ACIT, New Delhi V. M/s Global Healthline Pvt. Ltd., New Delhi

ITA 3319/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65342 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 03-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 29-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR PRABHA KANT
• Assessee Lawyers: P N MEHTA
• Keywords: Depreciation; Revenue expenditure
• Section: 37

Judgement Text

ITA NO. 3319/DEL/2012 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 3319/DEL/2012 A.Y. : 2008-09 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-12(1), NEW DELHI VS. M/S GLOBAL HEALTHLINE PVT. LTD., 5, COMMUNITY CENTRE, ZAMRUDPUR, KAILASH COLONY EXTN., NEW DELHI (PAN/GIR NO. : AABCG8091R) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : SH. P.N. MEHTA, FCA DEPARTMENT BY : DR. PRABHA KANT, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-XV, NEW DELHI DATED 04.4.2012 PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED READ AS UNDER:- 1. WHETHER THE LD. COMMISSIONER OF INCOME TAX (A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE DISALLOWANCE OF ` 8,76,435/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADVERTISEMENT EXPENSES. 2. WHETHER LD. COMMISSIONER OF INCOME TAX (A) WAS CORRECT ON FACTS AND CIRCUMSTANCES OF THE ITA NO. 3319/DEL/2012 2 CASE AND IN LAW IN DELETING THE DISALLOWANCE OF ` 1,57,665/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEPRECIATION ON PRINTERS AND SCANNER. 3. THE APPELLANT CRAVES LEAVE, TO ADD, ALTER OR AMEND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF HEARING. 3. APROPOS DELETION OF ` 8,76,435/- IN THIS CASE IT WAS OBSERVED BY THE ASSESSING OFFI CER THAT THE ASSESSEE HAS CLAIMED AN AMOUNT OF ` 10,95,543/- BE ING ADVERTISEMENT AND MARKETING EXPENSES AS REVENUE EXPEN DITURE. THE ASSESSING OFFICER OPINED THAT ASSESSEE HAS INCURRE D THIS HUGE EXPENDITURE FOR LAUNCHING ITS BRAND BY ADVERTISING IT IN A LARGE MANNER. THEREFORE, HE HELD THAT ASSESSEE HAS INCUR RED EXPENDITURE FOR BUILDING UP OF THE BRAND, WHICH WILL BE OF ENDU RING IN NATURE. THE ASSESSING OFFICER HELD THAT THE BENEFIT FROM THIS E XPENDITURE BY THE ASSESSEE WILL BE ACCRUING TO THE ASSESSEE OVER THE YEARS. ASSESSING OFFICER CONCLUDED THAT THE EXPENDITURE ON ADVERTIS EMENT BY THE ASSESSEE WILL BE SPREAD OVER, OVER A PERIOD OF 5 YE ARS. THEREFORE, 1/5 TH OF THE ADVERTISING EXPENSES OF ` 10,95,543/- AMOU NTING TO ` 2,19,109/- WAS ALLOWED IN THE CURRENT YEAR AND THE BALANCE OF ` 876435/- WAS HELD THAT IT CAN BE AMORTIZED IN THE N EXT FOUR YEARS. 4. ASSESSEE SUBMITTED ELABORATE SUBMISSION BEFORE THE LD. COMMISSIONER OF INCOME TAX (A). CONSIDERING THE SU BMISSIONS OF THE ASSESSEE IN THIS REGARD, LD. COMMISSIONER OF INCOME TA X (A) OBSERVED THAT IT IS UNDISPUTED FACT THAT ADVERTISEMENT EXPEN SES PER SE FALLS IN THE CATEGORY OF REVENUE EXPENDITURE PROVIDED THE SAID EXPENDITURE IS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS . LD. COMMISSIONER ITA NO. 3319/DEL/2012 3 OF INCOME TAX (A) HELD THAT THERE IS NO CONCEPT O F DEFERRED REVENUE EXPENDITURE UNDER THE INCOME TAX ACT. THE EXPENDI TURE IS EITHER CAPITAL OR IN NATURE OR REVENUE. ACCORDINGLY, T HE LD. COMMISSIONER OF INCOME TAX (A) HELD THAT THE ADDITION IN THIS REGAR D MADE BY THE ASSESSING OFFICER WAS DELETED. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. WE FIND THAT THE CASE LAW RELIED UPON BY THE ASSESS ING OFFICER IN THE CASE OF MADRAS INDUSTRIAL CORPORATION LTD. VS. C.I .T. 225 ITR 802 IS NOT APPLICABLE ON THE FACTS OF THE PRESENT CASE. IN THE AFORESAID CASE THE SAID CORPORATION ISSUED DEBENTURES IN DECEMBER, 1966 AT A DISCOUNT. THE TOTAL DISCOUNT ON THE ISSUE OF 1.5 CRORES AMOUNT ED TO ` 3,00,000/- FOR THE ASSESSMENT YEAR 1968-69. THE COMPANY WROTE O FF ` 12,500/- OUT OF THE TOTAL DISCOUNT OF ` 3,00,000/- BEING THE PROPORTIONATE AMOUNT OF DISCOUNT FOR THE PERIOD OF SIX MONTHS ENDI NG 30.6.1967 TAKING INTO ACCOUNT THE PERIOD OF 12 YEARS WHICH W AS A PERIOD OF REDEMPTION AND DISCOUNT FOR ` 3,00,000/- OVER THE PE RIOD OF 12 YEARS. IN THESE CIRCUMSTANCES, THE EXPENDITURE WAS HELD TO BE DEFERRED REVENUE EXPENDITURE. HENCE, WE AGREE WITH THE LD. COMMISSIONER OF INCOME TAX (A) THAT THE HONBE APEX COURTS DECI SION IN THE CASE OF MADRAS INDUSTRIAL CORPORATION LTD. VS. C.I.T. (SUPRA ) DOES NOT HELP THE CASE OF THE REVENUE. IN OUR CONSIDERED OPINION, T HERE IS NO CONCEPT OF DEFERRED REVENUE EXPENDITURE IN THE INCOME TAX ACT . THE EXPENDITURE IS EITHER REVENUE IN NATURE OR CAPITAL. IF T HE EXPENDITURE IS OF REVENUE NATURE AND IS INCURRED WHOLLY OR EXCLUSIVEL Y FOR THE PURPOSE OF BUSINESS AND HAS BEEN INCURRED DURING THE YEAR, T HE SAME IS ALLOWABLE EXPENSES SUBJECT TO CONDITION LAID DOWN IN SECTION 30 TO ITA NO. 3319/DEL/2012 4 SECTION 37 OF THE ACT. ACCORDINGLY, WE HOLD THA T THE IMPUGNED EXPENDITURE WAS ALLOWABLE AS REVENUE EXPENDITURE A ND HENCE, WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A). ACCORDINGLY, WE UPHOLD THE SA ME. 7. APROPOS DELETION OF DISALLOWANCE OF ` 1,57,665/ - ON THIS ISSUE ASSESSING OFFICER HELD THAT ON PER USAL OF THE SCHEDULE OF FIXED ASSETS REVEALS THAT THE ASSESSEE HAS CLAIMED DEPRECIATION @60% ON BARD CODE SCANNERS AND PRINTER S WHEREAS THE DEPRECIATION IS ADMISSIBLE @ 15% ONLY. ASSESSING OF FICER ALLOWED ONLY 15% OF DEPRECIATION. 8. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (A) HELD THAT IN VIEW OF THE DECISION OF THE HONBLE DELHI H IGH COURT IN THE CASE OF C.I.T. VS. BSES YAMUNA POWER LTD., 2010 TMI 78240 AND ITAT DECISION IN THE CASE OF EXPEDITORS INTERMATIONS INDI A (P) LTD. VS. C.I.T. (DELHI ITAT) IN I.T.A. NO. 3731/DEL/2005, PRINTERS, U PS AND SCANNER ARE PART OF THE COMPUTER AND HENCE, ASSESSEE WAS ALLOWED DEPRECIATION @ 60%. 9. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEA L BEFORE US. 10. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. WE FIND THAT T HE ISSUE INVOLVED IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF C.I.T. VS. BSES YAMUNA POWER LTD. IN ITA NO. 1267 OF 2010 WHEREIN IT WAS HELD T HAT COMPUTER ACCESSORIES AND PERIPHERALS SUCH AS, PRINTERS, SCAN NERS AND SERVER ETC. FORM AN INTEGRAL PART OF THE COMPUTER SYSTEM AS THEY C ANNOT BE USED WITHOUT THE COMPUTER. HENCE, SAME ARE THE PART O F THE COMPUTER ITA NO. 3319/DEL/2012 5 SYSTEM AND ENTITLED TO DEPRECIATION AT THE HIGHER RA TE OF 60%. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY OR ILLEGAL ITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (A), AND HENCE, WE AFFIRM THE SAME. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/9/2012. SD/- SD/- [ [[ [I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 07/9/2012 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES