ACIT CIR - 7(1), MUMBAI V. M/s. PROCTER & GAMBLE HOME PRODUCTS LTD., MUMBAI

ITA 4024/MUM/2006

• Counselvise Citation: 402419914 RSA 2006
• Duration Of Justice: 5 year(s) 9 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 12-04-2012
• Assessment Year: 2002-2003
• Appeal Filed On: 29-06-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HARESH G BUCH
• Keywords: Capital asset; Business income; Depreciation; Revenue expenditure; Capital expenditure
• Section: 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI MUMBAI MUMBAI MUMBAI F FF F BENCH BENCH BENCH BENCH MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI MUMBAI BENCHES, MUMBAI BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI B RAMAKOTAIAH B RAMAKOTAIAH B RAMAKOTAIAH B RAMAKOTAIAH, ,, ,AM AMAM AM & & & & SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM ITA NO. ITA NO. ITA NO. ITA NO. 4309/MUM/2006 (ASSESSMENT YEAR 2002 4309/MUM/2006 (ASSESSMENT YEAR 2002 4309/MUM/2006 (ASSESSMENT YEAR 2002 4309/MUM/2006 (ASSESSMENT YEAR 2002- -- -03) 03) 03) 03) ITA NO.120/MUM/2009 (ASSESSMENT YEAR 2003 ITA NO.120/MUM/2009 (ASSESSMENT YEAR 2003 ITA NO.120/MUM/2009 (ASSESSMENT YEAR 2003 ITA NO.120/MUM/2009 (ASSESSMENT YEAR 2003- -- -04) 04) 04) 04) PROCTER & GAMBLE HOME PRODUCTS LTD P&G PLAZA CARDINAL GRACIAS ROAD CHAKKALA, ANDHERI (E) MUMBAI VS THE ASST COMMR OF INCOME TAX CIR 7(1), MUMBAI (APPELLANT (APPELLANT (APPELLANT (APPELLANT ) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ITA NO. ITA NO. ITA NO. ITA NO. 4024/MUM/2006 (ASSESSMENT YEAR 2002 4024/MUM/2006 (ASSESSMENT YEAR 2002 4024/MUM/2006 (ASSESSMENT YEAR 2002 4024/MUM/2006 (ASSESSMENT YEAR 2002- -- -03) 03) 03) 03) ITA NO.7339/MUM/2008 (ASSESSMENT YEAR 2003 ITA NO.7339/MUM/2008 (ASSESSMENT YEAR 2003 ITA NO.7339/MUM/2008 (ASSESSMENT YEAR 2003 ITA NO.7339/MUM/2008 (ASSESSMENT YEAR 2003- -- -04) 04) 04) 04) THE ASST COMMR OF INCOME TAX CIR 7(1), MUMBAI VS PROCTER & GAMBLE HOME PRODUCTS LTD P&G PLAZA CARDINAL GRACIAS ROAD CHAKKALA, ANDHERI (E) MUMBAI (APPELLANT (APPELLANT (APPELLANT (APPELLANT ) )) ) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) PAN NO. PAN NO. PAN NO. PAN NO. AAACP4643H AAACP4643H AAACP4643H AAACP4643H ASSESSEE BY HARESH G BUCH REVENUE BY SH SUBACHAN RAM DT.OF HEARING 12 TH APRIL 1012 DT OF PRONOUNCEMENT 20 TH , APRIL 2012 ORDER ORDER ORDER ORDER PER PER PER PER VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO, , , , JM JMJM JM THESE TWO SETS OF CROSS APPEALS ARE DIRECTED AGAIN ST THE ORDERS DATED 16.3.2006 AND 6.10.2010 OF THE CIT(A) FOR THE AYS 2 002-03 AND 2003-04 RESPECTIVELY. 2 FOR THE ASSESSMENT YEAR 2002-03, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) XIX, MUMBAI (THE CIT (A)) ERRED IN UPHOLDING THE ACTION OF THE ASSISTANT COMM ISSIONER OF INCOME TAX (THE ACIT) OF DISALLOWING RS. 3 CRORES BEING AMOR TISED PORTION FOR PROCTER & GAMBLE HOME PRODUCTS LTD 2 RELEVANT YEAR OUT OF RS. 21 CRORES PAID UNDER THE SAFEGUARD CONFIDENTIALITY AGREEMENT TO GODREJ SOAPS LTD. (GS L) ON THE ALLEGED GROUND THAT IT WAS CAPITAL IN NATURE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT (A) ERRED IN UPHOLDING THE ACTION OF THE ACIT OF DISALLOWING EXPENDITURE INCURRED ON PROFESSIONAL FEES AMOUNTING TO RS. 9,18,607/- PAID FOR BRAND PROTECTION AND TRADEMARK INFRINGEMENT ON THE ALLEGED GROUND TH AT THE EXPENDITURE IS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT (A) ERRED IN UPHOLDING THE ACTION OF THE ACIT OF NOT ALLOWING DEDUCTION U/S 8OHHC ON THE ALLEGED GROUND THAT AFTER SET OFF OF BROUGHT FO RWARD LOSSES AND DEPRECIATION ALLOWANCE, THE BUSINESS INCOME WAS A N EGATIVE FIGURE. 4. THE CIT (A) ERRED IN NOT PASSING ANY ORDER ON THE G ROUND THAT THE ACIT ERRED IN NOT ALLOWING DEDUCTION OF PROFITS ELIGIBLE FOR DED UCTION U/S. 8OHHC FOR CALCULATING THE BOOK PROFIT U/S. 115JB. 3 GROUND NO.1 IS REGARDING DISALLOWANCE OF PAYMENT TOWARDS SAFEGUARD CONFIDENTIALITY AGREEMENT. 3.1 THE DISPUTE IS REGARDING THE DISALLOWANCE OF RS . 3 CRORES BEING THE CLAIM AS AMORTISED AMOUNT OF RS. 21 CRORES PAID BY THE AS SESSEE TO GODREJ SOAPS LTD (GSL) UNDER SAFEGUARD CONFIDENTIALITY AGREEMENT. THUS, IT IS CLEAR THAT THIS ISSUE IS INVOLVED SINCE ASSESSMENT YEAR 1997-98 ONW ARDS. 4 WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL A S THE LD DR CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, W E NOTE THAT THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1997-98 TO 2000-01 HAS CONSIDERED AND DECIDED THIS ISSUE IN PARA 2.6.6 & 2 .6.7 AS UNDER: 2.6.6 WE HAVE CONSIDERED THE VARIOUS ASPECTS OF THE MATTER AND THE JUDGMENTS CITED CAREFULLY. FOR DECIDING THE NATURE OF EXPENDITURE WE HAVE TO FIRST ASCERTAIN THE TRUE NATURE OF PAYMENT. THE PAYMENT HAD BEEN MADE IN TERMS OF THE CONFIDENTIALITY AGREEMENT DATED 30. 7.96. THE SAID CONFIDENTIALITY AGREEMENT MENTIONS THAT UNDER THE M ANUFACTURING AGREEMENT AND TECHNICAL ASSISTANCE AGREEMENT BOTH D ATED 22.1.93 GSL BECOME PRIVY TO CONFIDENTIAL INFORMATION IN RELATIO N TO ANTI BACTERIAL GERMICIDAL SOAP. HOWEVER, NO SUCH MANUFACTURING AGR EEMENT AND TECHNICAL ASSISTANCE AGREEMENT HAS BEEN PLACED ON R ECORD. NOR THERE IS ANY MATERIAL PLACED ON RECORD TO SHOW THAT THERE WA S ANY EXCHANGE OF PROCTER & GAMBLE HOME PRODUCTS LTD 3 CONFIDENTIAL INFORMATION BETWEEN THE ASSESSEE AND G SL IN RELATION TO DEVELOPMENT OF ANY ANTI BACTERIAL SOAP. TO A QUERY BY THE BENCH AT THE TIME OF HEARING OF THE APPEAL THE LEARNED AR FOR TH E ASSESSEE ADMITTED THAT THERE WAS NO FURTHER MATERIAL AVAILABLE WITH T HE ASSESSEE OTHER THAN THOSE PLACED IN THE PAPER BOOK WHICH DOES NOT CONTA IN ANY SUCH MANUFACTURING AGREEMENT OR EXCHANGE OF CONFIDENTIAL INFORMATION. IT IS THEREFORE NOT ESTABLISHED THAT GSL HAD ACQUIRED ANY CONFIDENTIAL INFORMATION FOR WHICH THE ASSESSEE HAD TO MAKE PAYM ENT FOR PROTECTING THE INFORMATION. AS THE PURPOSE OF PAYMENT IS NOT E STABLISHED THE EXPENDITURE CANNOT BE ALLOWED AS INCURRED WHOLLY AN D EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 2.6.7 SECONDLY, EVEN IF IT IS ASSUMED THAT THE GSL DID BECOME PRIVY TO ANY SUCH CONFIDENTIAL INFORMATION, THE PAYMENT AS PER T HE CONFIDENTIALITY AGREEMENT HAD BEEN MADE FOR UNDERTAKING FROM GSL NO T TO MANUFACTURE AND PROCESS ANY ANTI BACTERIAL GERMICIDAL SOAP (SAF EGUARD) AND FOR NOT DISCLOSING THE CONFIDENTIAL INFORMATION TO ANYONE. THE PURPOSE OF NOT ALLOWING GSL TO MANUFACTURE THE PRODUCT IS ONLY TO WARD OFF COMPETITION. SIMILARLY THE PURPOSE FOR NOT DISCLOSING THE INFORM ATION TO ANY ONE ELSE BY GSL IS ALSO TO WARD OFF COMPETITION BY NOT ALLOWING OTHERS TO USE THE INFORMATION FOR MANUFACTURE OF PRODUCT. THEREFORE T HE REAL PURPOSE OF PAYMENT IN SUCH SCENARIO ASSUMING THAT GSL DID HAVE IN ITS POSSESSION SOME CONFIDENTIAL INFORMATION WOULD BE TO WARD OFF COMPETITION. THE EXPENDITURE INCURRED TO WARD OFF COMPETITION IS NOT THE SAME AS EXPENDITURE ON DEVELOPMENT OF PRODUCT OR THE EXPEND ITURE TO PROTECT THE PRODUCTS. THE EXPENDITURE TO WARD OFF COMPETITION I S CAPITAL IN NATURE AS HELD BY HONBLE SUPREME COURT IN CASE OF ASSAM BENG AL CEMENT CO. LTD. VS CIT (SUPRA) AND IN CASE OF CIT VS COAL SHIPMENT PVT. LTD. (SUPRA) AND AS DISCUSSED IN DETAIL IN PARA 2.4.2 EARLIER. THE EXPE NDITURE THEREFORE CANNOT BE ALLOWED. THE ASSESSEE HAS PLACED RELIANCE ON THE JUDGMENT OF HONBLE SUPREME COURT IN CASE OF MALAYALAM PLANTATION (53 I TR 140) WHICH IS DISTINGUISHABLE AS THE ISSUE OF NATURE OF EXPENDITU RE INCURRED TO WARD OFF COMPETITION WAS NOT BEFORE THE SUPREME COURT. IN AN Y CASE, THE CLAIM OF THE ASSESSEE THAT PAYMENT WAS MADE FOR PROTECTION A ND PREVENTION OF CONFIDENTIAL INFORMATION RELATING TO DEVELOPMENT OF ANTI BACTERIAL SOAP IS NOT SUPPORTED BY ANY EVIDENCE. THEREFORE THE CLAIM CANNOT BE ALLOWED. THE PAYMENT IN OUR VIEW WAS FOR TERMINATION OF THE JVA WHICH AS HELD EARLIER WAS FOR RESTRUCTURING AND REORGANIZATION OF THE PROFIT EARNING APPARATUS OF THE GROUP WHICH CONSTITUTED A CAPITAL ASSET. THEREFORE THE EXPENDITURE WAS CAPITAL IN NATURE AND CANNOT BE ALL OWED ON THIS GROUND ALSO. THE ALTERNATE PLEA OF THE ASSESSEE TO AMORTIZ E THE AMOUNT OVER THE PERIOD OF 7 YEARS AND ALLOW A SUM OF RS. 3 CRORES T HIS YEAR CAN ALSO NOT BEEN ACCEPTED AS THERE IS NO PROVISION FOR AMORTIZA TION OF SUCH EXPENDITURE. WE ACCORDINGLY CONFIRM THE ORDER OF CI T(A) DISALLOWING THE CLAIM. 4.1 ACCORDINGLY, FOLLOWING THE EARLIER ORDERS OF TH E TRIBUNAL , WE DECIDE THIS ISSUE AGAINST THE ASSESSEE AND IN FAVOUR OF THE REV ENUE. 5 GROUND NO.2 IS REGARDING THE AMOUNT PAID FOR LEGA L FEE FOR BRAND PROTECTION AND TRADEMARK INFRINGEMENT. PROCTER & GAMBLE HOME PRODUCTS LTD 4 5.1 WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL AS THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD AR HAS POINTED OUT THAT THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNAL IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2001-02 VIDE ORDER DATED 25.1.2012. 5.2 WE FIND THAT THE TRIBUNAL HAS CONSIDERED AND AD JUDICATED THIS ISSUE IN PARA 51 OF THE ORDER DATED 25.1. 2012 AS UNDER: 51. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE H AVE ALREADY SEEN CLAUSE (8)(I) OF THE USER AGREEMENT DATED 7/8/2003 BETWEEN THE ASSESSEE AND THE OWNER OF THE TRADEMARK. IT IS CLEAR FROM TH E SAID CLAUSE THAT THE ASSESSEE HAD TO BEAR THE EXPENSES FOR PROTECTING TH E TRADEMARK AND INFRINGEMENT THEREOF. WE ARE OF THE VIEW THAT THE A SSESSEE WOULD DERIVE A BENEFIT BY ANY LEGAL RECOURSE TAKEN BY THE PROPRIET OR OF THE TRADEMARK FOR PROTECTING THE TRADEMARK. IF THE ASSESSEE DOES THAT ON ITS OWN EVEN THAT WOULD PROTECT THE BUSINESS INTEREST OF THE ASSESSEE . WE ARE ALSO OF THE VIEW THAT THE AGREEMENT CLEARLY ENVISAGES THAT THE ASSESSEE WILL BEAR COST AS MUTUALLY AGREED BETWEEN THE ASSESSEE AND THE OWN ER OF THE TRADEMARK. WE ARE OF THE VIEW THAT THERE IS NO REQU IREMENT FOR ANY FURTHER WRITTEN AGREEMENT BETWEEN THE OWNER OF THE TRADEMAR K AND THE ASSESSEE FOR SHARING OF COST. THE GENUINENESS OF THE PAYMENT AND THE PURPOSE OF THE PAYMENT BY THE ASSESSEE IS NOT DISPUTED. AS HEL D IN THE DECISIONS RELIED UPON BY THE ASSESSEE THE FACT THAT THIRD PAR TY ALSO DERIVES BENEFIT BY REASON OF INCURRING OF EXPENDITURE BY THE ASSESS EE IS NO GROUND TO DENY DEDUCTION OF EXPENDITURE WHICH IS FOR THE PURP OSE OF BUSINESS OF THE ASSESSEE. IN SUCH CIRCUMSTANCES WE ARE OF THE VIEW THAT THE CLAIM MADE BY THE ASSESSEE FOR DEDUCTION HAS TO BE ACCEPTED. G ROUND NO.X IS ACCORDINGLY ALLOWED. 5.3 ACCORDINGLY, FOLLOWING THE EARLIER ORDER OF THE TRIBUNAL, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REV ENUE. 6 GROUND NO.3 IS REGARDING DISALLOWANCE OF DEDUCTIO N U/S 80HHC ON ACCOUNT OF NET RESULT IS LOSS. 6.1 WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL AS THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THERE I S NO DISPUTE THAT THE BUSINESS INCOME WAS NEGATIVE; THEREFORE, THE AUTHORITIES BEL OW HAVE DISALLOWED THE CLAIM OF DEDUCTION U/S 80HHC IN THE NORMAL COMPUTATION. PROCTER & GAMBLE HOME PRODUCTS LTD 5 6.2 AFTER CONSIDERING THE RIVAL CONTENTION AND RELE VANT MATERIAL ON RECORD, WE NOTE THAT THIS ISSUE IS NOW COVERED AGAINST THE ASS ESSEE BY THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF COMMISSIONER O F INCOME-TAX V. SHIRKE CONSTRUCTION EQUIPMENT LTD., REPORTED IN 291 ITR 38 0 WHEREIN THE HONBLE SUPREME COURT HAS HELD AS UNDER: SECTION 80AB OF THE INCOME-TAX ACT, 1961, SPECIFYI NG THAT PROFITS ARE THOSE AS DETERMINED FOR THE PURPOSE OF THE ACT, WIL L APPLY FOR DETERMINING PROFITS FROM EXPORT BUSINESS FOR THE PURPOSES OF TH E DEDUCTION UNDER SECTION 80HHC. IN DETERMINING BUSINESS PROFITS FOR THE DEDUCTION UNDER SECTION 80HHC THE UNABSORBED BUSINESS LOSSES OF EAR LIER YEARS UNDER SECTION 72 SHOULD BE SET OFF. 6.3 ACCORDINGLY, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. 7 GROUND NO.4 IS REGARDING DISALLOWANCE OF DEDUCTIO N U/S 80HHC ON BOOK PROFIT U/S115JB. 7.1 WE HAVE HEARD THE LD AR OF THE ASSESSEE AS WELL AS THE LD DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT THIS ISSUE IS DECIDED BY THE HONBLE SUPREME COURT IN THE CASE OF AJANTA PHARMA LTD. V. COMMISSIONER OF INCOME-TAX REPORTED IN 327 ITR 305 . THE OPERATIVE PORTION OF THE DECISION OF THE HONBLE SUPREME COURT READS AS UNDER: ACCORDING TO THE DEPARTMENT, THE ASSESSEE HEREIN IS TRYING TO READ THE VARIOUS PROVISIONS OF SECTION 80HHC IN ISOLATION WHEREAS AS PER CLAUSE (IV) OF THE EXPLANATION TO SECTION 115JB, IT IS C LEAR THAT THE BOOK PROFIT SHALL BE REDUCED BY THE AMOUNT OF PROFITS ELIGIBLE FOR DEDUCTION UNDER SECTION 80HHC AS COMPUTED UNDER CLAUSE (A) OR CLAUS E (B) OR CLAUSE (C) OF SUB-SECTION (3) OR SUB-SECTION (3A), AS THE CASE MA Y BE, OF THAT SECTION AND SUBJECT TO THE CONDITIONS SPECIFIED IN THAT SEC TION, THEREBY MEANING THAT THE DEDUCTION ALLOWABLE WOULD BE ONLY TO THE E XTENT OF DEDUCTION COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SECTI ON 80HHC. THUS, ACCORDING TO THE DEPARTMENT, BOTH ' ELIGIBILITY' A S WELL AS ' DEDUCTIBILITY' OF THE PROFIT HAVE GOT TO BE CONSIDERED TOGETHER FO R WORKING OUT THE DEDUCTION AS MENTIONED IN CLAUSE (IV) OF THE EXPLAN ATION TO SECTION 115JB. WE FIND NO MERIT IN THIS ARGUMENT. PROCTER & GAMBLE HOME PRODUCTS LTD 6 7.2 ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE IN THE LIGHT OF THE ABOVE DECISION OF THE HONBLE SUPREME COURT (SUPRA). 