DCIT, New Delhi V. M/s. Study Overseas India Pvt. Ltd., New Delhi

ITA 4443/DEL/2013

• Counselvise Citation: 444320114 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 16-09-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 23-07-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Keywords: Unexplained expenditure; Depreciation; Tax effect
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G, NEW DELHI) BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.5661 /DEL/2011 ASSESSMENT YEAR : 2008-09 JCIT, CIRCLE 9(1), VS. STUDY OVERSEAS GLOBAL PVT. LTD. NEW DELHI S-2, LEVEL, BLOCK-E, INTERNATIONAL TRADE TOWER, NEHRU PLACE, NEW DELHI GIR / PAN:AALCS0438G ITA NOS.4932/DEL/2012 & 4443/DEL/2013 (ASSESSMENT YEARS 2009-10 & 2010-11) ACIT, CIRCLE 9(1), VS. STUDY OVERSEAS INDIA PVT. LTD., NEW DELHI S-2, LEVEL BLOCK-C, INTERNATIONAL TRADE TOWER, NEW DELHI GIR/PAN: AACKS9754Q (APPELLANT) (RESPONDENTS) APPELLANT BY : SHRI BRR KUMAR, SR. DR RESPONDENT BY : SHRI SHAILESH KUMAR, ADV. SHRI NAGESHWAR RAO, ADV. ORDER PER T.S. KAPOOR, AM: THESE ARE THREE APPEALS FIELD BY THE REVENUE AGAIN ST THE ORDER OF LD. CIT(A) DATED 23.09.2011, 13.06.2012 AND 23.05.2013 RESPECTIVELY. ITA NO.5661/DEL/2011 RELATES TO STUDY OVERSEAS GLOBAL P VT. LTD. WHEREAS I.T.A. NOS. 4932/DEL/2012 AND 4443/DEL/2013 RELATE TO ASSE SSEE M/S. STUDY OVERSEAS INDIA PVT. LTD.. THESE TWO COMPANIES ARE GROUP COMPANIES. THE ISSUES INVOLVED IN I.T.A.NOS. 4932/DEL/2012 AND 444 3/DEL/2013 ARE SIMILAR ITA NO.5661/DEL/2011 I.T.A.NO. 4832/DEL/2012 I.T.A.NO. 4443/DEL/2013 2 WHEREAS ONE OF THE GROUNDS IN I.T.A. NO.5661/DEL/20 11 IS SIMILAR TO ONE OF THE GROUNDS IN I.T.A.NO. 4932 AND 4443. HOWEVER, T HESE APPEALS WERE HEARD TOGETHER AND THEREFORE, FOR THE SAKE OF CONVE NIENCE, A COMMON AND CONSOLIDATED ORDER IS BEING PASSED. FOR THE SAKE O F CONVENIENCE, THE GROUNDS OF APPEAL TAKEN IN THESE THREE APPEALS ARE REPRODUCED BELOW: 1.1 I.T.A.NO. 5661/DEL/2011: 1. 'THE LD. C!T(A) ERRED IN DELETING ADDITION OF ~ 1,34,35,168/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF MANAGE MENT FEE.' 2. 'THE LD. CIT(A) ERRED IN DELETING THE ADDITION O F RS.21,56,211/- MADE BY THE AO ON ACCOUNT OF CAPITALIZATION OF ADVE RTISEMENT EXPENSES.' 3. 'THE LD. CIT(A) ERRED IN DELETING THE ADDITION O F RS.1,22,500/- MADE BY THE AO ON ACCOUNT OF FILING FEES PAID TO TH E REGISTRAR OF COMPANIES FOR INCREASING ITS AUTHORIZED SHARE CAPITAL.' 1.2 I.T.A.NO. 4932/DEL/2012: 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE ID. CIT(A) HAS ERRED IN LAW AS WELL AS ON MERITS IN DEL ETING THE ADDITION ON ACCOUNT OF ADVERTISEMENT EXPENDITURE AMOUNTING T O RS.29,06,982/-. 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE ID. CIT(A) HAS ERRED IN LAW AS WELL AS ON MERITS IN DEL ETING THE ADDITION ON ACCOUNT OF DEPRECIATION ON PRINTERS AND OTHER PE RIPHERALS OF RS.60,4101-.' 1.3 I.T.A.NO. 4443/DEL/2013: 1. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.25,47,6 82/- ON ACCOUNT OF ADVERTISEMENT EXPENSES BEING CAPITAL IN NATURE.' 2. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS,43,672/- ON AC COUNT OF EXCESS DEPRECIATION ON PRINTER AND OTHER PERIPHERALS.' ITA NO.5661/DEL/2011 I.T.A.NO. 4832/DEL/2012 I.T.A.NO. 4443/DEL/2013 3 2. AT THE TIME OF HEARING, LD. D.R. FIRST TOOK UP I .T.A. NO. 5661/DEL/2011. AT THE OUTSET, HE ARGUED THAT THE A SSESSEE HAD DEBITED AN AMOUNT OF RS.1,34,35,168/- AS MANAGEMENT FEE WHICH WAS BASED ON AN AGREEMENT DATED 27.03.2008 AND THE BILLS FOR MANAGE MENT FEE WERE ALL DATED 31.03.2008. IT WAS SUBMITTED THAT IN THIS PERIOD O F 4 DAYS, WHAT MANAGEMENT SERVICE WERE RENDERED TO THE ASSESSEE, IS NOT CLEAR AS EVEN THE BILLS RAISED BY RESPECTIVE PARTIES DO NOT MENTION THE NATURE OF SER VICES RENDERED TO THE ASSESSEE. REGARDING THE SUBMISSION OF LD. A.R. BEF ORE LD. CIT(A) AS RECORDED IN PARA 3.10, THE LD. D.R. SUBMITTED THAT THE CONTENTION OF THE ASSESSEE THAT THE EXPENSES INCURRED BY THE ASSESSEE HAD BECOME INCOME OF ANOTHER GROUP COMPANY, DOES NOT HOLD ANY FORCE AS I F THIS LOGIC IS TO BE ACCEPTED THEN, EVEN EXPENSES INCURRED BY ANY COMPAN Y ON SALARY OF ITS EMPLOYEES ALSO BECOME INCOME IN THE HANDS OF EMPLOY EES. THEREFORE, IT WAS ARGUED THAT UNEXPLAINED EXPENDITURE OF AN ASSES SEE CANNOT BE ALLOWED ONLY ON THE BASIS THAT THIS EXPENDITURE HAD BECOME INCOME OF PAYEES AND PAYEES HAD PAID THE TAXES. INVITING OUR ATTENTION TO THE SERVICE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH M/S. STUDY OVERSE AS INDIA PVT. LTD., LD. D.R. SUBMITTED THAT THE BASIS OF SHARING OF EXPENS E AND CHARGING OF FEE HAS NOT BEEN MENTIONED IN THE SERVICE AGREEMENT AND THE PAYEE BEING GROUP COMPANY THEY MUST HAVE USED THE SERVICE AGREEMENT T O MINIMIZE THE TAX EFFECT AND THEREFORE, THE A.O. HAD RIGHTLY MADE THE DISALLOWANCE AS THE EXPENDITURE WAS NOT EXPLAINED TO HAVE BEEN INCURRED FOR THE PURPOSE OF BUSINESS. AS REGARDS OTHER TWO GROUNDS OF APPEAL R ELATING TO DELETION OF ADDITION ON ACCOUNT OF ADVERTISEMENT EXPENSES AND O N ACCOUNT OF FILING FEE PAID TO REGISTRAR OF COMPANIES FOR INCREASING THE A UTHORIZED CAPITAL, LD. D.R. HEAVILY RELIED UPON THE ASSESSMENT ORDER. ITA NO.5661/DEL/2011 I.T.A.NO. 4832/DEL/2012 I.T.A.NO. 4443/DEL/2013 4 2.1 LD. A.R. ON THE OTHER HAND SUBMITTED THAT BOTH THE COMPANIES WERE GROUP COMPANIES AND WERE NEW COMPANIES. IN ORDER T O MINIMIZE THE COSTS, BOTH THE COMPANIES HAD AGREED TO SHARE THE COMMON E XPENSE AND THE EXPENSES WERE SHARED ON THE BASIS OF NUMBER OF STUD ENTS REGISTERED FOR UNIVERSITIES OTHER THAN UK UNIVERSITIES AND FOR STU DENTS REGISTERED FOR UK UNIVERSITY. OUR ATTENTION WAS INVITED TO PAPER BOO K PAGE 179-181 WHERE THE BASIS OF ALLOCATION OF EXPENSES WAS PLACED. OUR SP ECIFIC ATTENTION WAS INVITED TO PAPER BOOK PAGE 181 WHERE DISTRIBUTION O F EXPENSES OF GENERAL AND ADMINISTRATIVE RENT ETC., WERE PLACED. IT WAS FURTHER SUBMITTED THAT THE MANAGEMENT FEE AS DEBITED IN THE P & L ACCOUNT WERE CREDITED TO PAYEE AFTER DEDUCTION OF APPROPRIATE TAXES AND MOREOVER, IT WAS SUBMITTED THAT EVEN SERVICE TAXES WERE PAID ON SUCH MANAGEMENT FEE AND THEREFORE, THE ALLEGATION OF THE A.O. THAT AGREEMENT WAS USED FOR MINIMIZING THE TAXES IS NOT CORRECT. IT WAS FURTHER SUBMITTED THAT BOTH TH E COMPANIES I.E. PAYER AND PAYEE ARE INDIAN DOMESTIC COMPANIES AND EXPENSES IN CURRED BY ONE COMPANY HAD BECOME INCOME OF ANOTHER COMPANY. OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 133 WHERE A PART OF COPY OF BALANCE SHEET RELATING TO PAYEE COMPANY WAS PLACED AND OUR SPECIF IC ATTENTION WAS INVITED TO THE FACT THAT INCOME RECEIVED BY THIS COMPANY ON ACCOUNT OF MANAGEMENT FEE HAS BEEN REDUCED FROM ITS EXPENSE AND THEREBY T HE PAYEE COMPANY HAD DECLARED MORE PROFIT TO THIS EXTENT AND, THEREFORE , IT WAS SUBMITTED THAT THERE WAS NO TAX ADVANTAGE TO THE GROUP AS A WHOLE. IN V IEW OF THE ABOVE, IT WAS SUBMITTED THAT LD. CIT(A) AFTER GOING THROUGH THE W HOLE FACTS AND CIRCUMSTANCES HAS ARRIVED AT THE CORRECT DECISION. 3. AS REGARDS THE 2 ND ISSUE OF ADVERTISEMENT EXPENSES, THE LD. A.R. SUBMITTED THAT THE ASSESSEE HAD INCURRED EXPENDITUR E FOR ITS OWN BUSINESS ITA NO.5661/DEL/2011 I.T.A.NO. 4832/DEL/2012 I.T.A.NO. 4443/DEL/2013 5 AND OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 17 6-177 TO HIGHLIGHT THE COPY OF ADVERTISEMENT MATERIAL. IT WAS FURTHER SUB MITTED THAT NO BENEFIT OF ENDURING NATURE WAS BEING CREATED BY THE ASSESSEE A S ONCE THE STUDENT GETS ADMISSION, HE IS NOT CONCERNED WITH THE ASSESSEE AN D THEREFORE THERE IS NO BRAND BUILDING ON ACCOUNT OF ADVERTISEMENT EXPENSES . 