature of 'Business Promotion' expenses debited to the profit and loss account and the same is being reproduced as under:-

"9. Copies of bills above Rs. 50000/- expended under head Business Promotion during the assessment year 2010-2011 are enclosed.

ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana The business promotion expenses incurred by the company during the assessment year 2010-2011 are on account of promotional items purchased by the company and dispatched to the distributers/ stockiests on schemes given by the company from time to time to enhance the sales. The company usually gives the schemes to its distributors/ stockiests/ retailers to provide the promotional items free of cost on achievement of sales targets given by the company. Please find enclosed as sample copy of one of scheme circulated during the financial year 2009-2010. Also find enclosed 5 Sales Bills (as sample Bills) giving proof of Promotional items being dispatched to distributors.

Further Business promotion expenses also includes the expenses on account of purchase of catalogues, visual aids and price lists of the company to be circulated to the distributors/ stockiest/ retailers and to the marketing staff of the company."

9.3 Further, there is a reply dated 01.12.2016 furnished by the assessee during the course of original assessment proceedings for A.Y. 2014-15, wherein, the same fact was reiterated at S.No.14, page 118 of Paper Book-1, as is evidenced by the following paragraph of the said reply:-

14. "The company purchase and send the gift items according the stockiest scheme being floated by the company during the relevant period. The gifts are purchased by the company and booked in Business promotion account and the same are sent to stockiest of the company according to the targets achieved through distribution network. The company does not give any gift or freebies to the doctors.

9.4 Similar are the queries and replies in other assessment years as well. In so far as the search assessments under section 153A are 46 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana concerned and which have been the subject matter u/s 263 of the Act, we find ourselves in agreement with the contention of the Ld. AR that initiation of assessment proceedings u/s 153A and the order sheet entries relating to search assessments conclusively prove that all these assessments were being proceeded with simultaneously as is evident from Paper Book-V, pages 1 to 79 and the chart showing the sequence of events for the search assessments vis-à-vis issue of notices u/s 153A, 143(2), 142(1) and the same are identical in all the assessment years and the same Assessing Officer has framed the assessments for all the eleven years on a single day i.e. on 30.12.2019, on a similar pattern. 9.5 We have also taken note of the fact that in respect of search assessments, the same Assessing Officer had duly applied his mind to the issue of 'Business Promotion' expenses as is evident from the queries and replies furnished during the course of search assessments and we find that the assessee vide reply dated 13.12.2019, which was furnished during the course of assessment proceedings for AY 2015-16, had categorically stated that the assessee company is not giving any gift in kind of cash or otherwise to any Doctors/Medical Practitioners and for that, the relevant paragraph of such reply, dated 13.12.2019 is being reproduced herein under:-

"5. The assessee deals in marketing and trading of Generic pharmaceutical, Healthcare and cosmetic products all over India and appointed numbers of C & F agent for distribution and sale of goods. Since the company deals in the generic 47 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana goods which does not require any prescription from any Doctor/ medical practitioner and the company had not paid any type of gift or cash or otherwise to any such professional.

6. Further clarified that the company had policy of Business Promotion to give some free gifts to the dealers as quantity discount which is purely for the purpose of sales increment. The total such material purchased and delivered had duly been accounted for in the books of accounts. The prescribed rate list of the assessee is attached herewith as a proof of sales promotion."

9.6 We are also in agreement with the Ld. AR that the original assessments having merged with the assessments framed u/s 153A and further, since all the search assessments were being proceeded with simultaneously, it cannot be said that there was no application of mind by the Assessing Officer on the issue of 'Business Promotion' expenses. The Assessing Officer concerned was conscious of this issue and the same is borne out from the reply of the Assessing Officer in the 'Annotated Report', as enclosed at pages 193 to 197 of Paper Book-1 and in this report dated 18.03.2021, the Assessing Officer has communicated as under:-

"However, from the perusal of the record it has been found that the assessee company deals in marketing and trading of generic pharmaceutical, healthcare and cosmetic products through C&F agents for distribution and sales of goods and the company has not made any expenses on any gifts to medical practitioners or their professional associations. The items mentioned in the audit objections are given as gifts to the dealers for bulk purchase and sales increments. No adverse facts as 48 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana stated in the audit objections were found either during the course of search or during the course of assessment proceedings. Thus, the issue raised by the revenue audit party have been examined during the course of assessment proceedings u/s 153A rws. 143(3) of the IT. Act, 1961 and the objection was found to be without any basis and is not acceptable. Further, it is pertinent to mention here that the revenue audit party attended the office during Feb 2021 and audited the assessment completed u/s 153A r.w.s. 143(3) of the 1 T. Act, 1961 in this case but no objection raised by them."