8 FOR THE ASSESSMENT YEAR 2002-03 THE REVENUE HAS R AISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING THE AO TO ALLOW THE AD VERTISEMENT EXPENDITURE OF RS.3,44,07,358/- AS REVENUE EXPENDITURE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED IN ALLOWING THE PAYMENT OF RS.6,36, 813/- AND RS.6,97,994/- IN RESPECT OF EMPLOYEES & EMPLOYERS CONTRIBUTION TO P.F. MADE AFTER THE DUE DATE. 9 GROUND NO.1 IS REGARDING ADVERTISEMENT EXPENSES. 9.1 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT THIS ISSUE HAS CONSIDERED AND DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE AYS 1997-98 TO 2001-02 VIDE ORDER DATED 15.12.2 010 IN PARA 2.3.2 AS UNDER: 2.3.2 WE HAVE PERUSED THE RECORDS AND CONSIDERED TH E RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING ALLOWABILITY OF EXPENDITURE INCURRED BY THE ASSESSEE ON PRODUCTION OF ADVERTISEMENT FILM (R S.3,59,24,136/-) AND RADIO PROGRAMMES (RS.7,40,922/-) AS REVENUE EXPENDI TURE. THE AO HAD DISALLOWED THE CLAIM HOLDING THE SAME AS CAPITAL EX PENDITURE. CIT(A) HAS HELD THAT CLAIM HAS TO BE ALLOWED, WHETHER CAPITAL OR REVENUE, WITHIN THE LIMITATION PROVIDED UNDER RULE 6B. THE ASSESSEE HAS CHALLENGED THE ORDER OF THE CIT(A) AND ARGUED THAT THE CLAIM IS ALLOWABL E WITHOUT ANY LIMITATION. WE FIND THAT THE ISSUE RAISED IN THIS GROUND IS COV ERED BY THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN CASE OF DCJT VS METRO SHOES PVT. LTD. (258 ITR 106 (AT) IN THAT CASE THE ASSESSEE WHO WAS A TRADER IN FOOTWEAR HAD PRODUCED A VIDEO FILM FOR ADVERTISING THE PRODU CT ON TV AND CLAIMED THE EXPENDITURE AS REVENUE EXPENDITURE WHICH HAD BE EN DISALLOWED BY THE AO AS CAPITAL EXPENDITURE. IN APPEAL THE TRIBUNAL O BSERVED THAT THE PUBLIC INTEREST LIKE PUBLIC MEMORY HAD A SHORT SPAN OF LIF E AND IN ORDER TO KEEP THE MASS INTEREST INTACT IN THE PRODUCTS, THE ASSES SEE HAD TO CONTINUOUSLY STRIVE TO KEEP ON ADVERTISING ITS PRODUCTS IN EVER INCREASINGLY NOVEL WAYS AND METHOD THROUGH THE MEDIA. THE EXPENDITURE INCUR RED ON PRODUCTION OF ADVERTISEMENT FILM WAS THEREFORE HELD TO BE ALLOWAB LE AS REVENUE EXPENDITURE. THE SAID DECISION HAD BEEN FOLLOWED BY THE TRIBUNAL IN CASE OF PROCTER & GAMBLE DISTRIBUTION CO. LTD., ANOTHER GRO UP COMPANY OF THE PROCTER & GAMBLE HOME PRODUCTS LTD 7 ASSESSEE IN ITA NO.2173/M/2001. THE FACTS IN THE CA SE OF THE ASSESSEE ARE IDENTICAL AS THE EXPENDITURE CLAIMED IS ON ACCOUNT OF PRODUCTION OF ADVERTISEMENT FILM AND RADIO PROGRAMME. WE THEREFOR E RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN CASE OF M ETRO SHOES PVT. LTD (SUPRA) SET ASIDE THE ORDER OF CIT(A) AND ALLOW THE CLAIM OF THE ASSESSEE. 