DCIT, New Delhi V. M/s. Beehive Systems Pvt. Ltd., New Delhi

ITA 2407/DEL/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3486 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 02-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3)

Judgement Text

DY. CIT V. BEEHIVE SYSTEMS (P.) LTD . ITA NO. 2407/DEL/2016 ( ASST. YR. 2012-13) IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B, NEW DELHI BEFORE SH. H. S. SIDHU, JUDICIAL MEMBER AND SH. SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.2407/DEL/2016 ASSESSMENT YEAR: 2012-13 DY. CIT CIRCLE 4 (2), ROOM NO. 398 D. C. R. BUILDING, NEW DELHI VS BEEHIVE SYSTEMS PVT. LTD. J-202, SAKET, NEW DELHI [PAN: AACB 0344F] (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ATIQ AHMAD, SR. DR RESPONDENT BY SHRI SANJAY SOOD, CA DATE OF HEARING: 21/02/2018 DATE OF PRONOUNCEMENT: /02/2018 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE REVENUE AGITATING THE ORD ER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-2, NEW DELHI (CIT(A) FOR SHORT) DATED 29.02.2016, ALLOWING THE ASSESSEES APPEAL C ONTESTING ITS ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREI NAFTER) FOR (AY) 2012-13 DATED 19.02.2014. 2. THE APPEAL RAISES A SINGLE ISSUE, I.E., THE MAIN TAINABILITY OF THE ASSESSEES CLAIM FOR MARKETING RESEARCH EXPENDITURE. THE ASSES SING OFFICER (AO) DISALLOWED THE SAME AS IN HIS VIEW THE SAME WAS CAP ITAL IN NATURE AND, THEREFORE, EXIGIBLE FOR DEDUCTION U/S. 35D OF THE ACT, SO THAT THE ASSESSEE WAS ENTITLED TO CLAIM ONLY 1/5 TH (FOR EACH OF THE FIVE CONSECUTIVE YEARS, BEGINNING WITH THE YEAR OF INCURRING THE EXPENDITURE) IN ITS RESPECT. THE C LAIM, MADE ON RS. 126.29 LACS, WAS ACCORDINGLY RESTRICTED BY HIM TO 1/5 TH , I.E., AT RS. 25.26 LACS, DISALLOWING THE DY. CIT V. BEEHIVE SYSTEMS (P.) LTD . ITA NO. 2407/DEL/2016 ( ASST. YR. 2012-13) BALANCE RS. 101.03 LACS. SIMILAR CLAIMS FOR EARLIER YEARS, BEING AYS 2010-11 & 2011-12, WERE ALSO ALLOWED BY HIM AT 1/5 TH (IN TERMS OF THE ASSESSMENTS FOR THOSE YEARS), WORKING THE TOTAL THUS TO AN ALLOWANC E FOR RS. 43.71 LACS, AND EFFECTED A NET DISALLOWANCE AT RS. 82.58 LACS (RS. 126.29 LACS RS. 43.71 LACS). THE ASSESSEE FOUND FAVOUR IN FIRST APPEAL ON THE BA SIS OF THE ORDER BY THE FIRST APPELLATE AUTHORITY IN ITS CASE FOR AY 2010-2011, WHO CONCURRED WITH THE ASSESSEES CLAIM OF THE EXPENDITURE UNDER REFERENCE BEING REVENUE IN NATURE, ALLOWABLE U/S. 37(1). THE RELEVANT PART OF THE SAID ORDER STANDS REPRODUCED AT PARA 3.1.2 OF THE IMPUGNED ORDER. AGGRIEVED, THE RE VENUE IS IN APPEAL. 3. WE HAVE HEARD THE PARTIES, AND PURSUED THE MATER IAL ON RECORD. THE REVENUES APPEAL FOR AY 2010-2011 HAS SINCE BEE N DECIDED BY THE TRIBUNAL (IN ITA NO. 4336/DEL/2014, DATED 24.01.201 7). COPY OF THE SAME IS ON RECORD (PAPER-BOOK PAGES 32-37). THE TRIBUNAL PER I TS SAID ORDER HAS UPHELD THE ORDER BY THE FIRST APPELLATE AUTHORITY, DISMISSING THE REVENUES APPEAL. THE EXPENDITURE IN ITS VIEW COULD NOT BE REGARDED AS IN THE CAPITAL FILED AS NO ENDURING BENEFIT HAD ARISEN OR SHOWN TO BE. FURTHER , SEC. 35D IS NOT APPLICABLE AS EXPENDITURE HAD NOT BEEN INCURRED BEFORE THE COM MENCEMENT OF BUSINESS OR, THOUGH AFTER ITS COMMENCEMENT, IN CONNECTION WITH THE EXTENSION OF THE UNDERTAKING OR SETTING UP A NEW UNIT, THE QUALIFYIN G REQUIREMENTS OF S. 35 D(1). THE FACTS AND CIRCUMSTANCES FOR THE CURRENT YEAR AR E THE SAME AS FOR AY 2010-11. WHY, THE AO HAS HIMSELF ALLOWED 1/5 TH OF THE CLAIM FOR THE PRECEDING TWO YEARS, FOR WHICH, IN VIEW OF THE ORDERS BY THE APPELLATE FORUMS, NO DISALLOWANCE IS CALLED FOR. WE, ACCORDINGLY, IN LIN E WITH THE TRIBUNALS ORDER IN THE ASSESSEES OWN CASE FOR AY 2010-2011, CONFIRM T HAT NO DISALLOWANCE QUA THE IMPUGNED EXPENDITURE ON MARKETING RESEARCH OR S URVEY IS CALLED FOR. CONSEQUENTIALLY, NO PART OF THE ASSESSEES CLAIM IN ITS RESPECT, QUA THE EXPENDITURE INCURRED IN EARLIER YEARS, WOULD OBTAIN FOR THE CURRENT YEAR. DY. CIT V. BEEHIVE SYSTEMS (P.) LTD . ITA NO. 2407/DEL/2016 ( ASST. YR. 2012-13) LIKEWISE, NO CLAIM FOR THE EXPENDITURE INCURRED DUR ING THE CURRENT YEAR SHALL SURVIVE FOR THE SUBSEQUENT YEARS. WE DECIDE ACCORDI NGLY. [ 4. IN THE RESULT THE REVENUES APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON FEBRUARY 22, 2018 . SD/- SD/- [H.S. SIDHU] [SANJAY ARORA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE 22/02/2018 NEHA COPY FORWARDED TO: - 1. ASSESSEE - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHE S