M/s. Spice Distribution Ltd., New Delhi V. JCIT (OSD), New Delhi

CO 396/DEL/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 6970 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2008-2009
• Appeal Filed On: 15-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: AJAY VOHRA ADV SH ROHIT GARG
• Keywords: Capital asset; Depreciation; Business expenditure; Revenue expenditure; Capital expenditure
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: G NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI K.D.RANJAN, ACCOUNTANT MEMBER ITA NO: 4898/DEL/2011 A.Y. : 2008-2009 JCIT (OSD), CIRCLE 9(1) VS. M/S SPICE DISTRIBUTION LTD. ROOM NO.163, C.R.BLDG. 60-D, STREET NO.C-5, SAINI K FARM NEW DELHI NEW DELHI 110 62 C.O. 396/DEL/11 ITA NO: 4898/DEL/2011 A.Y. : 2008-2009 SPICE DISTRIBUTION LTD. VS. JCIT (OSD) NEW DELHI NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SH.AJAY VOHRA, ADV.&SH.ROHIT GARG, C.A. RESPONDENT BY : SH.ROHIT GARG, D.R. O R D E R PER DIVA SINGH, J.M. THE PRESENT APPEAL HAS BEEN MOVED BY THE REVENUE AGAINST THE ORDER DT. 28.7.2011 OF CIT(A)-XII, NEW DELHI WHERE IN THE SOLE ISSUE AGITATED BY THE REVENUE READS AS UNDER:- THE LD.CIT(A) ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.1,57,98,353/- BEING 25% OF ADVERTISING AND MARKETING EXPENSES, MADE BY A.O. TR EATING THEM IN THE NATURE OF BRAND BUILDING 2. THE ASSESSEE HAS FILED ITS CROSS OBJECTION STATI NG THAT THE ALTERNATE GROUND RAISED BY THE ASSESSEE HAD NOT BEEN DECIDED. ITA 4898/ DEL/11 & PAGE 2 OF 11 C.O. 396/ DEL/2011 A.Y. 2008-09 M/S SPICE DIS TRIBUTION LTD. 3. THE RELEVANT FACTS FOUND RECORDED AT PAGES 1 AN D 2 OF THE ASSESSMENT ORDER, SHOW THAT THE ASSESSEE HAD CLAIM ED AN EXPENDITURE OF RS.6,31,93,412/- ON ACCOUNT OF ADVERTISEMENT EX PENSES. THE A.O. REQUIRED THE ASSESSEE TO FURNISH THE DETAILS OF SU CH EXPENSES AND ALSO TO EXPLAIN AS TO WHY THEY SHOULD NOT BE DISALLOWED AS THEY APPEARED TO BE CONFER A BENEFIT OF ENDURING NATURE. THE ASSES SEES REPLY DATED 29.12.2010 EXTRACTED IN THE ASSESSMENT ORDER IS REP RODUCED HEREUNDER. IN THIS CONNECTION, IT IS RESPECTFULLY SUBMITTED THAT THE WORD SPICE HAS BEEN SUBSTITUTED IN PLACE OF THE W ORD HOTSPOTS IN THE NAME OF THE ASSESSEE COMPANY W.E. F. 9.4.2009. AS PER COPY OF FRESH CERTIFICATE OF INCO RPORATION ISSUED BY THE ROC, SUBMITTED TO YOUR GOODSELF WITH OUR LETTER DT. 20.10.2010. IN VIEW OF THE SAME NO SUCH EXPENSES CAN BE SAID TO BE RELATED TO BRAND BUILDIN G EXERCISE OF SPICE BRAND. DURING THE P.Y. UNDER CONSIDERATION, THE ASSESSEE COMPANY WAS CARRYING