Procter & Gamble Home Products Private Limited Vs ACIT (ITAT Mumbai)
Summary: The Income Tax Appellate Tribunal, Mumbai, “C” Bench, comprising Shri Vikram Singh Yadav, Accountant Member and Shri Rahul Chaudhary, Judicial Member, disposed of the assessee’s appeals for AYs 2004-05 and 2005-06 and the Revenue’s cross appeal for AY 2005-06. The order was pronounced on 21 July 2026, following hearing on 22 April 2026.
The principal dispute for AY 2004-05 concerned the treatment of alleged usage charges payable by Procter & Gamble Hygiene and Health Care Ltd. (PGHH) for occupation of premises in the assessee’s P&G Plaza building. The Assessing Officer treated Rs. 475.73 lakh as rent receivable from PGHH and assessed it under the head “Income from House Property”. The AO also disallowed Rs. 1,047.75 lakh, representing 63.5% of building-related expenditure, on the basis that 27% of the building was occupied by Nortel Network India Private Limited and the remaining 73% was jointly occupied by the assessee and PGHH, with 50% of that portion attributed to PGHH.
The assessee contended that the agreement dated 29 August 2003, effective from 1 April 2001, provided for sharing of common facilities and common costs. Although Clause 2 and Annexure I referred to compensation/usage charges of Rs. 90 per square foot and/or reimbursement of expenses, the assessee submitted that the Rs. 90 per square foot usage charge and corresponding security deposit were never implemented. Instead, common costs were shared and excess expenditure was reimbursed. The assessee also contended that common administrative and other expenses were allocated according to the respective Net Outside Sales ratio rather than the physical space occupied. These submissions were recorded by the Tribunal as the assessee’s contentions and were not treated as findings merely because they were advanced by the assessee.
