IN THE ITAT MUMBAI BENCH

OM PRAKASH KANT, A.M. & SANDEEP SINGH KARHAIL, J.M.

Dy. CIT v. Nicholas Piramal Enterprises Ltd.

ITA No. 1280/Mum./2013, ITA No. 1281/Mum./2013, ITA No. 1332/Mum./2013 and ITA No. 1333/Mum./2013

19 February, 2024

Appellant by: Ronak Doshi a/w Shri Priyank Gala

Respondent by: H.K. Bhatt

Per Bench

The present cross appeals have been filed by the assessee and the Revenue challenging the separate impugned orders dated 20-11-2012 and 23-11-2012 passed under section 250 of the Income Tax Act, 1961 (the Act) by the learned Commissioner of Income Tax (Appeals)-12, Mumbai (learned Commissioner (Appeals)) for the assessment years 2006-07 and 2007-08, respectively.

2. Since the present cross-appeals involve common issues arising out of a similar factual matrix, therefore these cross-appeals were heard together and are being decided by way of this consolidated order. With the consent of the parties, the cross-appeal for the assessment year 2006-07 is taken up as the lead case and the decision rendered therein shall apply mutatis mutandis to the cross-appeal for the assessment year 2007-08.

ITA No.1332/Mum./2013

Assessees Appeal assessment year 200607

3. In its appeal, the assessee has raised the following grounds:

GROUND 1: Disallowance of payments made to Piramal Corporate Services Ltd (formerly known as Piramal Enterprises Ltd.) under section 40 A (2) (b): Rs.3,12,66,000

1. On the facts and in the circumstances of the case and in law, the Commissioner (Appeals) erred in following his predecessor's order for assessment year 2005-06 by directing the assessing officer to allow payments made to PEL for consultancy fees and directing the basis that if comparative payments made by Appellant are more than the payments made by other group companies. No the excess should be disallowed and turnover may be adopted as the basis for determining excessiveness.

2. The Appellant, prays that entire payment made to Piramal Corporate Services Ltd. (formerly known as Piramal Enterprises Ltd.) be allowed as deductible expense under section 37(1) of the Act and disallowance made under section 40A(2)(b) be deleted.

GROUND II:

Disallowance of legal and professional charges incurred for system development: Rs.45,49,911

1. On the facts and in the circumstances of the case and in law, the Commissioner (Appeals)erred in upholding the action of the assessing officer of disallowing legal and professional charges incurred for 'system development' amounting to Rs.45,49,911 (being 50% of Rs.90,99,822) debited under the head Legal and Professional fee on the alleged ground that the said expenditure gives enduring benefit and hence is a capital expenditure.

2. The Appellant prays it be held that the aforesaid expenses are of revenue in nature and hence allowable under section 37(1) of the Act.

GROUND III:

Disallowance of advertising and business promotion expenses: Rs.11,76,41,050