ON ITS BUSINESS UNDER THE BRAND NAME HOTSPOTS AS EARLIER . NOT CONVINCED WITH THE EXPLANATION OFFERED THE A.O . DECIDED THE ISSUE AGAINST THE ASSESSEE HOLDING AS UNDER: AS PER THE FRESH CERTIFICATE OF INCORPORATION CON SEQUENT UPON CHANGE OF NAME, SUBMITTED BY THE ASSESSEE THE HOTSPORT DISTRIBUTION LTD. WAS ORIGINALLY INCORPORA TED 20 TH DAY OF MARCH, 2007 I.E. THE FAG END OF F.Y. 2006-07 . THIS FACT ITSELF GOES TO SHOW THAT THE EXPENSES INCURRED DURING THE FINANCIAL YEAR 2007-08 IS BRAND BUILDING EXERCISE O N PART OF THE ASSESSEE. THE ABOVE EXPLANATION OF THE ASSESSEE HAS BEEN CONSIDERED AND FOUND NOT ACCEPTABLE. FROM THE EXPLANATION OF THE ASSESSEE IT IS AN ADMITTED FACT THAT MOST OF THE EXPENSES ARE MADE FOR MAKING BRAND VALUE WHE THER IN THE FORM OF SCHEMES OF SALES PROMOTION OR ADVERTISE MENT GIVEN IN PRINT AND ELECTRONIC MEDIA. THE AFORESAID EXPENDITURE HAS LED TO THE CREATION OF SUCH ASSETS WHICH WOULD BRING ENDURING BENEFIT TO THE ASSESSEE. THE ASSESSEE ITA 4898/ DEL/11 & PAGE 3 OF 11 C.O. 396/ DEL/2011 A.Y. 2008-09 M/S SPICE DIS TRIBUTION LTD. CANNOT DENY THE ADVANTAGE OF AN ENDURING NATURE WHI CH IT WOULD DERIVE ON ACCOUNT OF ENHANCED VISIBILITY OF I TS PRODUCTS. AS SUCH, IT IS HELD THAT 25% EXPENSES AR E RELATED TO BRAND BUILDING AND ARE OF CAPITAL NATURE. AS SUC H, AN AMOUNT OF RS. 1,92,76,191/- BEING 25% OF TOTAL EXPE NDITURE OF RS. 7,71,04,765/- IS DISALLOWED AND ADDED TO TOT AL INCOME. SINCE I AM SATISFIED THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF ITS INCOME, PEN ALTY PROCEEDINGS U/S 271(1)(C ) IS BEING INITIATED SEPAR ATELY. 4. AGGRIEVED BY THIS THE ASSESSEE CAME IN APPEAL BE FORE THE CIT(A). 5. THE CIT(A) SUMMED UP THE FACTS AS UNDER. THE APPELLANT HAS COMMENCED ITS OPERATIONS DURING THE FINANCIAL YEAR ENDED 31 ST MARCH, 2008 RELEVANT TO A.Y. 2008-09. THE YEAR UNDER CONSIDERATION IS THEREFORE, ITS FIRST YEAR OF OPERATION. THE APPELLANT COMPANY HAS COMMENCED ITS BUSINESS OF SEL LING MOBILE HANDSETS AND OTHER ELECTRONIC ITEMS AND ACCESSORIES . DURING THE PREVIOUS YEAR RELEVANT TO THE A.Y. UNDER CONSIDERAT ION, THE APPELLANT HAS INCURRED AN AGGREGATE EXPENDITURE OF RS. 6,31,9 3,412/- ON ACCOUNT OF ADVERTISEMENT AND MARKETING EXPENSES. T HE BROAD DETAILS OF ADVERTISEMENT AND MARKETING EXPENSES IN CURRED BY THE APPELLANT DURING THE P.Y. ARE AS UNDER. 1. EXP. ON CUSTOMER INCENTIVE SCHEMES RS. 2,64,64, 187/- 2. ADVT. THROUGH HOARDINGS/BANNERS/FLEX ETC. RS. 70 ,02,700/- 3. ADVT. THROUGH NEWSPAPERS/MAGAZINES/RADIO T.V. ETC. RS. 2,86,24,038/- 4. PAYMENT TO AD AGENCIES RS. 11,02,487/- -------------------------- RS. 6,31,93,412/- ============== 5.1. REFERRING TO THE MATERIAL AVAILABLE ON RECORD HE OBSERVED THAT THE ASSESSEE SUBMITTED DETAILS VIDE LETTER DT. 22.11.20 10 AND 10.12.2010 AND YET AGAIN IN RESPONSE TO ORDER SHEET ENTRY DT. 24.12.2010 ASSESSEES REPLY DT. 29.12.2010 WAS ALSO BEFORE THE A.O. FROM THE EXTRACTED PORTION THEREOF IT IS SEEN THAT THE ASSESSEE CONTENDED THAT THE WORD SPICE HAS ITA 4898/ DEL/11 & PAGE 4 OF 11 C.O. 396/ DEL/2011 A.Y. 2008-09 M/S SPICE DIS TRIBUTION LTD. BEEN SUBSTITUTED FOR HOT SPOT AS THE NAME OF THE COMPANY W.E.F. 9.4.2009. THE SAID ASSERTION WAS SUPPORTED BY CERT IFICATE OF INCORPORATION OF REGISTRAR OF COMPANIES. CONSIDERI NG THE FACT THAT THE A.O. NOT CONVINCED WITH THE REASON FOR INCURRING TH E EXPENSES ON ADVERTISING AND BRAND BUILDING ON ACCOUNT OF VARIOU S SALES PROMOTION SCHEMES, ADVERTISEMENT OF ITS PRODUCTS IN NEWSPAPER , ELECTRONIC MEDIA, NEON SIGNS AND BANNERS ETC. AMOUNTING TO RS.6,31,93 ,412/- 25% OF THE EXPENSES WORKED OUT TO RS.1,57,98,353/-. HOWEVER A .O. HAS DISALLOWED RS.1,92,76,191/- I.E. THE 25% OF RS.7,71,04,765/-. HE ALSO RECORDS THE ALTERNATE PLEA OF THE ASSESSEE NAMELY THAT IF 25% O F EXPENSES INCURRED ON ADVERTISEMENT AND MARKETING PERTAIN TO BRAND BUILDI NG WHICH HAVE LED TO AN ENDURING BENEFIT AND CREATION OF AN INTANGIBLE A SSET THEN DEPRECIATION THEREON @ 25% SHOULD BE ALLOWED. 5.2. ADDRESSING THE PROVISIONS OF THE ACT NAMELY SE CTION 37 IT WAS ARGUED THE EXPENDITURE HAS BEEN INCURRED BY THE ASS ESSEE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS OR PROF ESSION, AS SUCH IT IS ALLOWABLE AS DEDUCTION AS ADMITTEDLY IT IS NOT A CA PITAL EXPENDITURE NOR A PERSONAL EXPENSE. IT WAS CONTENDED THAT THIS WOULD BE EVIDENT FROM THE DETAILS FILED THAT EXPENSES ARE WHOLLY AND EXCLUSIV ELY INCURRED FOR THE PURPOSE OF BUSINESS AND ARE NOT IN THE NATURE OF A CAPITAL EXPENSE NOR A PERSONAL EXPENSE IT IS A NORMAL EXPENDITURE INCURRE D ON ADVERTISING AND MARKETING IN THE NORMAL COURSE OF BUSINESS AS PER D ETAILS SUBMITTED IN ITA 4898/ DEL/11 & PAGE 5 OF 11 C.O. 396/ DEL/2011 A.Y. 2008-09 M/S SPICE DIS TRIBUTION LTD. THE COURSE OF PROCEEDINGS AND CAN BY NO STRETCH OF IMAGINATION RESULT IN ANY TANGIBLE OR INTANGIBLE ASSET. NONE OF THE EXP ENDITURE INCURRED CAN BE SAID TO BE BRINING ANY KNOW-HOW, PATENT, COPY RI GHT, TRADE MARK, MARKETING LICENSE OR FRANCHISEE ETC. VARIOUS CASE LAWS ARE RELIED UPON TO CONTEND THAT THE ADHOC DISALLOWANCE WAS NOT WARRANT ED ON FACTS NAMELY MADRAS INDUSTRIAL INVESTMENT CORPORATION LTD. VS CI T, 225 ITR 802, CIT VS. SALORA INTERNATIONAL LTD. (2009) 308 ITR 199. 5.3. ATTENTION WAS INVITED TO ANOTHER GROUP COMPANY OF THE ASSESSEE NAMELY SPICE COMMUNICATIONS WHICH IS PROVIDING CELL ULAR PHONE SERVICES IN PUNJAB AND KARNATAKA. IN THE FACTS OF THAT CASE IT WAS STATED THAT THE A.O. IN 2003-04, 2005-06 A.YS DISALLOWED 10% OF THE EXPENSES INCURRED ON ADVERTISING BY TREATING IT THE SAME TO BE RELATE D TO BRAND BUILDING. THE SAID DISALLOWANCE WAS DELETED BY CIT(A) WHICH ORDER WAS UPHELD BY ITAT IN ITS CONSOLIDATED ORDER DT. 9.10.2009 WITH THE FOLLOWING OBSERVATIONS IT IS NOT IN DISPUTE THAT THE ASSESSEE IS IN THE BUSINESS OF PROVIDING CELLULAR MOBILE SERVICES UNDER ITS OWN SE LF GENERATED BRAND SPICE SINCE 1997. THE ASSESSEES BUSINESS OF ROVIDING CELLULAR MOBILE SERVICES IS UNDOUBTEDLY A HIGHLY CO MPETITIVE BUSINESS, AND ASSESSEE HAS TO PROVIDE SERVICES IN A COMPETENT ENVIRONMENT. THIS IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS INCURRED EXPENDITURE TOWARDS ADVERTISEMENT AND SALE S PROMOTION IN COURSE OF CARRYING ON ITS BUSINESS ACTIVITIES. THE A.O. HAS ALLOWED 90 PER CENT OF THE EXPENSES AS REVENUE EXPE NDITURE AND ALLOCATED 10 PER CENT TOWARDS CAPITAL BY OBSERVING THAT 10 PER CENT OF EXPENSES HAVE BEEN INCURRED TOWARDS BRAND BUILDI NG. THE A.O. HAS NOT BEEN ABLE TO JUSTIFY AS TO HOW THE 10 PER C ENT OF THE TOTAL ADVERTISEMENT AND SALES PROMOTION EXPENSES CAN BE A LLOCATED TOWARDS CAPITAL EXPENDITURE WHEN THE ASSESSEE HAS N OT ACQUIRED ITA 4898/ DEL/11 & PAGE 6 OF 11 C.O. 396/ DEL/2011 A.Y. 2008-09 M/S SPICE DIS TRIBUTION LTD. ANY BRAND FROM ANY OUTSIDE PARTY. THE EXPENDITURE ON ADVERTISEMENT AND SALES PROMOTION CONSTITUTED EXPEN DITURE INCURRED ON PRESS ADVERTISEMENT, HOARDINGS, NEON SI GNS, BROCHURES, ETC. THE PRESS ADVERTISEMENTS COULD NOT BE CONSIDERED AS CAPITAL ASSET ACQUIRED BY THE ASSESSEE. SIMILAR LY, PUTTING HOARDINGS AND NEON SIGNS COULD NOT ALSO BE CONSIDER ED ON CAPITAL FIELD. THESE ;EXPENDITURES DO NOT LEAD TO CREATE A NY CAPITAL ASSET TO THE ASSESSEE. EVEN THERE IS NO BENEFIT OF ENDUR ING NATURE SO TO TREAT THE EXPENSES AS CAPITAL EXPENDITURE. SINCE BY INCURRING EXPENDITURE ON ADVERTISEMENT AND SALES PROMOTION, T HE ASSESSEE HAS NOT ACQUIRED ANY FIXED CAPITAL ASSET, BUT THESE EXPENDITURES WERE INCURRED FOR EARNING BETTER PROFITS, AND FOR F ACILITATING ASSESSEES OPERATION OF PROVIDING CELLULAR MOBILE S ERVICES, THERE EXIST DIRECT NEXUS BETWEEN THE ADVERTISEMENT AND SA LES PROMOTION EXPENSES AND THE CARRYING OUT OF THE BUSINESS ACTIV ITY OF THE ASSESSEE. WE, THEREFORE, DO NOT FIND ANY JUSTIFICA TION IN INTERFERING WITH THE ORDER OF THE CIT(A) IN DELETING THE DISALL OWANCE OF 10 PER CENT OF EXPENSES TOWARDS ADVERTISEMENTS AND SALES P ROMOTION INCURRED BY THE ASSESSEE FOR SMOOTH FUNCTIONING AND CARRYING ON ASSESSEES BUINESS EFFECTIVELY, PROFICIENTLY AND PR OFITABILITY. THE ORDER OF CIT(A), IS THUS, UPHELD ON THIS ISSUE. 6. THE CIT(A) CONSIDERING THE SUBMISSIONS OF ASSESS EE HELD THAT THE A.O. HAS NOT STATED THE BASIS FOR ARRIVING AT THE FIGURE OF 25% SO AS TO HOLD THAT THE EXPENDITURE WAS NOT TO BE ALLOWED. CONSIDERING THE JUDGEMENTS RENDERED IN THE CASE OF CIT VS. ADIDAS I NDIA MARKETING P.LTD. 195 ITR TAXMAN 256 DEL; CIT VS. INDIAN ALUMINIUM I NDUSTRIES LTD. 80 TAXMAN 243 KERALA; CIT VS. SALORA INTERNATIONAL LTD . 308 ITR 199 DEL; CIT VS. CASIO INDIA LTD. 335 ITR 196 DELHI HIGH COU RT., THE ACTION OF THE A.O. WAS SET ASIDE AND THE GROUND OF THE ASSESSEE W AS ALLOWED. 7. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFOR E THE TRIBUNAL ON THE GROUND THAT THE EXPENDITURE BEING FOR BRAND BUI LDING HAD TO BE DISALLOWED TO THE EXTENT OF 25%. THE ASSESSEE IN I TS C.O. CONTENDS THAT ITA 4898/ DEL/11 & PAGE 7 OF 11 C.O. 396/ DEL/2011 A.Y. 2008-09 M/S SPICE DIS TRIBUTION LTD. THE ALTERNATE PLEA OF THE ASSESSEE WAS NOT DECIDED BY THE CIT(A) NAMELY THAT IF IT IS TO BE DISALLOWED THEN DEPRECIATION HA S TO BE GRANTED. THE LD.D.R. PLACES HEAVY RELIANCE UPON THE ASSESSMENT O RDER. LD.A.R. APART FROM RELYING UPON THE IMPUGNED ORDER WHICH HAD PLAC ED RELIANCE UPON THE CASE OF SPICE COMMUNICATIONS LTD. IN THE GROUP CONCERN OF THE ASSESSEE, PLACED FURTHER RELIANCE UPON VARIOUS DECI SION OF DIFFERENT COURTS AND BENCHES OF THE TRIBUNAL NAMELY DELHI BENCH - ITO VS. SPICE COMMUNICATIONS LTD. 201 0 35 SOT 78; MUMBAI BENCH STAR INDIA P.LTD. VS ACIT, 103 ITD 7 3, 78; DELHI BENCH ALLIED DOMEEQ SPIRITS & WINE INDIA P. LTD. VS ITO IN ITA 540 & 511/DEL/2009; DELHI BENCH DCIT VS BACARDI MARTINI INDIA LTD. IN ITA NO. 2933/DEL/2010; DELHI BENCH SAMSUNG INDIA ELECTRONICS LTD. VS JCI T IN ITA 319/DEL/2010 DELHI HIGH COURT IN CIT VS. SALORA INTERNATIONAL LT D. 308 ITR 199 DELHI HIGH COURT IN CIT VS CASIO INDIA LTD. 335 ITR 196 DELHI HIGH COURT IN CIT VS. CITI FINANCIAL CONSUMER FIN.LTD. 335 ITR 29 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON A CAREFUL CONSIDERATION OF THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AND LEGAL DECISION ON THE ISSUE INVOLVED, WE ARE OF THE VIEW THAT THERE IS NO INFIRMITY IN THE O RDER OF THE CIT(A). A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT NO BAS IS FOR CONCLUDING THAT 25% OF THE EXPENDITURE ON ACCOUNT OF ADVERTISEMENT AND MARKETING EXPENSES SHOULD BE DISALLOWED HAS BEEN SET OUT WHIC H IS A FACT WHICH PREVAILED WITH THE CIT(A) TO UPSET THE FINDING IN T HE ASSESSMENT ORDER AS HAVING BASED ON NO FACTS THE ADMITTED POSITION IS T HAT THIS WAS THE FIRST ITA 4898/ DEL/11 & PAGE 8 OF 11 C.O. 396/ DEL/2011 A.Y. 2008-09 M/S SPICE DIS TRIBUTION LTD. YEAR OF OPERATION OF THE ASSESSEE WHEREIN W.E.F. 9. 4.2009 THE ASSESSEE SUBSTITUTED THE WORD HOT SPOT FOR THE WORD SPICE . AS SUCH THE ASSESSEE UNDERTOOK SCHEMES OF SALES PROMOTION AND ADVERTISEM ENT IN PRINTING AND ELECTRONIC MEDIA THE ASSESSEE WAS IN THE BUSINESS O F SELLING MOBILE HAND SETS AND OTHER ELECTRONIC ITEMS AND ACCESSORIES ADM ITTEDLY OPERATES IN A HIGHLY COMPETITIVE MARKET WHEREIN THE SPECIFIC BRA ND WAS NECESSARILY TO BE ADVERTISED AND MADE KNOWN TO THE PUBLIC AT LARGE THE FACTUM OF INCURRING THE EXPENDITURE OF SALES PROMOTION SCHEM ES ADVERTISEMENT OF ITS PRODUCTS IN NEWSPAPERS, ELECTRONIC MEDIA, NEON SIGNS AND BANNERS ETC. HAVE NOT BEEN DATED. IN THESE FACTS IT IS AN ADMITTED POSITION THAT THE EXPENSES ARE INCURRED WHOLLY AND EXCLUSIVELY FO R THE BUSINESS OF THE ASSESSEE AND IS NOT A CAPITAL EXPENDITURE NOR A PER SONAL EXPENSE. NO REASONING OR BASIS HAS BEEN GIVEN BY THE A.O. TO DI SALLOW 25% OF THE EXPENSES CLAIMED AS IF THE EXPENDITURE IS CAPITAL I N NATURE THEN DEPRECIATION SHOULD HAVE BEEN ALLOWED AND IF THE EX PENSE IS BEING TREATED AS DEFERRED REVENUE EXPENDITURE THEN IT IS CONTRAR Y TO THE SETTLED LEGAL POSITION. IN THE FACTS AS THEY STAND THE EXPENSES INCURRED FOR BRAND BUILDING EXERCISE OF SPICE BRAND HAS RIGHTLY BEEN A LLOWED AS REVENUE EXPENDITURE BY THE CIT(A) RELYING UPON THE ORDER OF THE TRIBUNAL IN A GROUP COMPANIES CASE NAMELY ITO VS. SPICE COMMUNICA TIONS LTD. 210 ITR 35, SOT 75, WE ARE FULLY IN CONCURRENCE WITH TH E FINDING OF THE COORDINATE BENCH AS ADVERTISEMENT ETC. CANNOT BE SA ID TO BE A CAPITAL ITA 4898/ DEL/11 & PAGE 9 OF 11 C.O. 396/ DEL/2011 A.Y. 2008-09 M/S SPICE DIS TRIBUTION LTD. ASSET. SIMILARLY PUTTING HOARDINGS, NEON SIGNS ETC . CANNOT BE SAID TO HAVE LED TO THE CREATION OF ANY CAPITAL ASSET. WE F IND SUPPORT FROM THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT VS. SALORA INTERNATIONAL LTD. 308 ITR 199 DELHI WHEREIN CONSID ERING THE ADVERTISING EXPENDITURE OF APPROXIMATELY RS.3.08 CRORES THE CON CLUSION OF THE TRIBUNAL NAMELY THAT THERE WAS DIRECT NEXUS BETWEE N ADVERTISEMENT EXPENDITURE AND THE