Alivira Animal Health Limited vs. Asstt. Commissioner of Income-tax, Circle I, Thane

Parties Involved

Facts Summary

Alivira Animal Health Limited, a subsidiary of Sequent Scientific Ltd., is engaged in manufacturing pharmaceutical, medicinal, and botanical products. The company filed a return of income on 30th November 2018, declaring a total loss for the current year at Rs. (-4,65,98,067). The return was processed under section 143(1) of the Income Tax Act, 1961, and a notice under section 143(2) was issued on 22/09/2019. During the assessment proceedings, the Assessing Officer observed that the assessee paid commission of Rs. 1,17,08,355 for procuring sales orders. The Assessing Officer disallowed the commission expenses under section 37(1) of the Act, which was upheld by the National Faceless Appeals Centre (NFAC), Delhi. The assessee appealed against this order, arguing that the commission expenses were wholly and exclusively for the purpose of business and were a regular trade practice in pharmaceutical exports.…

Legal Issues

• 1. Whether the disallowance of commission expenses of Rs. 1,17,08,355 under section 37(1) was justified.

Judgment Outcome

Decided in favour of Assessee.

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