ACIT, New Delhi V. M/s Galleria Property Management Services Pvt. Ltd., New Delhi

ITA 114/DEL/2011

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0100 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 16-03-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 10-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONA MOHNATY
• Assessee Lawyers: R K KAPOOR
• Keywords: Commercial expediency; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C NEW DELHI) BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.114/DEL/2011 ASSESSMENT YEAR : 2005-06 ACIT, M/S GALLARIA PROPERTY MANAGEMENT CIRCLE-12 (1), SERVICES PVT. LTD. DLF CENTRE, NEW DELHI. V. 9 TH FLOOR, SANSAD MARG, NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AABCG AABCG AABCG AABCG- -- -5095 5095 5095 5095- -- -F FF F APPELLANT BY : SMT. MONA MOHNATY, SR. DR. RESPONDENT BY : SHRI R.K. KAPOOR, C.A. ORDER PER A.K. GARODIA, AM: THIS IS REVENUE'S APPEAL FILED AGAINST THE ORDER OF LD CIT(A)-XV, NEW DELHI DATED 29.20.2010 FOR ASSESSMENT YEAR 2005-06. 2. GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF THE CIT(A) IS ERRONEOUS, PERVERSE, ILLEGAL AND AGAI NST THE PROVISIONS OF LAW WHICH IS LIABLE TO BE SET ASIDE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) HAS ERRED IN DELETING THE ADDITION OF `.10,9 6,647/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF T HE ADVERTISEMENT EXPENSES. PAGE 2 OF 5 ITA NO114./DEL/11 3. LD DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LD AR OF THE ASSESSEE SUPPORTED THE ORDER OF LD CIT(A). IT IS ALSO SUBMITTED THAT UNDER SIMILAR FACTS, ALTHOUGH IN THE C OURSE OF PROCEEDINGS U/S 263, IT WAS HELD BY THE TRIBUNAL IN TH E CASE OF REGANCY PARK PROPERTY MANAGEMENT SERVICES PVT. LTD. VS. CIT I N I.T.A. NO. 2812/DEL/2008 DATED 1.1.2010 THAT ADVERTISEMENT EXPE NDITURE IS ALLOWABLE AS REVENUE EXPENDITURE. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE MATERIAL AVAILABLE ON RECORD AND THE TRIBUNAL DECISI ON CITED BY LD AR OF THE ASSESSEE. WE FIND THAT IN THE PRESENT CASE, THE ISSUE R EGARDING ALLOWABILITY OF ADVERTISEMENT EXPENDITURE HAS BEEN DE CIDED BY THE LD CIT(A) BY MAKING FOLLOWING OBSERVATIONS ON PAGE NO.6 OF HIS IMPUGNED ORDER. THESE PARAS OF THE LD CIT(A) ARE BEING REPROD UCED BELOW:- IN THE CASE OF CIT V. BERGER PAINTS INDIA LTD. 264 I TR 503, IT HAS BEEN HELD THAT ADVERTISEMENT EXPENSE ARE NORMALLY TO BE TREATED AS REVENUE EXPENDITURE. SINCE THE MEMORY OUT OF PURCHASING MARKET IS SHORT AND ADVERTISEMENT IS NEEDED F ROM YEAR TO YEAR. MOREOVER, IN THE CASE OF CIT V. MODI O LIVETI LTD. 84 TTJ 1038 (DEL.). IT HAS BEEN HELD THAT EVEN THOUGH A DVERTISEMENT EXPENSES ON LAUNCHING A NEW PRODUCT WERE TREATED AS DE FERRED REVENUE EXPENDITURE THEY WERE STILL A REVENUE EXPEND ITURE. IN THE CASE OF THE APPELLANT IN VIEW OF THE DECISIONS DISCUSSED ABOVE IT CAN BE SAID THAT THE BUSINESS ACTIVITY COMMEN CED ON THE DATE ON WHICH THE APPELLANT MADE PAYMENT FOR PU RCHASE OF LAND. THE REVENUE EXPENDITURE CLAIMED BY THE APPELL ANT HAS TO BE ALLOWED EVEN IF THERE WERE NO SALES DURING THE YEA R. PAGE 3 OF 5 ITA NO114./DEL/11 MOREOVER, THE EXPENSES WERE INCURRED AS COMMERCIAL EXPEDIENCY DEMANDED THAT PUBLICITY HAS TO BE MADE TO THE GET BOOKING FOR THE PROJECT. SINCE EXPENDITURE HAS BEEN INCURRED AFTER THE COMMENCEMENT OF BUSINESS I.S. AFTER PURCHASE O F LAND, IN VIEW OF THE DISCUSSIONS ABOVE AND THE JUDICIAL PRECE DENT ON THE SUBJECT. I AM IN AGREEMENT WITH THE VIEW OF THE APPELLANT THAT THE EXPENDITURE OF `.1096647/- IS AN ALLOWABLE EXPENDITURE. THIS GROUND OF APPEAL IS ALLOWED. 5. IN THE ABOVE PARAS OF THE ORDER OF LD CIT(A), WE FIND THAT LD CIT(A) HAS FOLLOWED THE TRIBUNAL DECISION RENDERED IN THE CASE OF CIT . MODI OLIVETI LTD. (SUPRA) AND ALSO THE JUDGMENT OF H ON'BLE CALCUTTA HIGH COURT RENDERED IN THE CASE OF CIT V. BERGER PAI NTS INDIA LTD. (SUPRA) WHEREIN IT WAS HELD THAT ADVERTISEMENT EXPENSES ARE NORMALLY TO BE TREATED AS REVENUE EXPENDITURE SINCE THE MEMOR Y OF PURCHASING MARKET IS SHORT AND ADVERTISEMENT IS NEEDED FROM YEAR T O YEAR. IN THE CASE OF MODI OLIVETI (SUPRA), IT HAS BEEN HELD THAT BY THE TRIBUNAL THAT EVEN THOUGH ADVERTISEMENT EXPENSES FOR LAUNCHING A NEW PRODUCT WERE TREATED AS DEFERRED REVENUE EXPENDITURE, THEY W ERE STILL REVENUE EXPENDITURE. LD CIT(A) HAS FOLLOWED THESE DECISIONS TO ALLOW THE CLAIM OF THE ASSESSEE. A SPECIFIC FINDING HAS BEEN GIVEN BY HI M THAT THESE EXPENDITURE HAD BEEN INCURRED AFTER THE COMMENCEMEN T OF THE BUSINESS. CONSIDERING ALL THESE FACTS AND LEGAL POSITION, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF LD CIT(A). W E, THEREFORE, CONFIRM THE SAME. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISED. PAGE 4 OF 5 ITA NO114./DEL/11 7. ORDER PRONOUNCED IN THE OPEN COURT ON THE DAY OF 18 TH MARCH, 2011. SD/- SD/- (I.P. BANSAL) (A.K. GAR ODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 18.3.2011. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). PAGE 5 OF 5 ITA NO114./DEL/11