DCIT Circle 2 (1), V. Bharti Teletech Ltd,

ITA 152/DEL/2007

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6609 (ITAT-DELHI)
• Duration Of Justice: 9 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-01-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 09-01-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Keywords: Revenue expenditure; Capital expenditure
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH A NEW DELHI BEFORE : SHRI H.S. SIDHU , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 152/DEL./2007 ASSTT. YEAR : 2003 - 04 D.C.I.T.,CIRCLE 2(1), VS. M/S. BHARTI TELETECH LTD., NEW DELHI. D - 195, OKHLA INDL. AREA, PHASE - I, NEW DELHI (NOW H - 5/12, QUTAB AMBIENCE, MEHRAULI, NEW DELHI. [PAN: AABCB 3989 M] (APPELLANT) (RESPONDENT) APPELLANT BY : SH. K.K. JAISWAL, D.R. RESPONDENT BY : SH. ANIL BHALLA, C.A. DATE OF HEARING : 14.01.2016 DATE OF PRONOUNCEMENT : 24 .02.2016 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) - V, NEW DELHI DATED 18.10.2006 ON THE FOLLOWING GROUND: 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE ASSESSING OFFICER TO ALLOW BRAND PROMOTION EXPENSES OF RS.56,78,515/ - WHEN THE SAME HAD RIGHTLY BEEN CONSIDERED BY THE ASSESSING OFFICER AS EXPENDITURE, WHICH GRANTED BENEFITS OF ENDURING NATURE AND WHICH CALLED FOR ALLOWANCE OVER A PERIOD OF FIVE YEARS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 24.11.2003 FOR THE ASSESSMENT YEAR 2003 - 04 DECLARING INC OME OF ITA NO. 152/DEL./2007 2 RS.1,63,77,399/ - . THE RETURN WAS PROCESSED ON 03.02.2004 U/S. 143(1). SUBSEQUENTLY, THE RETURN WAS REVISED ON 17.12.2004 DECLARING INCOME OF RS.1,38,04,037/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE WAS ISSUED AND SERVED UPON THE ASSESSEE. DUR ING THE SCRUTINY ASSESSMENT, THE AO NOTICED THAT THE ASSESSEE HAD CLAIMED A SUM OF RS.70,98,143/ - AS BRAND BUILDING EXPENSES AND TREATED IT AS REVENUE EXPENDITURE. THE SAME WAS DEFERRED IN THE BOOKS OF ACCOUNT, BUT CLAIMED AS REVENUE EXPENDITURE FOR THE PU RPOSE OF INCOME - TAX. THE LD. AO FOUND THAT THIS EXPENDITURE WAS INCURRED FOR PROMOTION OF THE BRAND BEETEL BY THE AS SES SEE AND THE SAME IS DEFERRED OVER A PERIOD OF FIVE YEARS AS PER ACCOUNTING POLICY FOLLOWED BY THE ASSESSEE. IN VIEW OF THIS, THE AO ALL OWED ONLY 1/5 TH OF ABOVE EXPENSES AND DISALLOWED 4/5 TH BECAUSE THE ASSESSEE WILL GET BENEFIT OF THESE EXPENSES OVER THE YEARS. 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE FOLLOWING THE PRECEDENT THAT THERE WAS A SIMILAR ORDER MADE BY CIT(A) FOR THE ASSESSMENT YEAR 2001 - 02. THE REVENUE AGGRIEVED BY THE ORDER OF LD. CIT(A) IS IN APPEAL BEFORE THE TRIBUNAL. 4. THE LEARNED DR RELIED UPON THE ORDER OF TH E ASSESSING OFFICER. HE VEHEMENTLY OPPOSED THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE AO HAS MADE REASONED ORDER AND DOES NOT REQUIRE ANY INTERFERENCE. HE FURTHER SUBMITTED THAT THE ASSESSEE HIMSELF HAS TREATED IT IN HIS BOOKS AS DEFERRED ITA NO. 152/DEL./2007 3 REVENUE E XPENDITURE OVER THE YEARS, THEREFORE, THE TAX SHOULD ALSO BE CALCULATED ACCORDINGLY. 5. THE LD. AR RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED THAT IT IS A REVENUE EXPENDITURE. THE SAME WAS ALLOWED BY THE LD.CIT(A) IN ASSESSMENT YEAR 2001 - 02. HON BL E ITAT HAS DISMISSED THE APPEAL OF THE REVENUE IN THIS MATTER FOR THE ASSESSMENT YEAR 2001 - 02. THIS EXPENSE IS COVERED U/S. 37(1) OF THE ACT. IN THE INCOME - TAX ACT, THERE IS NO ANY PROVISION FOR DEFERRED REVENUE EXPENDITURE. THERE ARE ONLY TWO TYPES OF EXP ENDITURE CONSIDERED IN THE I T ACT EITHER CAPITAL OR REVENUE. IN THIS REGARD HE HAS PLACED RELIANCE ON THE ORDER OF ITAT IN ITA NO. 3135 & 3136/DEL./2005 FOR THE ASSESSMENT YEAR 2001 - 02 IN THE CASE OF ASSESSEE ITSELF . 6. WE HAVE HEARD THE ARGUMENTS OF BO TH THE SIDES AND CAREFULLY PERUSED THE MATERIAL PLACED ON RECORD BEFORE US. HON BLE ITAT, DELHI IN ITA NO. 3135 & 3136/DEL./2005 IN THE CASE OF ASSESSEE ITSELF FOR THE ASSESSMENT YEAR 2001 - 02 IN THE IDENTICAL FACTS AND CIRCUMSTANCES, HAS DECIDED THE SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE AND DISMISSED THE APPEAL OF THE REVENUE. THE RELEVANT FINDINGS OF THE ITAT GIVEN AT PARA 28 OF THE AFORESAID ORDER DATED 14.03.2008 READ AS UNDER : 28. WE HAVE CAREFULLY CONSIDERED RIVAL SUBMISSIONS . THE REASONS FOR DISALLOWANCE IS LIMITED TO THE EXTENT OF HOLDING THAT IN RESPECT OF THE EXPENDITURE, THE ASSESSEE RECEIVED BENEFIT OVER A PERIOD OF MANY YEARS AND ACCORDINGLY, 1/5 TH OF THE EXPENDITURE WAS ALLOWED. IN OUR OPINION, THIS CONTENTION IS NOT T ENABLE IN LAW. FIRSTLY, THE CONCEPT OF DEFERRED REVENUE ITA NO. 152/DEL./2007 4 EXPENDITURE IS NOT KNOWN UNDER THE INCOME - TAX ACT. THE EXPENDITURE CAN BE EITHER CAPITAL EXPENDITURE OR REVENUE EXPENDITURE. IF THE EXPENDITURE IS REVENUE IN NATURE AND CLAIMED U/S. 37, THE SAME IS AL LOWABLE IN WHOLE AND CANNOT BE SPREAD OVER NUMBER OF YEARS. ADMITTEDLY, THE ADVERTISEMENT AND PUBLICITY EXPENSES ARE REVENUE EXPENSES. ADMITTEDLY, THE ADVERTISEMENT AND PUBLICITY EXPENSES ARE REVENUE EXPENSES. NO NEW ASSET IS CREATED BY INCURRING THE EXPEN SES. IT IS ALSO NOT THE CASE OF THE AO THAT THE EXPENSES ARE CAPITAL EXPENDITURE. THE FINDING OF THE LEARNED CIT(A) THAT THE EXPENDITURE ARE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND WHICH IS NOT CHALLENGED IN APPEAL. WE, THEREFORE, CONFIRM TH E DELETION OF DISALLOWANCE. THE JUDGMENT RELIED BY THE LEARNED DR WILL NOT APPLY AS WE ARE NOT CALLED UPON TO DETERMINE THE NATURE OF EXPENSES, I.E. WHETHER CAPITAL OR REVENUE. THIS GROUND ACCORDINGLY FAILS. 7. RESPECTFULLY FOLLOWING THE ABOVE ORDER, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). ACCORDINGLY, THE APPEAL OF THE REVENUE IS LIABLE TO BE DISMISSED, BEING DEVOID OF ANY MERIT. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OP EN COURT ON 24.02.2016 . SD/ - SD/ - ( H.S. SIDHU ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 24.02.2016 *AKS/ - COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI