ACIT, New Delhi V. M/s. Universal Dairy Products (P) Ltd., New Delhi

ITA 4074/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4297 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 11-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 01-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K RAVI RAM CHANDRAN
• Assessee Lawyers: V K JAIN

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, DELHI DELHI DELHI DELHI, BENCH , BENCH , BENCH , BENCH H HH H , NEW DELHI , NEW DELHI , NEW DELHI , NEW DELHI BEFORE SHRI A. D. JAIN, JUDICIAL MEMBER AND SHRI K. D. RANJAN, ACCOUNTANT MEMBER ITA NO. 4074 /DEL/2010 (ASSESSMENT YEAR 2007-08) ACIT, CIRCLE 18(1), VS. M/S. UNIVERSAL DAIRY PRODUC TS (P) LTD., NEW DELHI. 2/7, OKHLA INDL. AREA, PHASE I, NEW DELHI. (APPELLANT) (RESPONDENT) PAN AAACU5759P APPELLANT BY: SHRI K. RAVI RAMCHANDRAN, SR. DR RESPONDENT BY: SHRI V K JAIN, C.A. ORDER ORDER ORDER ORDER PER K. D. RANJAN, AM: PER K. D. RANJAN, AM: PER K. D. RANJAN, AM: PER K. D. RANJAN, AM: 1. THIS APPEAL BY THE REVENUE FOR THE ASSESSMENT YE AR 2007-08 ARISES OUT OF THE ORDER OF CIT(A) XI, NEW DELHI. T HE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS UNDER: LD. CIT(A) HAS ERRED ON FACTS AND IN LAW BY ACCEPT ING AMONG OTHER THINGS THAT THE EXPENDITURE ON BOARDING ETC. WAS ONLY ` 92,303/- AND BY OBSERVING THAT THE ASSESSING OFFICE R HAD INCORRECTLY HELD EXPENDITURE ON BANNERS, HOLDINGS E TC. TO BE SUBSTANTIAL, AND THEREBY DELETING ADDITION OF ` 72, 58,807/- IGNORING THAT: 1) CLAIMS OF EXPENDITURE OF ` 1,10,96,727/- IN RESPECT OF ADVERTISING (MATERIAL), ` 97,51,276/- IN RESPECT OF ADVERTISEMENT (OUTDOOR), ` 15,29,752/- IN RESPECTS OF ADVERTISEMENT (EVENTS SPONSORSHIP) AND ` 26,29,752/ - IN RESPECT OF ADVERTISEMENT (DISPLAY BOARDS IN IRCTC/ BUS SHELTERS) ARE ALSO IN THE NATURE OF EXPENDITURE ON HOARDINGS, BANNERS, PAINTING ETC. 2) THE ASSESSEE HAD FAILED TO PRODUCE COGENT EVIDENCE TO PROVE IN ENTIRETY THE CLAIM OF ADVERTISEMENT, PUBLI CITY AND SALES PROMOTION EXPENSE OF ` 7,25,80,718/-. I.T.A.NO. 4074/DEL/2010 2 2. THE ONLY ISSUE FOR CONSIDERATION RELATES TO DELE TING THE ADDITION OF ` 72,58,807/- ON ACCOUNT OF PUBLICITY A ND SALES PROMOTION EXPENSES. THE FACTS OF THE CASE STATED IN BRIEF AR E THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TR ADING OF ICE CREAM, MILK PRODUCTS UNDER THE NAME CREAM BELLS AND TRADING OF BEVERAGES. DURING THE YEAR UNDER CONSIDERATION, TH E ASSESSEE CLAIMED ADVERTISEMENT, PUBLICITY AND SALES PROMOTIO N EXPENSES OF ` 9,34,60,184/-. AS PER THE ASSESSMENT ORDER, THE EXPENSES UNDER ADVERTISEMENT HAVE GONE UP BY 330% FROM IMMEDIATELY PRECEDING YEAR WHEREAS SALES HAVE INCREASED FROM ` 28,94,22,6 42/- TO ` 47,23,88,849/-. ACCORDING TO THE ASSESSING OFFICER THE EXPENDITURE OF ` 9,34,60,184/- WAS ILLOGICAL AND UNREASONABLE. FURTHER, THE ASSESSING OFFICER ASKED THE A.R. OF THE ASSESSEE TO JUSTIFY THE EXPENDITURE INCURRED ON ADVERTISEMENT. IT WAS POIN TED OUT THAT IN COMPUTATION AN AMOUNT OF ` 2,08,79,466/- WAS WRITTE N OFF BY THE ASSESSEE TO EXPENDITURE. THE REMAINING CLAIM OF ` 7,72,80,718/- WAS CONSIDERED BY THE ASSESSING OFFICER ON THE HIGH ER SIDE. SHE, THEREFORE, DISALLOWED 1/10 TH OF THIS EXPENDITURE FOR NON BUSINESS PURPOSES. 3. ON APPEAL, LD. CIT(A) AFTER CONSIDERING THE ISS UE IN DETAIL, DELETED THE ADDITION. HE NOTED THAT THE EXPENDITUR E WAS INCURRED FOR LEGITIMATE BUSINESS NEEDS AND SINCE THE FACT OF GENUINENESS OF EXPENDITURE WAS NOT IN DOUBT, DISALLOWANCE COULD NO T BE MADE JUST BECAUSE THE ASSESSING OFFICER FELT THAT THE EXPENDI TURE WAS ON A HIGHER SIDE. HE ALSO NOTED THAT THE ASSESSING OFFI CER DURING THE COURSE OF ASSESSMENT PROCEEDINGS TEST CHECKED THE B OOKS OF ACCOUNT AND THERE WAS NOT EVEN A SINGLE TRANSACTION WHICH HAD BEEN SPECIFIED BY HER IN RESPECT OF WHICH PROPER BILLS/V OUCHERS WERE NOT AVAILABLE. THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY WERE DULY AUDITED UNDER THE COMPANIES ACT HAS ALSO U/S 4 4AB OF THE INCOME TAX ACT AND NO EXPENDITURE OF UNVERIFIABLE N ATURE WAS I.T.A.NO. 4074/DEL/2010 3 REPORTED IN AUDIT REPORT. LD. CIT(A), ACCORDINGLY DELETED THE ADDITION. 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. THE ASSESSING OFFICE R HAD MADE DISALLOWANCE ON AD-HOC BASIS WITHOUT POINTING OUT A NY EXPENDITURE WHICH WAS NOT VERIFIABLE. LD. CIT(A) HAS RECORDED FINDINGS OF THE FACT THAT ASSESSING OFFICER HAD TEST CHECKED THE BOOKS O F ACCOUNT OF THE ASSESSEE AND HAD NOT FOUND EVEN A SINGLE TRANSACTIO N WHICH HAD BEEN SPECIFIED BY HER IN RESPECT OF WHICH PROPER BI LLS/VOUCHERS WERE NOT AVAILABLE. THE EXPENDITURE HAS BEEN INCURRED F OR THE PURPOSE OF BUSINESS. THE ASSESSING OFFICER HAD NOT DOUBTED TH E GENUINENESS OF THE EXPENDITURE. THEREFORE, NO DISALLOWANCE CAN B E MADE. ACCORDINGLY, IN OUR CONSIDERED OPINION, CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. 6. ORDER PRONOUNCED IN THE OPEN COURT AFTER CLOSE O F HEARING ON 11 TH APRIL 2011. SD./- SD./- (A. D. JAIN) (K. D. RANJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:11 TH APR., 2011 SP. COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT TRUE COPY: BY ORDER 4. CIT(A) 5. DR DY. REGISTRAR, ITAT, NEW DELHI