ACIT 6(1), MUMBAI V. DISH TV INDIA LTD, MUMBAI

ITA 1646/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4217 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 02-07-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 09-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: RAJESH CHAMARIA
• Keywords: Revenue expenditure; Capital expenditure
• Section: 143(3); 14A

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . , , ! '# ! '# ! '# ! '# , ,, , $ $ $ $ % % % % BEFORE SHRI R.S. SYAL, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER . / ITA NO. 1646/MUM./2012 ( $' ( )( / ASSESSMENT YEAR : 200708 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE6(1), AAYAKAR BHAVAN 101, M.K. ROAD, MUMBAI 400 020 .. *+ / APPELLANT ' V/S M/S. DISH TV INDIA LTD. 207, PARADIGM, B WING MIND SPACE, MALAD LINK ROAD MALAD, MUMBAI 400 064 .... ,-*+ / RESPONDENT * . / PERMANENT ACCOUNT NUMBER AAACA5478M / 0 1 / REVENUE BY : MRS. R.M. MADHAVI $' (2! 0 1 / ASSESSEE BY : MR. RAJESH CHAMARIA ' 0 ! / DATE OF HEARING 02.07.2013 ' 34) 0 ! / DATE OF ORDER 10.07.2013 ' ' ' ' / ORDER ! '# ! '# ! '# ! '# , ,, , $ $ $ $ 5 5 5 5 / PER AMIT SHUKLA, J.M. THE PRESENT APPEAL IS PREFERRED BY THE REVENUE, CHA LLENGING THE IMPUGNED ORDER 28 TH DECEMBER 2011, PASSED BY THE LEARNED COMMISSIONER (APPEALS), MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, FOR THE ASSESSMENT YEAR 200708, VID E WHICH, FOLLOWING GROUNDS HAVE BEEN RAISED. M/S. DISH TV INDIA LTD. 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN RESTRICTING THE DISALLOWANC E U/S 14A AT ` 5 LAKHS WITHOUT GIVING ANY BASIS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANCE O F ` 44,78,696 OUT OF THE TOTAL EXPENSES OF ` 55,98,370 ON TELEVISION COMMERCIALS WITHOUT APPREC IATING THE FACTS THAT THE SAID EXPENDITURE HAS ENDURING BE NEFITS TO THE ASSESSEE. 2. THE ASSESSING OFFICER HAS APPLIED RULE 8D FOR MAKIN G DISALLOWANCE UNDER SECTION 14A, AS PER THE WORKING GIVEN AT PAGE2 OF THE ASSESSMENT ORDER. THE LEARNED COMMISSIONER (APPEALS) HELD THAT IN VIEW OF THE JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN GODREJ & BOYCE MFG. CO . LTD. V/S DCIT, (2010), 328 ITR 081 (BOM.), RULE8D CANNOT BE APPLIED IN THE ASSESS MENT YEAR PRIOR TO THE ASSESSMENT YEAR 200809. HE HELD THAT THE DISALLOWA NCE OF ` 5,00,000 WOULD BE REASONABLE ALLOCATION OF EXPENSES FOR THE PURPOSE O F DISALLOWANCE UNDER SECTION 14A. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED T HAT IN THE EARLIER YEAR, THE TRIBUNAL HAS RESTORED THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER AND THE AMOUNT OF ` 5,00,000 DISALLOWED BY THE LEARNED COMMISSIONER (A PPEALS) CANNOT BE SAID TO BE REASONABLE AND IS WITHOUT ANY BASIS. 4. ON THE OTHER HAND, THE LEARNED COUNSEL STRONGLY REL IED UPON THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) AND SUBMITTED TH AT LOOKING TO THE FACTS OF THE CASE, A SUM OF ` 5,00,000 IS QUITE REASONABLE FOR ALLOCATING THE EX PENSES FOR THE PURPOSE OF DISALLOWANCE UNDER SECTION 14A. 5. AFTER CAREFULLY CONSIDERING THE RIVAL CONTENTIONS A ND GOING THROUGH THE RELEVANT FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED COMMISSIONER (APPEALS) AS WELL AS THE ORDER OF THE TRIBUNAL FOR THE EARLIE R YEARS, WE FIND THAT THIS ISSUE HAS COME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN AS SESSMENT YEAR 200506 WHEREIN THE MATTER HAS BEEN RESTORED BACK TO THE FILE OF TH E ASSESSING OFFICER ON THE GROUND THAT RULE8D CANNOT BE MADE APPLICABLE FOR THE ASSE SSMENT YEAR PRIOR TO THE ASSESSMENT YEAR 200809 AND SOME REASONABLE BASIS S HOULD BE MADE OUT FOR MAKING DISALLOWANCE AND FOR THIS PURPOSE, THE MATTE R WAS RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER. CONSEQUENTLY, FOLLOWING T HE SAME, WE RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER, WHO SHALL, ON SO ME REASONABLE BASIS, WORK OUT THE DISALLOWANCE, IF ANY, AFTER CALLING FOR THE RECORDS FROM THE ASSESSEE. THE GROUND NO.1 IS, THUS, TREATED AS ALLOWED FOR STATISTICAL P URPOSES. M/S. DISH TV INDIA LTD. 3 6. IN GROUND NO.2, THE REVENUE HAS CHALLENGED THE DELE TION OF DISALLOWANCE OF ` 44,78,696, OUT OF THE TOTAL EXPENDITURE OF ` 55,98,370, ON TELEVISION COMMERCIAL. 7. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS I NCURRED ADVERTISEMENT EXPENSES OF ` 55,98,370, ON PRODUCTION OF TV COMMERCIAL. HE HELD THAT SUCH COMMERCIALS HAVE ENDURING BENEFIT AND, HENCE, IS A CAPITAL EXPENDITURE. ACCORDINGLY, 20% OF SUCH EXPENDITURE WAS ALLOWED IN THIS YEAR AND THE BALANCE EXPENDITURE OF ` 44,78,676, WAS ALSO HELD TO BE ALLOWABLE FOR THE N EXT FOUR ASSESSMENT YEAR YEARS. 8. THE ASSESSEE, BEFORE THE LEARNED COMMISSIONER (APPE ALS), SUBMITTED THAT THE ASSESSEE HAS MADE ADFILMS TO ADVERTISE IN TV CHANN ELS FOR GENERATING MORE BUSINESS. THESE ADFILMS DO NOT HAVE LONG LIFE AND NO ENDURING BENEFIT IS DERIVED BY SUCH ADVERTISEMENT AS THERE IS NO LONG LIFE OF THE ASSESSEES PRODUCT. RELIANCE WAS ALSO PLACED ON VARIOUS CASE LAWS. THE LEARNED COMMI SSIONER (APPEALS) HELD THAT SUCH AN EXPENDITURE CANNOT BE HELD TO BE CAPITAL IN NATURE AS THERE IS NO ENDURING BENEFIT ACCRUED TO THE ASSESSEE. HE FURTHER HELD TH AT THERE IS NO CONCEPT OF DEFERRED REVENUE EXPENDITURE ON ADVERTISEMENT EXPENDITURE WH ICH ARE IN THE NATURE OF COMMERCIALS. THUS, HE ALLOWED THE ENTIRE EXPENDITUR E INCURRED IN THIS YEAR. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE FINDINGS OF THE ASSESSING OFFICER AND THE LEARNED COUNSEL SUPPORTED THE CONCLUSION DRAWN BY THE LEARNED COMMISSIONER (APPEALS). 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL PLACED ON RECORD. IT IS UNDISPUTED THAT THE ASSESSEE IS PROVI DING DTH SERVICES ACROSS INDIA AND IT HAS INCURRED EXPENDITURE ON ADVERTISEMENT ON TV CHANNELS FOR GENERATING BUSINESS. THESE EXPENDITURES HAVE BEEN INCURRED DUR ING THE RELEVANT ASSESSMENT YEAR AND HAVE BEEN CLAIMED IN THE PROFIT & LOSS ACC OUNT. SUCH AN ADVERTISEMENT EXPENDITURE DO NOT HAVE ANY ENDURING BENEFIT TO THE ASSESSEE AS THESE ARE MERE PROMOTION TO ADVERTISE THE PRODUCT AND SERVICES PRO VIDED BY THE ASSESSEE. THESE EXPENDITURES ARE ONLY REVENUE IN NATURE. THE CASE L AW RELIED UPON BY THE ASSESSEE BEFORE THE LEARNED COMMISSIONER (APPEALS) IN CORE H EALTHCARE LTD., 308 ITR 263 (GUJ.) AND GEOFFREY MANNERS, 180 TAXMAN 87, ALSO SU PPORTS THE SAME VIEW THAT THE EXPENDITURE INCURRED ON FILM PRODUCTION BY WAY OF A DVERTISEMENT OR MARKETING OF PRODUCTS IS ALLOWABLE AS REVENUE EXPENDITURE. THUS, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE CONCLUSION DRAWN BY THE LEARNED CO MMISSIONER (APPEALS) AND, M/S. DISH TV INDIA LTD. 4 HENCE, DECLINE TO INTERFERE IN THE MATTER AS SUCH. ACCORDINGLY, GROUND NO.2, RAISED BY THE REVENUE IS DISMISSED. 11. 2 !6 / 0 70 89: ! ; ' /! <= > 11. IN THE RESULT, REVENUES APPEAL IS TREATED AS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ' 0 34) ? @'6 10 TH JULY 2013 4 0 A > ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JULY 2013 SD/- . .. . . . . . R.S. SYAL ACCOUNTANT MEMBER SD/- ! ! ! ! '# '# '# '# $ $ $ $ AMIT SHUKLA JUDICIAL MEMBER MUMBAI, @' @' @' @' DATED: 10 TH JULY 2013 ' 0 ,$! B CB)! / COPY OF THE ORDER FORWARDED TO : (1) $' (2! / THE ASSESSEE; (2) / / THE REVENUE; (3) D () / THE CIT(A); (4) D / THE CIT, MUMBAI CITY CONCERNED; (5) BGA ,$!$' , , / THE DR, ITAT, MUMBAI; (6) A( H / GUARD FILE. -B! ,$! / TRUE COPY '' / BY ORDER , /. IJ / PRADEEP J. CHOWDHURY 2K $'/ I / SR. PRIVATE SECRETARY 8 / < / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI