Vasan Publications Pvt Ltd., CHENNAI V. ACIT, CHENNAI

ITA 1194/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9019 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 22-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 19-05-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: T BANUSEKAR
• Keywords: Capital asset; Depreciation; Revised return; Revenue expenditure; Capital expenditure
• Section: 143(3)

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 1 1 9 4 /MDS/2015 / ASSESSMENT YEAR : 20 0 9 - 1 0 M/S. VASAN PUBLICATIONS PVT. LTD., NO. 757, ANNA SALAI, CHENNAI 600 0 02 . [PAN: A A A C V 2 180M ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , COMPANY CIRCLE II I ( 4 ) , C HENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI T. BANUSEKAR , C.A. / RESPONDENT BY : SHRI A.V. SREEKANTH , J CIT / DATE OF HEARING : 22 . 0 3 .201 6 / DATE OF P RONOUNCEMENT : 21 . 0 6 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 11 , C HENNAI , DATED 30 . 0 1 .20 1 5 RELEVANT TO THE ASSESSMENT YEAR 20 0 9 - 1 0 . 2. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS NOT PRESSING THE GROUNDS NO. 3 AND 10 AS RAISED IN THE GROUNDS OF APPEAL OF THE ASSESSEE. SINCE THE LD. COUNSEL FOR THE ASSESSEE I.T.A. NO . 11 9 4 /M/ 15 2 HAVING ENDORSED IN THE GROUNDS OF APPEAL AS NOT PRESSED GROUNDS 3 AND 10, BOTH THESE GROUNDS RAISED BY THE ASSESSEE ARE DISMISSED AS NOT PRESSED. 3. THE FIRST EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRE D IN DISALLOWING BRAND DEVELOPMENT EXPENDITURE OF .3,28,70,415/ - 3.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PRINTING AND PUBLISHING OF TAMIL MAGAZINES AND BOOKS AND FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2 009 - 10 ADMITTING A LOSS OF .3,89,68,259/ - ON 30.09.2009. THE RETURN FILED BY THE ASSESSEE WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT]. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) O F THE ACT WAS ISSUED ON 18.08.2010. IN RESPONSE THERETO, THE ASSESSEE FILED ALL THE DETAILS BEFORE THE ASSESSING OFFICER. AFTER VERIFICATION OF DETAILS FILED BY THE ASSESSEE, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT BY DETERMINING THE T OTAL INCOME OF THE ASSESSEE AT .25,90,987/ - AFTER MAKING VARIOUS ADDITIONS. AGAINST THE ASSESSMENT ORDER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND THE LD. CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 3.2 ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BE FORE THE TRIBUNAL AND RAISED VARIOUS GROUNDS. WITH REGARD TO THE DISALLOWANCE OF BRAND I.T.A. NO . 11 9 4 /M/ 15 3 DEVELOPMENT EXPENDITURE, THE ASSESSING OFFICER HAS OBSERVED THAT F ROM THE DEPRECIATION SCHEDULE FOR FIXED ASSETS FILED BY THE ASSESSEE THAT THE AS SESSEE MADE ADDITIONS F OR THE YEAR BY THE NAME BRAND REPOSITIONING COST OF .4,38,27,220/ - AND CLAIMED DEPRECIATION FOR THE SAME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AR OF THE ASSESSEE WAS ASKED TO EXPLAIN ABOUT THE BRAND DEVELOPMENT EXPENSES. BUT ON PERUSAL OF THE ASSESSEE'S LETTER DATED 02.07.2008, THE ASSESSEE'S AR EXPLAINED THAT WITH EFFECT FROM THE MAGAZINE ISSUE DATED 23.07.2008, THE ASSESSEE HAS CHANGED THE SIZE OF THE ANANDA VIKATAN MAGAZINE FROM 1/8 TH TO DEMMY SIZE. THEREAFTER, THE ASSESSEE HAS LAUNCHED THE NEW VERSION OF ITS PUBLICATION THROUGH TV ADVERTI SEMENTS , RADIO ADVT ., ADVT . THR OUGH PRINT MEDIA , FREE COPIES , LIBERAL SALES RETURNS , PRIZE SCHEMES TO READERS, AGENTS SCHEMES , FREE SUPPLEMENTS. 3.3 HOWEVER, THE ASSESSEE VIDE ITS LETTER DATED 15.11.2011, BY GIVING JUSTIFICATION FOR TREATING THE BRAND DEV ELOPMENT EXPENSES OF .438.27 LAKHS CLAIMED EXEMPTION AS REVENUE EXPENDITURE. AFTER, CONSIDERING THE ENTIRE FACTS OF THE CASE, THE ASSESSING OFFICER HAS OBSERVED AS UNDER: 1. VIDE LETTER DATED 02.07.2008, THE ASSESSEE STATED THAT IT WAS AS CAPITAL NATURE. 2. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE'S CONTENTION IS THAT THE ABOVE EXPENDITURE WAS REVENUE IN NATURE. 3. THE BOARD OF DIRECTORS OF THE COMPANY IN THE BOARD MEETING HELD ON 3 0.05.2008 DECIDED TO CHANGE THE SIZE OF ANANDA VIKA TAN MAGAZINE I.T.A. NO . 11 9 4 /M/ 15 4 FROM 1/8 TH TO 1 / 4 TH D EMMY SIZE WITH EFFECT FROM THE MAGAZINE ISSUE DATED 23.07.2008, WHICH IS EVIDENT FROM THE ASSESSEE'S LETTER DATED 02.07.2008. A) CHANGING IN SIZE OF THE MAGAZINE IS LIKELY TO LAUNCH A NEW PRODUCT. B) TO IMBIBE CONFIDEN CE IN THE MINDS OF THE ANANDA VIKADAN READERS. C) TO CONSIDER THE FUTURE OF THE COMPANY AND THE BENEFIT OF THE INVESTMENT FOR LONG TERM IMPACT FOR THE PERFORMANCE OF THE COMPANY PROPOSED TO INVEST UPTO RS.450 LAKHS. D) IT IS DECIDED BY THE BOARD THAT TH E ACTUAL EXPENDITURE INCURRED DURING THE PERIOD OF 6 MONTHS FROM JULY, 08 TO DECEMBER, 08 HAS BEEN CAPITALIZED AND WILL BE ABSORBED OVER A PERIOD OF 3 YEARS FROM THE FINANCIAL YEAR 2008 - 09. E) AS PER DEPRECIATION SCHEDULE, THE ASSESSEE HAS DEBITED DEPREC IATION AND ALSO CLAIMED DEPRECIATION FOR THE SAME IN THE PROFIT AND LOSS ACCOUNT. F) THE EXPENDITURE INCURRED OF .438.27 LAKHS FOR ACQUIRING THE INTANGIBLE ASSET OF NEW BRAND IMAGE. G) AS PER DEPRECIATION SCHEDULE, PART - B - INTANGIBLE ASSETS I.E., KNO W - HOW, PATENTS, COPYRIGHTS, TRAD EMARKS, LICENCES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE - 25% DEPRECIATION IS ALLOWABLE. HENCE, 25%DEPRECIATION WILL BE ALLOWED ON THE ENTIRE AMOUNT OF .4,38,27,220/ - WH ICH IS EQUIVALENT TO .1,09,56,805/ - . HENCE, BALANCE AMOUNT OF .3,28,70,415/ - IS ADDED BACK. 3.4 THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED AS UNDER: THE OR DER OF THE AO, WRITTEN SUBMISSIONS OF THE APPELLANT'S AR ARE CAREFULLY CONSIDERED. IT IS SEEN FROM THE ORDER OF THE AO AND ALSO ADMITTED BY THE APPELLANT THAT THE SAID EXPENDITURE WAS CAPITAL IN NATURE (LETTER DTD: I.T.A. NO . 11 9 4 /M/ 15 5 02.07.2008 BEFORE THE AO) FURTHER THE WRI TTEN SUBMISSIONS ALSO STATE THAT THE ENTIRE BRAND BUILDING EXERCISE WAS DONE FOR FUTURE OF THE COMPANY AND ALSO FOR A LONG TERM IMPACT. THIS IS FURTHER CORROBORATED BY THE FACT THAT THE SIZE OF THE MAGAZINE WAS REDUCED FROM A - 8 TO A - 4, IS NOTHING BUT LAUNC HING OF A NEW PRODUCT. FURTHER THE NEW SIZE I . E . A - 4 IS GOING TO BE THE NEW SIZE THAT THE MAGAZINE IS GOING TO BE MARKETED. HENCE THE CLAIM OF THE APPELLANT, THAT THE EXPENDITURE INCURRED FOR ADVERTISEMENT AND PUBLICITY AND THAT TOO, A SIZEABLE AMOUNT IS N OT GOING TO PROVIDE ENDURING BENEFIT IS NOT CORRECT. IT IS IRONICAL TO NOTE, NORMALLY THE APPELLANT'S RELY UPON THE AUDIT REPORT, THE NOTES ON ACCOUNTS ETC., TO BUTTRESS THEIR CLAIMS AS REVENUE IN NATURE OR VICE VERSA, WHEREAS IN THE PRESENT CASE THE AUDIT OR REPORT STATES THE SAID EXPENDITURE IS CAPITAL IN NATURE, BUT CLAIMED AS REVENUE BEFORE THE AO AGAINST THEIR OWN AUDIT REPORT. IN VIEW OF THE FACTS NARRATED ABOVE, THE ORDER OF THE AO IS UPHELD AND THE GROUNDS DISMISSED. 3.5 AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS STRONGLY CONTENDED THAT THE BRAND DEVELOPMENT EXPENDITURE HAS NOT BROUGHT INTO EXISTENCE ANY NEW BRAND TO CONSTITUTE CAPITAL EXPENDITURE. 3.6 PER CONTRA, THE LD. DR HAS SUBMITTED THAT TH E ASSESSEE HAS LAUNCHED A NEW PRODUCT BY MEANS OF ITS NEW SIZE THROUGH VARIOUS MEDIA FOR ITS PUBLICITY. MOREOVER, THE ASSESSEE ITSELF CLAIMED IN THE AUDIT REPORT AS CAPITAL EXPENDITURE AND THE ENTIRE BRAND BUILDING EXERCISE WAS DONE FOR THE FUTURE OF THE C OMPANY AND ALSO TO HAVE A LONG TERM IMPACT, WHICH IS TO ENJOY ENDURING BENEFIT IN THE FUTURE. THEREFORE, THE AUDITOR OF THE ASSESSEE COMPANY HAS RIGHTLY CONSIDERED IT AS CAPITAL EXPENDITURE. 3. 7 WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD A ND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS CHANGE D THE SIZE OF ANANDA VIKATAN MAGAZINE FROM 1/8 TH SIZE TO 1 / 4 TH D EMMY SIZE WITH EFFECT I.T.A. NO . 11 9 4 /M/ 15 6 FROM THE MAGAZINE ISSUE DATE 23.07.2008, WHICH IS EVIDENT FROM THE ASSESSEE'S LETTER DATED 02.07.2 008. THEREFORE, THERE IS NO EXISTENCE OF 1/8 TH SIZE OF ANANDA VIKATAN MAGAZINE AFTER 23.07.2008 AND THERE IS NO DISPUTE OVER IT. SINCE THE ASSESSEE HAS TO START PUBLISHING ITS MAGAZINE WITH 1/4 TH DEMMY SIZE W.E.F. THE MAGAZINE ISSUE DATE 23.07.2008 FOR WHI CH THE ASSESSEE HAS LAUNCHED ITS MAGAZINE WITH NEW VERSION OF ITS PUBLICATION THROUGH TV ADVERTISEMENTS , RADIO ADVERTISEMENT, ADV ERTISEMENT THR OUGH PRINT MEDIA , FREE COPIES , LIBERAL SALES RETURNS , PRIZE SCHEMES TO READERS, AGENTS SCHEMES , FREE SUPPLEMENTS AND INCURRED A SIZEABLE AMOUNT TO THE EXTENT OF .438.27 LAKHS. NO BUSINESSMEN CAN SPENT SUCH HUGE AMOUNT WITHOUT AIMING FOR ENDURING BENEFIT. SO, EXPENDING SUCH HUGE AMOUNT FOR ADVERTISEMENT AND PUBLICITY WITHOUT ENDURING BENEFIT, IS NOT CORRECT. IT IS AN ADMITTED FACT THAT THE ANANDA VIKATAN IS QUITE LONG MAGAZINE, BUT WITH EFFECT FROM 23.07.2008, THE ASSESSEE HAS STARTED PUBLISHING NEW ANANDA VIKATAN MAGAZINE WITH THE SIZE OF 1/4 TH DEMMY SIZE, WHICH IS A NEW PRODUCT AND THE HEAVY EXPENDITURE INCURRED IS FOR THE EXISTENCE OF THE NEW PRODUCT IN THE MARK ET FOR EVER, I.E., TO ENJOY ENDURING BENEFIT, THE ASSESSEE HAS INCURRED SUCH HUGE AMOUNT. NATURALLY, BY INCURRING HEAVY EXPENDITURE AND LAUNCHED A NEW PRODUCT WITH ENDURING BENEFIT CANNOT BE TERMED THE EXPENDITURE AS REVENUE EXPENDITURE EITHER AUDITORS POI NT OF VIEW OR AS PER INCOME TAX ACT. IN THIS CASE, THE ASSESSEE HAS NOT FILED ANY REVISED RETURN CLAIMING THE EXPENDITURE INCURRED AS REVENUE EXPENDITURE. IN THE RETURN OF INCOME FILED BY I.T.A. NO . 11 9 4 /M/ 15 7 THE ASSESSEE WITH AUDITOR S REPORT, P & L ACCOUNT, THE ASSESSEE ITSE LF HAS CLAIMED THE EXPENDITURE AS CAPITAL EXPENDITURE. THEREFORE, THE ASSESSING OFFICER HAS HELD THAT THE EXPENDITURE WAS CAPITAL IN NATURE AND THE ASSESSEE ITSELF MENTIONED IN ITS SUBMISSIONS THAT THE ENTIRE BRAND BUILDING EXERCISE WAS DONE FOR THE FUTURE OF THE COMPANY AND ALSO FOR A LONG TERM IMPACT . MOREOVER, IT IS IRONICAL TO NOTE THAT NORMALLY THE ASSESSEE REPLY UPON THE AUDIT REPORT, THE NOTES ON ACCOUNTS, ETC. TO BUTTRESS THEIR CLAIMS AS REVENUE IN NATURE OR VICE VERSA, WHEREAS, IN THE PRESENT CASE, THE AUDITOR REPORT STATES THE SAID EXPENDITURE IS CAPITAL IN NATURE, BUT CLAIMED AS REVENUE BEFORE THE ASSESSING OFFICER AGAINST THEIR OWN AUDIT REPORT . AT THAT POINT, IT IS PERTINENT TO MENTION HEREIN THAT DUE TO SOME MISAPPREHENSION OR BY MISTAKE, IF TH E ASSESSEE FAILS TO MAKE ANY ENTRY IN THE BOOKS OF ACCOUNTS AND ALTHOUGH UNDER THE INCOME TAX ACT, A DEDUCTION MUST BE ALLOWED BY THE ITO, THE ASSESSEE CANNOT LOSS THE RIGHT OF CLAIM OF THE DEDUCTION. [KEDERNATH JUTE MANUFACTURING CO. LTD. V. CIT 82 ITR 3 63 (SC)]. HOWEVER, IN THE PRESENT CASE, IT IS NOT A MISTAKE COMMITTED BY THE ASSESSEE IN NOT ENTERING INTO BOOKS OF ACCOUNT, THE ASSESSEE MADE A CONSCIOUS DECISION THAT IT IS A CAPITAL EXPENDITURE AND RECORDED THE SAME IN THE BOOKS OF ACCOUNT AS WELL AS CE RTIFIED BY THE STATUTORY AUDITORS. 3.8 THE RELIANCE PLACED BY THE ASSESSEE IN THE CASE OF EMPIRE JUTE CO. LTD. V. CIT 124 ITR 1 (SC), THE HON BLE SUPREME COURT HAS HELD THAT THE I.T.A. NO . 11 9 4 /M/ 15 8 EXPENDITURE INCURRED BY THE ASSESSEE, JUTE MANUFACTURING COMPANY FOR THE PUR CHASE OF WORKING HOURS (LOOM HOURS) WITH A VIEW TO EARNING MORE INCOME IS REVENUE EXPENDITURE. HOWEVER, IN THE PRESENT CASE, THE ENTIRE BRAND BUILDING EXERCISE WAS DONE FOR THE FUTURE OF THE COMPANY AND ALSO FOR A LONG TERM IMPACT, WHICH IS OF ENJOYING END URING BENEFIT. THEREFORE, THE CASE LAW RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. FURTHER, IN THE CASE OF DCIT V. CORE HEALTHCARE LTD. 308 ITR 263, THE RATIO LAID DOWN BY THE HON BLE GUJARAT HIGH COUR T IS RELATING TO THE INSTALLATION OF ADDITIONAL MACHINERY FOR WHICH EXPENDITURE INCURRED FOR ADVERTISEMENT IS ALLOWABLE AS REVENUE EXPENDITURE SINCE THE ASSESSEE IS NOT ENJOYING ANY ENDURING BENEFIT . HOWEVER, IN THE CASE IN HAND, THE ASSESSEE HAS LAUNCHED A NEW MAGAZINE BY CHANGING ITS SHAPE AND SIZE AND TO MARKET ITS PUBLICATION THROUGH VARIOUS MODES AND MOREOVER THE EXISTING MAGAZINE IS NO MORE EXIST. THEREFORE, THE RELIANCE PLACED BY THE ASSESSEE HAS NO APPLICATION TO THE FACTS OF THE CASE . OTHER CASE LA W RELIED ON BY THE ASSESSEE HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. 3.9. FURTHER IN THE CASE OF CIT V. MODI OLIVETTI LTD. 218 TAXMAN 193 (ALL), THE ASSESSEE HAS FIRSTLY SHOWN ENTIRE AMOUNT OF ADVERTISEMENT EXPENSES IN BOOKS OF ACCOUNTS AS D EFERRED REVENUE EXPENDITURE AND THEREAFTER DEBITED CERTAIN SUM IN PROFIT AND LOSS ACCOUNT. IN THE PRESENT CASE, SINCE THE ASSESSEE HAS LAUNCHED A NEW PRODUCT, THE AUDITOR OF THE ASSESSEE COMPANY I.T.A. NO . 11 9 4 /M/ 15 9 TREATED THE NATURE OF EXPENDITURE AS CAPITAL EXPENDITURE AND CLAIMED DEPRECIATION . THERE WAS NO CHANGE IN THE RETURN FILED BY THE ASSESSEE OR ANY CHANGES MADE IN THE 44AB AUDIT REPORT, ETC. THEREFORE, THE CASE LAW RELIED ON BY THE ASSESSEE HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. 3.10 IN THE CASE OF CI T V. INDIAN VISIT.COM (P) LTD., (DEL), IT WAS HELD THAT SPENDING MONEY FOR UPGRADATION OF ITS EXISTING WEBSITE, THE ASSESSEE COULD NOT BE CONSIDERED TO HAVE ACQUIRED ANY CAPITAL ASSET EVEN IF SUCH A WEBSITE PROVIDED AN ENDURING BENEFIT TO THE ASSESSEE. IN THE PRESENT CASE, BY LAUNCHING A NEW PRODUCT, IT IS CREATION OF NEW ASSET AND THE ENTIRE EXPENDITURE WAS INCURRED FOR THE FUTURE OF THE COMPANY AND ALSO FOR A LONG TERM IMPACT, WHICH IS OF ENJOYING ENDURING BENEFIT. THEREFORE, THE CASE LAW RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. 3. 11 UNDER THE ABOVE FACTS AND CIRCUMSTANCES , THE CLAIM OF ASSESSEE TO CLAIM THE EXPENDITURE INCURRED TOWARDS BRAND DEVELOPMENT EXPENSES OF 438.27 LAKHS CANNOT BE HELD AS REVENUE EXPENDITURE. THEREFORE, THE DEPRECIATION ALLOWED AT 25% WAS QUITE REASONABLE AND THE LD. CIT(A) VALIDLY CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. THUS, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. I.T.A. NO . 11 9 4 /M/ 15 10 4. THE NEXT GROUND RAISED IN THE APPEAL OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN DISALLOWING ADVERTISEMENT COMMISSION OF .5,72,160/ - AND PRINTING CHARGES OF .32,89,862/ - BEING PAYMENTS MADE TO SISTER CONCERNS. 4.1 THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS DEBITED A SUM OF .58,25,468/ - TOWARDS ADVERTISEMENT COMMISSION, OUT OF WHICH, AN AMOUNT OF .57,21,59 5/ - WAS PAID TO M/S. VIKATAN MEDIA SERVICES PRIVATE LIMITED AS PER THE DETAILS GIVEN AS UNDER: 1. VIKATAN MEDIA SERVICES . 57,21,593 @ 3.25% 2. MATEX NET . 15,281 @ BARTER 3. SYNAP TRADE . 67,289 @ BARTER AFTER VERIFICATION OF INVOICES FILED BY THE ASSESSEE, THE ASSESSING OFFICER HAS FOUND HUGE DIFFERENCE BETWEEN THE SISTER CONCERN AND ALSO OTHER COMPARABLE CONCERNS, TOWARDS COMMISSION PAID, KEEPING IN VIEW OF THE QUALITY AND QUANTITY MAINTAINED BY THE ASSESSEE. HENCE, THE ASSESSING OFFICER DISA LLOWED 10% ON THE ENTIRE SUM OF .57,21,595/ - WHICH IS EQUIVALENT TO .5,72,160/ - AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4.2 SIMILARLY WITH REGARD TO SCANNING AND PRINTING CHARGES, THE ASSESSEE HAS DEBITED TO MANUFACTURING ACCOUNT WITH SCHEDULE 1.4 FOR AN AMOUNT OF .4,03,24,65 2/ - . THE BREAK UP FOR THE TOTAL EXPENDITURE IS AS UNDER: VASAN PRINT PRODUCTS PT. LTD. . 3,28,98,628/ - RATHNA OFFSET PRINTS . 67,20,267/ - RASI PRINTS . 7,05,758/ - THE ASSESSING OFFICER VERIFIED THE BILL COPIES AND THE DETAILS ARE AS UNDER: I.T.A. NO . 11 9 4 /M/ 15 11 PARTICU LARS VASAN PRINT PRODUCTS RATHNA OFFSET RASI PRINTS PRINTING 50 PAISE/COPY 17 PAISE/COPY 44 PAISE/COPY PRINTING PLATE CHARGES .900 - .600 IN VIEW OF THE ABOVE VARIATIONS IN RATES, THE ASSESSING OFFICER HAS CONCLUDED THAT THE ASSESSEE HAS PAID EXCESS IVE RATES TO ITS SISTER CONCERN, M/S. VASAN PRINT PRODUCTS AND THEREFORE DISALLOWED 10% ON THE AMOUNT PAID TO VASAN PRINT PRODUCTS UNDER SECTION 40A(2)(B) OF THE ACT. 4.3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERIN G THE WRITTEN SUBMISSIONS OF THE ASSESSEE, DETAILS OF PARTIES AND THE PAYMENTS AS EXTRACTED FROM THE 44AB REPORT AND ALSO THE DETAILS OF THE DIFFERENCES BETWEEN THE PAYMENTS MADE TO SISTER CONCERNS AND OTHER PARTIES, THE LD. CIT(A) HAS OBSERVED THAT THE PAYMENTS MADE TO SISTER CONCERNS ARE ON A HIGHER SIDE AND HELD THAT IT IS NOTHING BUT SHIFTING OF PROFITS. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. CIT(A) CALLED FOR TAX DETAILS OF THE RECIPIENTS OF THE PAYMENTS FROM THE ASSESSEE. AFTER VERIFICATION OF TAX DETAILS OF THE RECIPIENTS, THE LD. CIT(A) HAS OBSERVED THAT THE SAID ENTITIES HAVE CAR RIED FORWARD LOSSES IN THE EARLIER YEARS WHICH WOULD OFFSET ANY INCOME THAT WOULD BE LIABLE FOR TAX AS PER PROVISIONS OF THE ACT AND THEREBY THE PAYMENT DOES NOT SUFFER TAX AT EITHER END. CONSIDERING THE ABOVE FACTS, THE LD. CIT(A) HAS HELD THAT THE DISALL OWANCE MADE BY THE ASSESSING OFFICER IS QUITE REASONABLE AND UPHELD ON BOTH PAYMENTS ON ADVERTISEMENT COMMISSION AND PAYMENTS ON SCANNING AND PRINTING CHARGES. I.T.A. NO . 11 9 4 /M/ 15 12 THUS, UNDER THESE CIRCUMSTANCES, WE FIND THAT DISALLOWANCE OF 10% MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) NEEDS NO INTERFERENCE. A CCORDINGLY, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 5 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 21 ST JUNE , 201 6 AT CHENNAI. SD/ - SD/ - ( CHANDR A POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 21 . 0 6 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.