9.7 Then again, there is a supplementary 'Annotated Report', dated 26.03.2021, placed at pages 196 to 197 of the paper book and emanating from the same Assessing Officer in which it has categorically been communicated by the Assessing Officer concerned to the Ld. PCIT that the assessee had not provided any benefit to the Doctors. The same is evident from the following paragraphs:-

"It is submitted that the above issue was dealt during the course of search assessment proceedings which were completed on 30.12.2019. During the course of assessment proceedings u/s 153A r.w.s 143(3) of the IT. Act, 1961, the assessee was asked during the course of assessment proceedings to give detail note on business model, nature of business. details of commission paid, business promotion expenses, scheme, rebate and discount expense which were examined and compared with the previous year and the turnover of the assessee (copy of the order sheet dated 01.11.2019), it was found that the assessee used to provide various gift items to the distributors/C&F distribution agents linked with their volume of order and sales made by the distributor copy of sample scheme and gifts pamphlet) and not the doctors 49 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana The assessee company deals in marketing and trading of generic pharmaceutical, healthcare and cosmetic products through CF agents for distribution and sales of goods and expenses on business promotion and Scheme, rebate & Discount were incurred for bulk purchase promotion and sales increments. The business promotion expenses were test checked and no details of providing any benefits to the doctors was found and thus no adverse facts as stated in the audit objections were found during the course of assessment proceedings."

9.8 Thus, from the various documentary evidences as furnished before us and placed in the paper book, we have no hesitation in holding that the no 'Freebies/Gifts' have been given to the Doctors/Medical Practitioners. We have also gone through the judgment in the case of 'Apex Laboratories Pvt. Ltd.' (supra) in detail and we find that while delivering the judgment, the Hon'ble Apex Court had categorically mentioned about freebies/gifts given to the Doctors/Medical Practitioners and we have also referred to the Regulations of the Medical Council of India of 2002 which debars the Doctors from accepting such gifts and we also note that this judgment relates to the Gifts received by 'Medical Practitioners/Doctors only whereas in the present case, it is a fact on record that the AO, after making in-depth enquiries/examinations/verifications of 'Business Promotion' expenses had found that no 'Freebies/Gifts' were given to Doctors/ Medical Practitioner. Above all, the concerned Assessing Officer, who framed the search assessments has categorically admitted in 'Annotated Report' 50 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana that no such gifts have been given to Doctors/Medical Practitioners by the assessee and, therefore, in our considered view, the Ld. PCIT (Central), Ludhiana was not justified in cancelling the assessments framed by the Assessing Officer vide orders dated 30.12.2019 on the issue of freebies/gifts to the Doctors /Medical Practitioners and to that extent the order of Ld. PCIT (Central), Ludhiana is set aside. 9.9 While giving this finding, we have also gone through the finding of the Ld. PCIT from Para 5.4.1 to Para 5.9.2 of the impugned order as well as the rebuttal made by the Ld. AR in 'tabular form', which for the sake of ready reference, is being reproduced herein under:-

CONTENTION OF THE LD. PCIT REPLY OF THE ASSESSEE (CENTRAL) PARA 5.4.1, PAGE 12 It has been observed by Ld. PCIT The facts with regard to 158BC assessments is that under block assessment not applicable in this case, but even u/s 153A scheme u/s 158BC, only one single as per decided case laws, only 'undisclosed assessment was required to be income' is sought to be assessed based on made to assess the undisclosed incriminating material found during search income in different assessment and if particular income/facts has been years and, whereas, under the disclosed in the regular return, the same provisions of section 153A, the cannot be disturbed until or unless, some Assessing Officer is required to incriminating material is found. Reliance is exercise normal assessment being placed on the decision of Delhi High procedure i.e. to assessee or Court in the case of 'Kabul Chawla' and reassess the total income, where Others and numerous judgments of both disclosed and undisclosed 'Chandigarh Bench' of the ITAT and of income is brought to tax. different coordinate Benches of ITAT. Para 5.4.3 Again, the Ld. PCIT here has This contention of the Ld. PCIT is again not mentioned that in the procedure correct as discussed above. for assessment u/s 153A, once the assessment is reopened, the Assessing Officer can take note of 51 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana disclosed income in the earlier return and take into consideration everything, even if it is not unearthed during search.

Para 5.6 Ours is a case of pharmaceutical company and The PCIT has referred to 'Medical as stated above repeatedly, both in original Council (Professional Conducts) assessments and in the assessments framed u/s regulation Act 2002', with code of 153A, we have clearly demonstrated and conduct for Doctors in relation furnished documentary evidences in the shape with pharmaceutical companies of 'sale bills' issued to the and then in every para in, it has Distributors/Stockiest, and no freebies have mentioned about, Medical been given to the Doctors /Medical Practitioners/ doctors only. Practitioners from the sale bills and in various schemes, of business promotions, it has clearly been mentioned that such incentives are for distributors/stockiest. Further, these guidelines given by the Medical Council are only applicable to the Doctors and not to the Distributors/Stockiest.

Para 5.7, page 15 & 16 The PCIT has quoted CBDT Our stockiest/Distributors are not 'medical circular, in which, again, it has professionals' and they are not under the been mentioned about Freebies to guidelines of Medical Council of India. Medical Practitioners and their professional associates and the violation of the provisions of Indian Medical Council (2002), have been referred to.

Para 5.8, Page 16 The Ld. PCIT (Central), Ludhiana has grossly In this paragraph, it has been erred in mentioning these facts, since these mentioned by the Ld. PCIT that incentives are being given only to section 37(1) would cover Stockiest/Distributors, under a scheme to make acceptance of Freebies by Medical more sales and a bare look at the judgment of Practitioners, which is prohibited 'Apex Court', which has been placed at pages by law and then, the reference has 129 to 159 of the 'Judgment set' and at so been made to the Judgment of many paragraphs, of the case, it has been 'Apex Court'. clarified, especially at page 153 of 'judgment set' in para 33 that pharmaceutical company gifting the Freebies to Doctors etc. is clearly prohibited by law and not allowed to claim deduction u/s 37(1). In our case, the person concerned, who are receiving incentives etc. 52 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana are not doctors, but distributors/stockiest.

Further, a reference may be made to the judgment of Hon'ble H.P. High Court in the case of 'Confederation of Indian Pharmaceutical Industries' reported in 353 ITR 388, in which it has been held as under:-

"This court is not oblivious to the increasing complaint that 'medical practitioners' do not prescribe 'generic medicines' but prescribe' branded medicines', only in lieu of the gifts and other freebies given to them by some particular Pharmaceutical Industries." We are manufacturing only generic medicines and, as such, the facts are totally different in our case and copy of judgment is placed in Judgment Set-II.


Page 17                            The facts are not applicable to our case, since
The PCIT has quoted a particular   we     are    giving   incentives    to    only
paragraph from the judgment of     Distributors/Stockiest and have no link or
'Apex     Court',  where     the   connection with the Medical Practitioners /
regulations of Medical Council     Doctors.
(Professional Conducts) has been
discussed.

Para 5.9.1
The PCIT has again mentioned       This observation of the Ld. PCIT is incorrect
that u/s 153A, the Assessing       as stated above and even, further, it is

Officer can touch upon any issue submitted that since that issue of business and his jurisdiction is not promotions has been examined, both in restricted to issue arising from original assessments framed u/s 143(3) and incriminating material. also during the search assessments u/s 153A,which have been framed simultaneously on the basis of almost similar questionnaire of same dates as is evident from order sheet entries u/s 153A assessments, for all the years, placed in the Paper Book-5. Thus, there was due application of mind. Even the order sheet entries are similar in all the years.

Para 5.9.2 The assessment for Asstt. Year 2017-18 got The PCIT has mentioned that abated in view of search conducted on assessment for Asstt. Year 2017- 23.03.2018 and even if, two assessments were 18, 2016-17 and 2013-14 have not framed u/s 143(1), it is submitted that, the 53 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana been framed u/s 143(3) and for assessment framed /s 143(3) are for Asstt. Asstt. Year 2018-19, the Years 2010-11, 2011-12, 2013-13 & 2014-15, assessment was framed for the first where the detailed investigation/examination time. was made on the issue of 'business promotion expenses' and three assessments had also been framed u/s 143(3) as per Chart at page no. 1 of PB-3,and therefore, once the issue has been examined in one particular year and here number of times in different assessment proceedings, the issue have been examined, thus, on the basis of consistency and without there being any other material on record, the same view was liable to be taken as per the following Judgments:-

a.CIT Vs/ Dalmia Dadri Cement Ltd. (1970) 77 ITR 410 (P&H) b. Berger Paints India Ltd. Vs CIT (2004) 266 ITR 99 (SC) c. DCIT V/s United Vanaspati Ltd. (2005) 275 ITR 124 (AT) (TM) d. Radha Soami Satsang Vs CIT(1992) 193 ITR 321 (SC) e.CIT V/s Arthur Andersen & Co.(2009) 318 ITR 229 (Bom) f. Commissioner of Income Tax V/s Leader Valves Ltd.(2007) 295 ITR 273 (P&H) g. PRINCIPAL CIT V/S GRASIM INDUSTRIES LTD. 424 ITR 236 (BOM) h. CIT (EXEMPTIONS) V/S INDIA HABITAT CENTRE 425 ITR 325 (DEL) i. DCIT Vs Marigold Premises Pvt. Ltd. as reported 83 ITR (Trib.) 32 (Pune) j. CHITTHARANJANA .

DASANNACHARYA VS. CIT 429 ITR 570 (KARN) DATED 23.10.2020 k. TIRUPATI PROCON PVT. LTD. VS. ITO 85 ITR (TRIB) 76 (DEL) DATED 14.01.2021 54 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana 9.10 We find no flaw in the above rebuttal by the assessee and we are of the view that this rebuttal, which is based on records, cannot be negated. Therefore, we have no hesitation in holding that the nature of the expenses under the head 'Business Promotion' in all the years under consideration have thoroughly been examined/verified by the Assessing Officer, who framed the search assessments simultaneously and, as such, we are of the considered view that the concerned AO had duly applied his mind on this issue and the records of the various assessment proceedings, both in the original and in search assessment, bear testimony to the fact that, no 'Freebies/Gifts' have been given to the Medical Practitioners/Doctors and that such gifts were only given to the Stockists/Distributors of the company as is evident from the various promotional schemes launched by the assessee company in different years.

9.11 It would be relevant here to refer to the judgment of the Hon'ble Delhi High Court in the case of 'CIT vs. Sunbeam Auto reported in 332 ITR 167', wherein the Hon'ble Court has held that the distinction between the 'lack of enquiry' and 'inadequate enquiry' has to be considered and it has been held that if there was an enquiry, howsoever inadequate that would not give occasion to the Commissioner, who passed an order u/s 263 of the Act, just because he has a different opinion in the matter and under such circumstances, it was held that the 55 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana assessment cannot be held to be as erroneous and prejudicial to the interest of the revenue.

9.12 Similar, is the observation of the Hon'ble Delhi High Court in the case of ITO vs. DG Housing Ltd. reported in 339 ITR 329 (Delhi) where the same issue was elaborately discussed. On an identical issue, the Hon'ble Jurisdictional High Court in the case of CIT vs. Unique Auto Felts Pvt. Ltd. reported in (2009) 30 DTR 221 have held as under:

"5. From the finding of the Tribunal, it is clear that the assessee had given proper explanation by filing the necessary confirmations. In view of such a finding, the Tribunal rightly held that power under section 263 of the Act could be exercised where view taken by an Assessing Officer was erroneous. While exercising such power, the Commissioner was bound to take into account all relevant facts. If order invoking the said power proceeds on an erroneous assumption, the same could be set aside by the Tribunal. Finding of the Tribunal is not shown to be perverse. No substantial question of law arises."

9.13 Similarly, the Hon'ble Apex Court in the case of PCIT vs. Shreeji Prints (P) Ltd. reported in 130 taxmann.com 294 has held as under:

"Section 69, read with section263, of the Income-tax Act, 1961 - Unexplained investments (Unsecured loans) - Assessment year 2013-14 - Assessee-company loans from two different companies Commissioner noting that said investment in assessee's name in balance sheet of respective companies exercised his revisionary powers and passed an order without giving an opportunity to assessee of being heard, invoking Explanation2 to section263 - High court by 56 ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana impugned order held that since Assessing Officer has made inquires in details and accepted genuineness of loans received by assessee, such view of Assessing Officer was a plausible view and same cannot to be considered erroneous or prejudicial to interest of revenue impugned order was to be dismissed - Held, yes [Para 2] [In favour of assessee] "

9.14 Similarly, the Hon'ble Apex Court in the case of Commissioner of Income-tax vs. Nirav Modi reported in [2017] 77 taxmann.com 15 (SC), has held as under:

"Section 68 read with section 263, of the Income-tax Act, 1961 - Cash credit (Gift) - Assessment years 2007-08 and 2008-09 - Assessee received certain amount as gifts from his father and sister who were non-residents in India - Assessing Officer after making detailed enquiries, took a view that assessee had duly proved identity, source and creditworthiness of donors - Commissioner, however, passed a revisional order under section 263 directing Assessing Officer to enquire into capacity of donors and to decide about genuineness of gifts afresh - It was noted that Commissioner in his order of revision, did not indicate any doubt in respect of genuineness of evidence produced by assessee - Moreover, satisfaction of Assessing Officer on basis of documents produced was not shown to be erroneous - High Court by impugned order held that it was a case where a view had been taken by Assessing Officer after making proper enquiry and, thus, Tribunal was justified in setting aside impugned revisional order - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes [Para 2] [In favour of assessee] "

ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana 9.15 Thus, the crux is that once there is an application of mind and enquiry has been made by the AO, then in such circumstances, the assessment cannot be branded as erroneous and prejudicial to the interest of revenue and we have no hesitation in setting-aside the orders as passed by the Ld. PCIT u/s 263 of the Act on the issue of 'Freebies/Gifts' to the Medical Practitioners/Doctors in all the 11 years under consideration.

9.16 As far as the alternate contention of the assessee that the proceedings u/s 263 of the Act were initiated on the basis of an audit Objection is concerned, since we have already set aside the impugned orders on the issue, this alternate plea assumes only academic importance and we are not inclined to adjudicate on this issue at the present juncture.

9.17 We may also mention here that in assessment year 2017-18, besides the issue of business promotion expenses, there is another issue of non-reference to the Transfer Pricing Officer (TPO) in respect of 'Specified Domestic Transactions' and the Ld. AR has been fair enough to concede that the AO was mandatorily required to refer the same to the TPO and, therefore, we hold that the Ld. PCIT was justified in setting- aside the assessment on the issue of non-reference to the TPO in Assessment Year 2017-18.

ITA 344 to 353-c-2022 -

Leeforad Healthcare Limited, Ludhiana 10.0 In the final result, all the appeals by the assessee are partly allowed.

Order pronounced on 29.07.2022.

       Sd/-                                                    Sd/-
(N.K. SAINI)                                        (SUDHANSHU SRIVASTAVA)
Vice President                                           Judicial Member

Dated :     29. 07.2022
"आर.के."

आदे शक त*ल+पअ,े+षत/ Copy of the order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent

3. आयकरआयु-त/ CIT

4. आयकरआयु-त (अपील)/ The CIT(A)

5. +वभागीय त न0ध, आयकरअपील#यआ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH

6. गाडफाईल/ Guard File आदे शानस ु ार/ By order, सहायकपंजीकार/ Assistant Registrar

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Income Tax Appellate Tribunal - Chandigarh

Leeford Healthcare Limited, Ludhiana vs Pr. Cit (Central), Ludhiana on 29 July, 2022