4. AS REGARDS THE ISSUE OF FEE PAID TO REGISTRAR OF COMPANIES FOR INCREASE IN AUTHORIZED CAPITAL, THE LD. A.R. RELIED UPON THE ORDER OF LD. CIT(A). ARGUING UPON THE REVENUES APPEAL IN I.T.A. NO. 493 2 AND 4443, LD. D.R. SUBMITTED THAT ADVERTISEMENT EXPENSES INCURRED BY T HE ASSESSEE WERE OF CAPITAL NATURE AND, THEREFORE, THE A.O. HAD RIGHTLY DISALLOWED THE SAME. SIMILARLY, REGARDING DEPRECATION ON COMPUTER PERIPH ERALS, HE RELIED UPON THE ASSESSMENT ORDER. LD. A.R. ON THE OTHER HAND SUBMI TTED THAT LD. CIT(A) HAD FOLLOWED THE JURISDICTIONAL HIGH COURT ORDER WITH R ESPECT TO DEPRECIATION ON COMPUTER PERIPHERALS AND SIMILARLY, THE ADVERTISEME NT ISSUE WAS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND HE HEAVILY RE LIED UPON THE ORDER OF LD. CIT(A) IN THIS REGARD. 5. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. WE FIRST TAKE UP I.T.A. NO. 5661/DEL/20 11; THE FIRST ISSUE IS REGARDING DELETION OF RS.1,34,35,168/- WHICH WAS MA DE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF MANAGEMENT FEE. THE A.O . HAD MADE THIS DISALLOWANCE HOLDING THAT THE ASSESSEE WAS NOT ABLE TO GIVE BILL WISE DETAILS OF SERVICE RECEIVED AND ALL THE BILLS WERE DATED 31 .03.2008 AND ASSESSEE HAD BOOKED EXPENSES UNDER THE HEAD MANAGEMENT FEE ONLY TO LOWER THE PROFITS OF THE COMPANY. HOWEVER, WE OBSERVE THAT AT PAGE 182 OF THE PAPER BOOK THERE IS A DETAILED BREAK-UP OF THE BASIS OF SHARING OF E XPENSES BETWEEN THE TWO COMPANIES. THE EXPENSES HAVE BEEN CHARGED BY PAYEE COMPANY ON THE ITA NO.5661/DEL/2011 I.T.A.NO. 4832/DEL/2012 I.T.A.NO. 4443/DEL/2013 6 BASIS OF MAN-HOURS SPENT. MOREOVER, THE ASSESSEE H AS DEDUCTED APPROPRIATE TAX AT SOURCE AND THESE BEING GROUP COMPANIES AND B EING INDIAN DOMESTIC COMPANIES, THE SAME RATE OF TAX APPLIES AND THE EXP ENDITURE IF INFLATED IN ONE COMPANY WILL BECOME INCOME IN ANOTHER GROUP COMPANY . THEREFORE, THERE IS NO TAX ADVANTAGE TO THE GROUP AS A WHOLE IN INFL ATING AND DEFLATING THE PROFITS OF ONE COMPANY. MOREOVER, THE ASSESSEE HAS BEEN SUBJECTED TO SIGNIFICANT SERVICE TAX PAYMENTS ON ACCOUNT OF MANA GEMENT FEE. THEREFORE, THERE WAS IN FACT NO ADVANTAGE TO ASSESSEE COMPANY TO EVADE INCOME TAX. LD. CIT(A) HAD DEALT THE ISSUE IN A REASONABLE MANN ER. FOR THE SAKE OF CONVENIENCE, FINDINGS OF LD. CIT(A) IN THIS RESPECT ARE REPRODUCED BELOW: 3.13 I HAVE CAREFULLY CONSIDERED THE FINDINGS OF THE AO, THE WRITTEN SUBMISSIONS MADE BY THE APPELLANT ON THE SAME INCLU DING ALL RELEVANT MATERIAL PLACED ON RECORD AND JUDICIAL PRECEDENTS R ELIED UPON BY THE APPELLANT. DURING THE COURSE OF THE APPELLATE PROCE EDINGS THE APPELLANT HAS REBUTTED THE ALLEGATIONS MADE BY THE AO AS FOLLOWS: A) APPELLANT DULY SUBMITTED DETAILS OF THE EXPENSES COMPRISING OF THE MANAGEMENT EXPENSE ALONG WITH DOCUMENTARY EVIDE NCE TO SUPPORT THE INCURRENCE OF SUCH EXPENDITURE BY SOIPL. B) APPELLANT SUBMITTED A DETAILED NOTE TO SUBSTANTI ATE THE NECESSITY OF CROSS CHARGE OF EXPENDITURE INCURRED BY SOIPL TO THE APPELLANT AND DULY DEMONSTRATED THAT THE MANAGEMENT FEE HAS B EEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSIN ESS. IN THIS REGARD, THE APPELLANT HAS APPROPRIATELY PLACED RELIANCE ON VARIOUS JUDICIAL PRECEDENTS WHICH SUPPORT GENUINENESS OF THE EXPENDI TURE. C) FURTHER THE APPELLANT HAS ALSO APPROPRIATELY CLA RIFIED THAT THE QUANTUM OF COMMISSION INCOME EARNED BY THE APPELLAN T SINCE THE TWO COMPONENTS ARE COMPUTED BASED ON DIFFERENT VARIABLE S VIZ. NUMBER OF STUDENTS COUNSELED DURING THE YEAR VS. NUMBER OF ST UDENTS WHO TOOK ADMISSION. D) THE APPELLANT HAS APPROPRIATELY SUPPORTED ITS CL AIM OF EXPENDITURE WITH JUDICIAL PRECEDENTS WHICH HAVE HEL D THAT REASONABLENESS OF THE EXPENDITURE INCURRED IS REQUI RED TO BE DETERMINED FROM A BUSINESSMAN'S PERSPECTIVE. ITA NO.5661/DEL/2011 I.T.A.NO. 4832/DEL/2012 I.T.A.NO. 4443/DEL/2013 7 E) APPELLANT HAS SUBMITTED DETAILED WORKING OF THE BASIS OF ALLOCATION OF EXPENDITURE BET N THE APPELLANT AND SOIPL AND HA S ALSO ADEQUATELY EXPLAINED ADDITIONAL QUERIES RAISED BY MY OFFICE ON BASIS OF ALLOCATION ADOPTED BY THE APPELLANT UNDER ALL POSSIBLE ODD SIT UATIONS. F) DETAILED NOTE TO SUBSTANTIATE THAT THE SAID COST RECHARGE HAS NOT RESULTED IN ANY LOSS TO THE REVENUE HAS ALSO BEEN S UBMITTED BY THE APPELLANT. ON THE CONTRARY, THE AO HAS MADE ITS ALLEGATIONS ME RELY ON THEORIES AND NOTHING HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE MANAGEMENT FEE IS NOT RELATED TO THE BUSINESS OF THE APPELLANT OR HAS NOT ACTUALLY BEEN INCURRED. THUS, THE ADDITION MADE BY THE AO TO THE INCOME OF THE APPELLANT BY DISALLOWING THE MANAGEMENT EXPENDITURE OF RS. 1,34,35,168/- REDUCING THE AMOUNT OF RETURNED LOSS IS DELETED. AS A RESULT, THE GROUND NO 3 OF THE APPEAL IS ALLOWED. 5.1 WE ARE IN AGREEMENT WITH THE DETAILED SUBMISSIO N OF THE ASSESSEE AS RECORDED IN LD. CIT(A)S ORDER AND ALSO WE DO NOT F IND ANY INFIRMITY IN LD. CIT(A)S FINDING THEREFORE, WE DO NOT INTERFERE WIT H THE SAME. IN VIEW OF ABOVE, GROUND NO.1 IS DISMISSED. 