9.2 THE LD AR HAS ALSO RELIED UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS M/S GEOFFREY MANNE R & CO LTD REPORTED IN 180 TAXMAN 87(BOM) AS WELL AS THE ORDER OF THE TRIBUNAL IN THE CASE OF PROCTER & GAMBLE HOME PRODUCTS LTD, A SISTER CONCERN OF THE A SSESSEE, FOR THE ASSESSMENT YEAR 2004-05 IN ITA NO.1549/MUM/2009. 9.3 THUS, IT IS CLEAR THAT EVEN IN THE CASE OF THE SISTER CONCERN, THE TRIBUNAL VIDE ORDER DATED 5.10.2011 (SUPRA) HAS DECIDED IDEN TICAL ISSUE IN PARA 6 AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND THAT IN THE CASE OF CIT VS. PATEL INTERNATIONAL FILM LTD. [SUPR A] THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF PROCESSING AND PRINTING MOVIE FILMS AND HAD PURCHASED A FILM PROCESSOR IN A LABORATORY TO SERVE AS A MODEL FOR EXHIBITION TO INDUCE CONFIDENCE IN THE CUSTOMERS BY WAY OF ADVERTISEMENT. BECAUSE OF THIS FACT THIS DECISION HAS BEEN DISTING UISHED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GEOFFREY M ANNERS & CO. LTD. [SUPRA) BY HOLDING THAT IN THAT CASE AN ASSET WAS P URCHASED. AFTER DETAILED DISCUSSION, THE HONBLE HIGH COURT HELD THAT EXPEND ITURE INCURRED ON FILM PRODUCTION BY WAY OF ADVERTISEMENT FOR MARKETING OF PRODUCT WAS IN THE NATURE OF REVENUE EXPENDITURE. THEREFORE, FOLLOWING THIS DECISION WE DECIDE THE ISSUE THE REVENUE. 9.4 ACCORDINGLY, FOLLOWING THE ORDER OF THE TRIBUNA L AS WELL AS IN VIEW OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT, AS RELIED UPON BY THE LD AR OF THE ASSESSEE, THIS ISSUE IS DECIDED AGAINST THE REV ENUE AND IN FAVOUR OF THE ASSESSEE. 10 GROUND NO. 2 IS REGARDING EMPLOYERS AND EMPLOYEE S CONTRIBUTION MADE TO PROVIDENT FUND. PROCTER & GAMBLE HOME PRODUCTS LTD 8 11 WE HAVE HEARD THE LD DR AS WELL AS THE LD AR OF THE ASSESSEE AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. IN VIE W OF THE UNDISPUTED FACT THAT THE PAYMENT WAS MADE WITHIN THE GRACE PERIOD PERMIT TED UNDER THE PF ACT, THE SAME IS ALLOWABLE AS HELD BY THE HONBLE SUPREME CO URT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. ALOM EXTRUSIONS LTD. REPORTED IN 319 ITR 306. THE LD AR HAS ALSO RELIED UPON THE DECISION OF T HE HONBLE DELHI HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX V. AIMIL LTD . REPORTED IN 321 ITR 508. 11.1 IT IS SETTLED PROPOSITION OF LAW THAT IF THE P AYMENTS TOWARDS EMPLOYERS AND EMPLOYEES CONTRIBUTIONS HAVE BEEN MADE WITHIN THE G RACE PERIOD PERMITTED UNDER THE PF ACT, THEN THE SAME CANNOT BE DISALLOWE D BY INVOKING THE PROVISIONS OF SEC. 43B. ACCORDINGLY, WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 12 FOR THE AY 2003-04, THE REVENUE HAS RAISED THE F OLLOWING GROUND: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE TH DISALLOWANCE OF RS.42,17,26,036/ BEING EXPENDITURE INCURRED ON PROD UCTION OF TV ADVERTISEMENT FILMS TREATING THE SAME AS ADVERTISEM ENT EXPENDITURE ALLOWABLE AS REVENUE EXPENDITURE AS AGAINST CAPI TAL EXPENDITURE TREATED BY THE ASSESSING OFFICER IGNORING THE FACT THAT PRODUCTION OF ADVERTISEMENT FILMS RESULTED IN CREATION OF ASSETS WHICH CAN BE USED FOR SUFFICIENTLY LONG TIME TO ADVERTISE THE ASSESSEES PRODUCTS BY WHICH THE ASSESSEE IS ENJOYING BENEFITS OF ENDURING NATURE. 12.1 THIS ISSUE IS COMMON AS FOR THE ASSESSMENT YE AR 2002-03. ACCORDINGLY, IN VIEW OUR FINDINGS IN PARAS 9.1 TO 9.4, WE DECIDE TH IS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 13 FOR THE ASSESSMENT YEAR 2003-04, THE ASSESSEE HA S RAISED THE FOLLOWING GROUNDS: 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOL DING THE ACTION OF THE PROCTER & GAMBLE HOME PRODUCTS LTD 9 ASSESSING OFFICER IN OF DISALLOWING RS. 3 CRORES BE ING AMORTISED PORTION FOR RELEVANT YEAR OUT OF RS. 21 CRORES PAID UNDER THE SAFEGUARD CONFIDENTIALITY AGREEMENT TO GODREJ SOAPS LTD. (GS L) ON THE ALLEGED GROUND THAT IT WAS CAPITAL IN NATURE. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE CIT (A) ERRED IN UPHOLDING THE ACTION OF THE ACIT OF DISALLOWING EXPENDITURE INCURRED ON PROFESSIONAL FEES AMOUNTING TO RS. 20,76,000/- PAID FOR BRAND PROTECTION AND TRADEMARK INFRINGEMENT ON THE ALLEGED GROUND TH AT THE APPELLANT WAS NOT THE OWNER OF THE TRADE MARK. 13.1 GROUND NO.1 IS REGARDING DISALLOWANCE OF AMORT ISED PORTION OF THE PAYMENT UNDER SAFEGUARD CONFIDENTIALITY AGREEMENT. THIS ISSUE IS COMMON TO THE GROUND RAISED FOR THE ASSESSMENT YEAR 2002-03. 13.2 IN VIEW OF OUR FINDINGS IN PARAS 4 & 4.1 THIS ISSUE IS DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. 14 GROUND NO.2 IS REGARDING THE EXPENDITURE INCURRE D ON PROFESSIONAL FEES AND BRAND PROTECTION. THIS ISSUE IS COMMON FOR ASSE SSMENT YEAR 2002-03. 14.1 IN VIEW OF OUR FINDINGS IN PARAS 5.1 TO 5.3, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 15 IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED WHEREAS THE APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON THIS ORDER PRONOUNCED ON THIS ORDER PRONOUNCED ON THIS ORDER PRONOUNCED ON THIS 20 2020 20 TH THTH TH , ,, , DAY OF DAY OF DAY OF DAY OF APRIL APRIL APRIL APRIL 2012 2012 2012 2012 SD/ SD/ ( (( ( B RAMAKOTAIAH B RAMAKOTAIAH B RAMAKOTAIAH B RAMAKOTAIAH ) )) ) ACCOUNTANT MEMBER ( (( ( VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO VIJAY PAL RAO ) )) ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 20 TH . APRIL 2012 RAJ* RAJ* RAJ* RAJ* PROCTER & GAMBLE HOME PRODUCTS LTD 10 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI