Centaur Pharmaceutical Pvt Ltd, Mumbai vs Department Of Income Tax

BEFORE HON'BLE S/SHRI H.L. KARWA, PRESIDENT AND B.R.BASKARAN (AM) सव ी एच.एल. कावा, अ य एवं बी.आर.बा करन, लेखा सद य आयकर अपील सं./I.T.A. No.6843/Mum/2011 ( नधारण वष / Assessment Year :2004-05)

Asstt.Commissioner of Income बनाम/ M/s Centaur Pharaceutical Tax -Circle 10(1), Vs. Pvt.Ltd., R No.455, Centaur House, Aayakar Bhavan, Near Grand Hyat, M.K.Road, Vakola, Santacrus East, Mumbai-400020 Mumbai-400055 (अपीलाथ /Appellant) .. ( यथ / Respondent)

थायी ले ख ा सं . /जीआइआर सं . /PAN/GIRNo. :AAACCO444K

अपीलाथ ओर से / Appellant by : Shri Parmanand J यथ क ओर से/Respondent by Shri Viswas V Mehandale

सन ु वाई क तार ख / Date of Hearing : 29.12.2014 घोषणा क तार ख /Date of Pronouncement : 16.01.2015

आदे श / O R D E R

Per B.R.BASKARAN, Accountant Member:

The revenue is aggrieved by the decision of Ld CIT(A)-21, Mumbai in deleting the penalty of Rs.3,67,114/- levied in the hands of the assessee u/s 271(1)(c) of the Act for assessment year 2004-05.

2. We heard the parties and perused the record. The assessee is in the business of manufacturing and marketing pharmaceutical items. During the year under consideration, the assessee had incurred a sum of Rs.10,23,313/- as product registration expenses in African Countries and claimed the same as revenue expenditure. The AO treated the same as Capital expenditure on the reasoning that the assessee would be getting ITA No.6843/M/11 2

long term benefit of sales in African Countries due to this expenditure. Accordingly he disallowed the above said claim and the Ld CIT(A) also confirmed the said disallowance. It appears that the assessee did not pursue this disallowance before the Tribunal. The assessing officer levied penalty u/s 271(1)(c) of the Act on the above said disallowance on the ground that the assessee has furnished inaccurate particulars of income. However, the Ld CIT(A) deleted the same by holding that the said claim is a debatable one and further by placing reliance on the decision of Hon'ble Supreme Court in the case of Reliance Petroproducts (322 ITR 158).

3. Before us the Ld D.R placed strong reliance on the penalty order passed by the AO and contended that the AO was justified in levying penalty, since the assessee has claimed a Capital expenditure as deduction. On the contrary, the Ld A.R submitted that the Ld CIT(A) was justified in deleting the penalty on the ground that question whether the Product registration charges is a Capital expenditure or revenue expenditure is a debatabe question. The Ld A.R invited our attention to the order dated 29-05-2013 passed by the Mumbai C bench of ITAT in the assessee's own case in AY 2007-08, which is placed in pages 1 - 12 of the paper book and submitted that the Tribunal has deleted identical disallowance made by the AO in AY 2007-08.

4. Having heard the rival contentions, we are of the view that the order of Ld CIT(A) deleting the penalty deserves to be sustained. We agree with the view of Ld CIT(A) that the question whether the Product registration charges is a Capital expenditure or revenue expenditure is a debatabe question and hence the same may not lead to levy of penalty u/s 271(1)(c) of the Act. Accordingly, we confirm the order of Ld CIT(A).

ITA No.6843/M/11 3 5. In the result, the appeal filed by the revenue is dismissed.

The above order was pronounced in the open court on 16th Jan,2015.

घोषणा खुले यायालय म दनांकः 16th Jan 2015 को क गई ।

sd sd

(एच.एल. कावा/ H.L. KARWA) (बी.आर. बा करन,/ B.R. BASKARAN) अ य / PRESIDENT लेखा सद य/Accountant Member मब ुं ई Mumbai: th Jan, 2015.

व. न.स./ SRL , Sr. PS

आदे श क त ल प अ े षत/Copy of the Order forwarded to :

1. अपीलाथ / The Appellant

2. यथ / The Respondent.

3. आयकर आयु त(अपील) / The CIT(A)- concerned

4. आयकर आयु त / CIT concerned

5. वभागीय त न ध, आयकर अपील य अ धकरण, मब ुं ई / DR, ITAT, Mumbai concerned

6. गाड फाईल / Guard file.

आदे शानस ु ार/ BY ORDER, true copy सहायक पंजीकार (Asstt. Registrar) आयकर अपील य अ धकरण, मुंबई /ITAT, Mumbai