BUSINESS OF THE ASSESSEE AND TH AT THE ASSESSEE HAD TO INCUR SUCH EXPENDITURE TO MEET THE COMPETITION I N THE INDIAN MARKET FOR SELLING ITS PRODUCTS IN INDIA WAS UPHELD. IN T HE FACTS OF THE PRESENT CASE ALSO IT IS IMPERATIVE THAT UNLESS THE ASSESSE E MADE ITS PRODUCTS KNOWN TO THE MARKET ITS BUSINESS WOULD SUFFER. THE JUDGEMENT OF APEX COURT IN EMPIRE JUTE MILLS 124 ITR 1 (S.C.) WHICH H AS CONSIDERED THAT THERE COULD BE CASES WHERE THE EXPENDITURE EVEN IF IT WAS INCURRED FOR OBTAINING A BENEFIT OF AN ENDURING NATURE MAY NEVER THELESS BE ON THE REVENUE ACCOUNT IN WHICH CASE THE TEST OF ENDURING BENEFIT WOULD BREAK DOWN FULLY SUPPORTS THE VIEW TAKEN. SIMILARLY THE JURISDICTIONAL HIGH COURT IN CIT VS CASIO INDIA LTD. 335 ITR 196 REFERR ED TO A BUNCH OF APPEALS WITH THE LEAD CASE BEING ITA 1820/2010 ENTI TLED CIT VS. CITY FINANCE CONSUMERS FINANCE LTD. 335 ITR 29 DELHI HA D HELD THAT EXPENDITURE ON ADVERTISING AND SALES PROMOTION IS T O BE TREATED AS BUSINESS EXPENDITURE U/S 37 OF THE ACT. THE JURISD ICTIONAL HIGH COURT THEREIN CONSIDERING THE APPEAL OF THE REVENUE IN RE GARD TO THE CLAIM OF ITA 4898/ DEL/11 & PAGE 10 OF 11 C.O. 396/ DEL/2011 A.Y. 2008-09 M/S SPICE DIS TRIBUTION LTD. THE ASSESSEE BEFORE THE A.O. PERTAINING TO AN EXPEN DITURE OF RS.4.18 LAKHS FOR ADVERTISING AND SALES PROMOTION WHEREIN T HE A.O. HAD RELIED UPON THE JUDGEMENT OF APEX COURT IN MADRAS INDUSTRI AL INVESTMENT CORPORATION VS CIT 225 ITR 802 (SC) UPHELD THE ORD ER OF THE TRIBUNAL WHICH HAD CONFIRMED THE ORDER OF THE CIT(A) WHO HAD HELD THAT THERE IS NO CONCEPT FOR DEFERRED REVENUE EXPENDITURE IN THE INCOME TAX ACT, 1961. SIMILAR VIEW WAS TAKEN BY THE JURISDICTION AL HIGH COURT IN CIT VS PEPSI CO INDIA COOLDRINKS LTD. IN ITA 319/2010 R ENDERED ON 30.3.2011 A COPY OF WHICH IS PLACED AT PAGES 155 T O 172. ACCORDINGLY FOR THE REASONS GIVEN HEREINABOVE BEING SATISFIED W ITH THE REASONING AND FINDING ARRIVED AT IN THE IMPUGNED ORDER THE DEPART MENTAL GROUND IS DISMISSED. IN VIEW OF THE FACT THAT THE FINDING IN THE IMPUGNED ORDER IS CONFIRMED THE C.O. FILED BY THE ASSESSEE IS INFRUCT UOUS AND IS DISMISSED AS SUCH. 9. IN THE RESULT THE C.O. BY THE ASSESSEE AND THE A PPEAL BY THE DEPARTMENT ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH,2012. SD/- SD/- (K.D. RANJAN) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 RD MARCH, 2012 ITA 4898/ DEL/11 & PAGE 11 OF 11 C.O. 396/ DEL/2011 A.Y. 2008-09 M/S SPICE DIS TRIBUTION LTD. *MANGA COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR 6.GUARD FILE BY ORDER DY. REGISTRAR