Appeal details
Counselvise Citation
[2010] 119 COUNSELVISE.COM (IT) 5761 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-03-2010
Appeal Filed By
Department
Order Result
Partly Allowed
Bench Allotted
E
Next Hearing Date
25-02-2010
Assessment Year
2005-2006
Appeal Filed On
19-10-2009
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E DELHI) BEFORE SHRI A.D. JAIN AND SHRI DEEPAK R. SHAH ITA NOS. 4129 & 4130(DEL)2009 ASSESSMENT YEARS: 2005-06 & 2006-07 DY. COMMISSIONER OF INCOME TAX, M/S. TEXT HUNDRE D INDIA PVT.LTD., CIRCLE 16(1), NEW DELHI. V. PAHARPUR BUSINESS CENTRE, NEHRU PLACE, NEW DELHI-19. (APPELLANT) (RESPONDENT) APPELLANT BY: APPELLANT BY: SHRI AJAY VOHRA, ADV. & SHRI AVDHESH BANSAL, CA RESPONDENT BY: SHRI H.K. LAL, SR. DR ORDER PER A.D. JAIN, J.M. THESE ARE DEPARTMENTS APPEALS FOR THE ASSESSMENT Y EARS: 2005- 06 & 2006-07. 2. THE FIRST ISSUE IS WITH REGARD TO THE CIT(A)S A CTION IN DELETING THE DISALLOWANCE ON ACCOUNT OF ROYALTY. THE LD. C IT(A) ALLOWED THE ASSESSEES CLAIM FOLLOWING THE CIT(A)S ORDER FOR A SSESSMENT YEAR 2004-05 IN THE ASSESSEES CASE . THE DEPARTMENT I S AGGRIEVED. ITA NOS. 4129&4130(DEL)0 9 2 3. THE ISSUE, IT IS SEEN, HAS BEEN REMITTED TO THE FILE OF THE AO BY THE TRIBUNAL, IN THE ASSESSEES CASE FOR ASSESSMENT YEAR 2004-05, VIDE ITS ORDER DATED 18.12.2009 (SUPRA), TO DECIDE THE M ATTER AFRESH ON CONSIDERING, INTER ALIA, THE PROVISIONS OF SECTION 40 AND 200 OF THE I.T. ACT AND RULE 30 OF THE I.T. RULES. THE FACTS FOR THE YEAR UNDER CONSIDERATION UNDISPUTEDLY REMAINING SIMILAR , FOR THE YEARS UNDER CONSIDERATION FOR ASSESSMENT YEARS 2005-06 AND 2006 -07 ALSO, THIS ISSUE IS, FOLLOWING THE AFORESAID TRIBUNAL ORDER, REMITTE D TO THE FILE OF THE AO FOR FRESH DECISION. 4. THE ONLY OTHER ISSUE INVOLVED IN THESE APPEALS I S THE DELETION OF DISALLOWANCES ON ACCOUNT OF BUSINESS PROMOTION EXPE NSES. THE AO MADE THE DISALLOWANCE HOLDING THAT THE EXPENSES WE RE NOT GENUINE AND WERE MERELY BOGUS ENTRIES MADE. THE LD. CIT(A) HE LD THAT SINCE THE EXPENDITURE WAS INITIALLY INCURRED BY THE EMPLOYEES OF THE ASSESSEE AND IT WAS REIMBURSED BY THE ASSESSEE TO ITS EMPLOYEES, THIS WAS EXPENDITURE INCURRED IN THE COURSE OF BUSINESS. 5. IN THIS REGARD THE ASSESSEES CASE HAS BEEN THAT THE EXPENSES WERE INCURRED BY THE EMPLOYEES OF THE ASSESSEE IN RESTAU RANTS/HOTELS WHILE MEETING CLIENTS, JOURNALISTS, BUSINESS ASSOCIATES, ETC.; THAT THIS EXPENDITURE INCLUDED EXPENSES INCURRED ON BUSINESS MEETINGS OR OTHER ITA NOS. 4129&4130(DEL)0 9 3 EVENTS ORGANIZED BY THE ASSESSEE FOR ITS CLIENTS. THESE FACTS WERE NOT CONTROVERTED BY THE AO, AS OBSERVED BY THE LD. CIT( A). GIVEN THE NATURE OF THE ASSESSEES BUSINESS, I.E,, PUBLIC REL ATION SERVICES/PUBLIC CONSULTANCY SPECIALIZED IN PROVIDING SERVICES TO IN FORMATION TECHNOLOGY INDUSTRIES THROUGH ITS CONSULTANCIES AND OTHER STAFF OTHER THAN AT ITS REGISTERED OFFICE AND ALSO AT ITS BRANC H OFFICE AT BOMBAY AND BANGALORE, BESIDES BEING A CONSULTANCY FOR BRANCH M ANAGEMENT OF FIRMS IN THE INCOME TAX INDUSTRY, FOR WHICH, THE AS SESSEE ADOPTS VARIOUS CREATIVE METHODOLOGIES FOR MARKETING/PROM OTION OF ITS CLIENTS, IT WAS ESSENTIAL FOR THE ASSESSEE TO INCUR SUCH EXP ENSES AS THE YEAR UNDER CONSIDERATION, SO AS TO DEVELOP AND MAINTAIN CORDIA L BUSINESS RELATIONS WITH ITS PROSPECTIVE AS WELL AS EXISTING CLIENTS, J OURNALISTS OF TV CHANNELS, NEWSPAPERS AND MAGAZINES, BUSINESS ASSOCI ATES, ETC. MOREOVER, AGAIN UNDISPUTEDLY, THE REIMBURSEMENTS WE RE MADE BY THE ASSESSEE TO ITS EMPLOYEES FOR THE EXPENDITURE ON PR ESENTATION OF ACTUAL INVOICES, COPIES WHEREOF WERE FURNISHED BEFORE THE AUTHORITIES BELOW. 6. IN THESE FACTS, THE BUSINESS PROMOTION EXPENSES INCURRED BY THE ASSESSEE WERE GENUINE EXPENSES, AS FOUND BY THE LD. CIT(A), INCURRED WHOLLY AND EXCLUSIVELY FOR THE ASSESSEES BUSINESS PURPOSES. AS SUCH, ITA NOS. 4129&4130(DEL)0 9 4 THERE IS NOTHING WRONG WITH THE ORDER OF THE LD. CI T(A) IN THIS REGARD AND WE HEREBY UPHOLD THE SAME, FOR BOTH THE ASSESSM ENT YEARS. 7. IN THE RESULT, BOTH THE APPEALS OF THE DEPARTMEN T ARE PARTLY ALLOWED, AS INDICATED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.03.2010 . SD/- SD/- (DEEPAK R. SHAH) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26.03.2010 *RM COPY FORWARDED TO: 1. DCIT, CIRCLE 16(1), NEW DELHI. 2. M/S. TEXT HUNDRED INDIA PVT.LTD., PAHARPUR BUSINESS CENTRE, NEHRU PLACE, NEW DELHI-19. 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER DEPUTY REGISTRAR
