ITAT Deletes Disallowances of Public Relations, Shared Services, and Product Registration of BASF India, Citing No Change in Facts or Law [Read Order]

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) dismissed the appeal by revenue regarding the disallowances of ₹55,00,000 on Public Relations expenses, Shared Service (Malaysia), and Product Registration expenses claimed by the assessee for the Assessment Years (AYs) 2014-15 and 2015-16.

The assessee-respondent, BASF India Limited, is engaged in the business of manufacturing

and marketing of expandable polystyrene, tanning agents, leather chemicals and auxiliaries.

The assessee filed its return of income on 29.11.2014, declaring a total income of ₹198,89,19,750. The return filed by the assessee was selected for scrutiny, and statutory notices under section 143(2) and section 142(1) of the Income Tax Act,1961 were issued and served on the assessee.

The Assessing Officer (AO) disallowed expenditure of ₹25,00,000 towards Public Relations, ₹20,00,000 for Shared Services (Malaysia), and ₹10,00,000 for Product Registration, relying on similar grounds taken in prior years. These issues had arisen and been adjudicated for AY 2007-08 and 2008-09, with identical agreements and factual circumstances.

The CIT(A), noting no change in facts or law, deleted the disallowances for the years under consideration.

The Revenue appealed and sought the restoration of the disallowances, but did not present any fresh evidence or point out amendments to the relevant law. They reiterated the prior grounds without bringing any distinguishing material or showing any change in the facts since earlier decisions.

The assessee contended that the expenses were legitimate and had already been adjudicated in its favour in earlier years. The assessee argued that the legal and factual matrix remained unchanged, relying on previous Tribunal orders that deleted the disallowances.

The ITAT Bench comprising Sandeep Singh Karhail (Judicial Member) and Girish Agrawal (Accountant Member observed that the facts and the agreement, as well as the nature of expenses, are identical for the year under consideration as they were in earlier years. There is no change in the facts or law, and no new material has been placed before the tribunal.

ITAT Dismisses Revenue’s Appeals in Absence of Incriminating Material in Unabated Assessments, Upholds Deletion of S.68 Additions of ₹ 2.71 Cr [Read Order]

The Tribunal upheld the CIT(A)'s deletion of the ₹55,00,000 disallowances and dismissed the Revenue’s appeals, confirming the previous rulings should apply in the absence of a change in facts or law.

The assessee was represented by Nikhil Tiwari along with Hemang Mehta, while Neena Jeph represented the revenue.

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