M/s Ireo Waterfront Private Ltd., New Delhi V. DCIT, New Delhi

ITA 2138/DEL/2016

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9561 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 18-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 14A; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’, NEW DELHI Before Sh. A. D. Jain, Vice-President Dr. B. R. R. Kumar, Accountant Member ITA No. 2137/Del/2016 : Asstt. Year : 2010-11 ITA No. 2138/Del/2016 : Asstt. Year : 2011-12 M/s Ireo Waterfront Pvt. Ltd., 5, Dhanraj Chambers, 1 st Floor, Satbari, New Delhi Vs ACIT, Central Circle-26, New Delhi (APPELLANT) (RESPONDENT) PAN No. AACCV2433R Assessee by : Sh. S. Krishnan, Adv. Revenue by : Ms. Meenakshi J. Goswami, CIT DR Date of Hearing: 28.10.2021 Date of Pronouncement: 28.01.2022 ORDER Per Dr. B. R. R. Kumar, Accountant Member: The present appeals have been filed by the assessee against the orders of ld. CIT(A)-29, New Delhi dated 12.02.2016. 2. Since, the issues involved in both the appeals are identical, they were heard together and being adjudicated by a common order. 3. In ITA No. 2137/Del/2016, following grounds have been raised by the assessee: “1. That the ld. CIT(A) has erred both in law and on facts of the case in sustaining the partial disallowance of Advertisement and Business Promotion expenses to the tune of Rs.13,23,600/- on the basis of contention that the same was paid as advance and expenditure has not been crystallized for the year under consideration. This contention of ld. CIT(A) is arbitrary and is based solely on assumptions, surmises and ITA Nos. 2137 & 2138/Del/2016 Ireo Waterfront Pvt. Ltd. 2 conjectures as full services were performed during the same assessment year against the payment of this amount. Therefore where the services were already performed and benefits from these services has already accrued to Appellate Company, the expenditure is charged to profit and loss account and cannot be said to be an advance payment. Hence this expenditure is fully allowable as expenditure u/s 37(1) of the Income Tax Act, 1961. Therefore ld. CIT(A) has erred in sustaining the disallowance of Rs.13,23,600/- incurred on account of Advertisement and business Promotion expenses. 2. That the ld. CIT(A) has erred in both in law and on facts of the case in sustaining the addition of Rs.52,516/- u/s 14A read with Rule 8D of the Income Tax Rules, 1962 as no expenditure was incurred for earning the exempted income. This addition is based solely on assumptions, surmises and conjectures hence it is totally wrong, unjustified & arbitrary which needs to be deleted in full.” 4. The return of income was filed on 15.10.2010 declaring loss of Rs. Rs.4,46,56,632/-. A search & seizure operation u/s 132 of the Income Tax Act, 1961 was carried out on 19.10.2010 in the case of IREO Group of cases. During the course of search carried out at the different premises located in India in IREO Group, documents and data storage devices etc. belonging to the assessee company were found and seized. 5. Consequent upon search and centralization, a notice u/s 153A of the Income Tax Act, 1961 was issued to the assessee on 30.12.2011 which was duly served upon the assessee company through speed post, receipt of which is placed on record. The Assessing Officer, on going through the details of the expenditure claimed for the purpose of publicity, advertisement and sales promotion amounting to Rs.3,57,78,862/- has disallowed an amount of Rs.13,23,600/- which has been incurred on 02.03.2010 on account of bill of ITA Nos. 2137 & 2138/Del/2016 Ireo Waterfront Pvt. Ltd. 3 Result Services Pvt. Ltd. towards advance payable for Waterfront launch. The AO held that since this is an advance payment and the expenditure appeared to have not been crystallized for the year under consideration, therefore, the same cannot be treated to have been incurred for the relevant previous year and cannot be allowed as expenditure within the meaning of provisions of Section 37(1) of the Act. Hence, the addition to the extent of Rs.13,23,600/- is sustained. The ld. CIT(A) confirmed the disallowance. The returned income for the instant year 2010-11 was loss of Rs.4,46,56,600/-. The returned income for the A.Y. 2011-12 was also loss of Rs.12.76 crores. Hence, the issue raised before us is purely tax neutral in the instant case, hence there is no call to go into the technicalities of the issue. Hence, the appeal of the assessee on this ground is allowed. Disallowance u/s 14A: 6. Not pressed. ITA No. 2138/Del/2016 Disallowance ABP expenses: 7. During the year, the assessee incurred an amount of Rs.4.72 crores on account of advertisement and business promotion. Out of which the AO disallowed an amount of Rs.3.98 crores on the grounds that the assessee company has not shown any income from the projects undertaken during the year under consideration. 8. The ld. CIT(A) allowed an amount of Rs.3.52 crores out of the disallowance of Rs.3.98 crores and sustained the ITA Nos. 2137 & 2138/Del/2016 Ireo Waterfront Pvt. Ltd. 4 disallowance of Rs.46.45 lacs holding that this expenditure is not in the nature of advertisement and business promotion. 9. Before us, it was argued that these are the expenses indeed pertaining to advertising. 10. We have gone through the expenditure and find that they pertain to barricading for installation of Vinyls, Unipol fabrications and hoardings which are indeed in the nature of advertising. Hence, we hereby direct that the disallowance made by the AO and confirmed by the ld. CIT(A) be obliterated. 11. In the result, both the appeals of the assessee are allowed. Order Pronounced in the Open Court on 28/01/2022. Sd/- Sd/- (A. D. Jain) (Dr. B. R. R. Kumar) Vice President Accountant Member Dated: 28/01/2022 *Subodh Kumar, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR