Income Tax Appellate Tribunal - Mumbai
Procter And Gamble Health Pvt ... vs Dcit 8(2)(1), Mumbai on 4 April, 2025
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "C" MUMBAI
BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)
AND
SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER)
ITA No. 328/MUM/2025
Assessment Year: 2005-06
Procter and Gamble Heath Ltd., The Dy. CIT-8(2)(1),
P& G Plaza, Cardinal Gracias Road, Room No. 624, 6th floor,
Chakala Andheri (East), Vs. Aayakar Bhavan, Sir M.K.
Mumbai-400099. Road,
Mumbai-400020.
PAN NO. AAACE 2616 F
Appellant Respondent
Assessee by : Mr. Ajit Shah
Revenue by : Mr. Gotimukul Santosh Kumar, Sr.
DR
Date of He aring : 02/04/2025
Date of pronouncement : 04/04/2025
ORDER
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 25.11.2024 passed by the Ld. Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi [in short 'the Ld. CIT(A)'] for assessment year 2005-06, raising following grounds:
Procter and Gamble Heath Ltd 2 ITA No. 328/MUM/2025
1. The Hon'ble Commissioner of Income Tax (Appeals) on facts and in law erred in:
(a) dismissing the impugned order u/s. 250 of the Act on grounds that all three quantum issues were settled under Direct Tax Vidad se Vishwas (DTVSV) Scheme, 2020 though however only one issue pertaining to Transfer Pricing was settled under DTVSV.
(b) not appreciating the fact that all the said issues on which Penalty was levied were not covered under settled under DTVSV, but two quantum issues were subsequently adjudicated by Hon'ble ITAT vide Orders dated 21st August 2013 (Against Original Order) and 16th December 2021 (Against Set aside order) in favour of the appellant and hence no Penalty could be levied in respect thereof.
(c) not allowing the appeal and quashing the penalty on merits in respect of two issues (i.e., Disallowance of Physician Samples Adjustment in respect of Technical Fees) and Transfer Pricing Adjustment basis the Orders passed by Hon'ble ITAT dated 21st August 2013 (Against Original Order) and 16th December 2021 (Against Set aside order).
(d) not quashing the entire penalty levied of Rs. 2,56,21,685/ 2,56,21,685/-
in view of aforesaid facts and circumstances of the case of the appellant
2. The above grounds of appeal are distinct and separate and without prejudice to each other.
2. We have heard rival submissions of the parties and perused the relevant materials on record enalty u/s 271(1)(c) of record. In the case penalty tax Act, 1961 (in short 'the Act') was levied for filing the Income-tax inaccurate particulars of the income in respect of three items. The relevant finding of the Assessing Officer is reproduced as under:
"4. Penalty u/s 271(1)(c) is lleviable on the following issues:--
(i) Disallowance on account of free samples and stock discrepancies Rs.4,51,04.234/ : The AO had made the said disallowance of Rs.4,51,04.234/-:
representing 70% of the samples distributed to the doctors and physicians for want of sufficient proof as regards their distribut distribution and the fact that the expenditure had been incurred for business Procter and Gamble Heath Ltd 3 ITA No. 328/MUM/2025 purpose could not be established by the assessee. The Ld. CIT(A) has upheld the said disallowance. In view of these facts, penalty u/s 271(1)(c) is leviable for filing inaccurate particul ars of income.
particulars
(ii) Addition u/s 92CA on account of transfer pricing adjustment of Rs.2,81,00,581/ : The AO has made an addition of Rs.
Rs.2,81,00,581/-
1,83,99,104i- in respect of import of raw materials from its Rs.97,01,477/ in relation Associated enterprise and an addition of Rs.97,01,477/- to payment of technical knowhow fees to Merck KGaA. The Ld. CIT(A) has upheld the said disallowance. In view of these facts, penalty u/s 271(1)® is leviable for filing inaccurate particulars of income.
271(1)© is not leviable on this
(iii) Disallowance u/s 14A: Penalty u/s 271(1)© issue since it is debatable issue."
2.1 The Ld. CIT(A) however treated the appeal as infructuous in view of Direct Tax Vivad Se Vishwas Scheme opted by the assessee. The relevant finding of the Ld. CIT(A) is reproduced as under:
"2.0 It is noted that the appellant opted for the Vivad Se Vishwas Scheme by filing Form 1 and Form 2 dated 01.10.2020. Pursuant thereto, the Pr. Commissioner of Income Tax, Mumbai-8 Mumbai has 0/- as taxes in terms of certified the full and final payment of Rs. 0/ Form No. 5 dated 11.05.2021. In view of the above, the appeal is treated as infructuous as per Section 4(2) of the Direct Tax Vivad Se Vishwas Act, 2020."
2.2 Before us, the Ld. counsel for the assessee however pointed out that the assessee opted settleme settlement of dispute only in respect of transfer pricing adjustment in respect of import of Bisopeolol Fumaret under the Direct Tax Vivad Se Vishwas Scheme.
Scheme In respect of other two issues, the Tribunal has already deleted the addition. On perusal of the records, we find that in respect of first time of the penalty levied i.e. disallowance of 70% of the distribution of the free sample, in second round of the proceedings, the Tribunal has deleted the addition observing in ITA No. 1637, 1638 & Procter and Gamble Heath Ltd 4 ITA No. 328/MUM/2025 1639/Mum/2020 for asse 05, 2005-06 assessment years 2004-05, 2005 & 2006- 07 has deleted the addition observing as under :
"11. On a perusal of material placed before us, it is noticed that the cost incurred by the assessee towards distribution of free samples in these assessment years is muc much h lesser than similar expenditure incurred in the earlier and subsequent assessment years. Thus, keeping in view the peculiar circumstances of the case, we hold that no disallowance out of the cost incurred towards free physician's samples is called for in any of these assessment years. Accordingly, we delete the additions. Ground 1 in all the appeals is allowed."
2.3 Since the quantum addition has been deleted the penalty levied cannot survive. Accordingly, the penalty levied corresponding to the addition of disallowance of distribution of free sample is deleted.
2.4 The second item of the penalty levied is in respect of transfer pricing adjustment in relation to import of Bisoprolol Fumarte , which the assessee has settled under the Vivad Se Vishwas. This fact has not been disputed by the Ld. Departmental Representative also. Once, the assessee has opted for Vivad Se Vishwas scheme, no penalty is levied under the provisions of the scheme. Accordingly, penalty levied in respect of transfer pricing adjustment is also stands deleted.
2.5 The third item of levy of the penalty is transfer pricing ow fees'.
adjustment in respect of 'technical knowhow fees The addition made in this respect has been deleted by the Tribunal in ITA No. Procter and Gamble Heath Ltd 5 ITA No. 328/MUM/2025 2005-06.. For ready refrence, 5596/Mum/2011 for assessment year 2005 relevant part of decision is reproduced as under:
"79.
79. The issue involved in Ground No. 1.2 are identical with the issue in ITA No. 2393/M/09 for A.Y. 2004 05 in ground 2004-05 No. 1.1 at paras 1 to 8, though quantum may differ, therefore, on similar lines, similar reasons, the appeal filed by the assessee in ITA No. 5596/M/11 for assessment year 2005-2006 2006 is allowed for statistical purpose."
2.6 Since the transfer pricing adjustment in respect of technical knowhow has already been deleted by the Tribunal, the penalty levied by the AO in respect of same, cannot survive.
3. The grounds of appeal of the assessee are accordingly accordingly allowed.
4. In the result, the appeal of the assessee is allowed.
Order pronounced /04/2025.
nounced in the open Court on 04/04/2025.
Sd/
Sd/- Sd/
Sd/-
(RAHUL
RAHUL CHAUDHARY)
CHAUDHARY OM PRAKASH KANT)
(OM KANT
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 04/04/2025
Rahul Sharma, Sr. P.S.
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
BY ORDER,
//True Copy//
(Assistant Registrar)
ITAT, Mumbai