5.2 GROUND NO.2 HAS BEEN DECIDED BY LD. CIT(A) BY H OLDING AS UNDER: 4.3 I HAVE CAREFULLY EXAMINED THE ISSUE AND HAVE ALSO CONSIDERED THE SUBMISSION MADE BY THE APPELLANT ON THE SAME IN CLUDING ALL RELEVANT MATERIAL PLACED ON RECORD AND JUDICIAL PRE CEDENTS RELIED UPON BY THE APPELLANT. I FIND NO MERIT IN ALLEGATIO N OF THE AO THAT MERELY AS THIS IS THE FIRST YEAR OF OPERATION OF TH E COMPANY THE ADVERTISEMENT EXPENDITURE WOULD RENDER ENDURING BEN EFIT TO THE COMPANY. MOREOVER, THE AO HAS FAILED TO DEFINE THE PERIOD OVER WHICH SUCH BENEFIT IS EXPECTED TO BE INCURRED. THUS, PLAC ING RELIANCE ON THE JUDICIAL PRECEDENTS SPECIFICALLY THE DECISION JURIS DICTIONAL DELHI HIGH COURT IN CASE OF SALORA INTERNATIONAL (SUPRA) AND T HE DECISION OF THE MADRAS HIGH COURT IN CASE OF BRILLIANT TUTORIALS P LTD (SUPRA) WHICH IS ON SIMILAR FACT PATTERN, THE CLAIM OF ADVERTISEM ENT EXPENDITURE MADE BY THE APPELLANT IS CORRECT AND THE ADDITION M ADE BY THE AO IS DELETED. AS A RESULT, THE GROUND NO 4 OF THE APPEAL IS ALLOWED. ITA NO.5661/DEL/2011 I.T.A.NO. 4832/DEL/2012 I.T.A.NO. 4443/DEL/2013 8 5.3 LD. CIT(A) HAS FOLLOWED THE JURISDICTIONAL HIGH COURT DECISION AND THERE IS NO INFIRMITY IN HIS FINDINGS. THEREFORE, GROUND NO.2 IS ALSO DISMISSED. 5.4 GROUND NO.3 HAS BEEN DECIDED BY LD. CIT(A) BY H OLDING AS UNDER: DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, T HE AO OBSERVED THAT AS PER CLAUSE 17(A) OF THE TAX AUDIT REPORT PE RTAINING TO A.Y. 2008-09 THE APPELLANT HAD DEPOSITED FILING FEE OF R S. 1,22,500 WITH THE REGISTRAR OF COMPANIES FOR INCREASE IN AUTHORIZED S HARE CAPITAL OF THE COMPANY. SINCE THE SAME IS IN THE NATURE OF A CAPIT AL EXPENDITURE, HENCE, THE AO DISALLOWED THE SAME U/S 37 OF THE ACT . IN THIS REGARD, THE APPELLANT SUBMITTED THAT THE FI LING FEES PAID BY THE APPELLANT PERTAINED TO INCREASE IN THE AUTHORIZED S HARE CAPITAL OF THE COMPANY IN THE FINANCIAL YEAR 2008-09 WHICH WAS INA DVERTENTLY REPORTED IN THE TAX AUDIT REPORT PERTAINING TO FINA NCIAL YEAR 2007- 08. FURTHER, THE APPELLANT ALSO CONFIRMED THAT THE FILING FEE PAID BY THE APPELLANT WAS DULY DISALLOWED IN THE COMPUTATIO N OF TAXABLE INCOME FOR THE ASSESSMENT YEAR RELEVANT TO FINANCIA L YEAR 2008-09. TO SUPPORT THE ABOVE CONTENTION, THE APPELLANT SUBM ITTED THE FOLLOWING DOCUMENTS: A. FORM 5 FILED WITH THE REGISTRAR OF COMPANIES B. CHALLAN TILED WITH MINISTRY OF CORPORATE AFFAIRS EV IDENCING THAT THE FILING FEE WAS PAID ON 14.05.2008. C. COPY OF LEDGER ACCOUNT EVIDENCING THAT THE EXPENSE WAS BOOKED DURING FINANCIAL YEAR 2008-09 D. COPY OF LAX COMPUTATION FOR FINANCIAL YEAR 2008- 09 EVIDENCING THAT THE EXPENSE WAS DISALLOWED DURING T HAT YEAR. FINDING 6.3 I HAVE CONSIDERED THE WRITTEN AND ORAL SUBMISS IONS MADE BY THE APPELLANT AND THE FACTS ON RECORD. THE AO IS ACCORD INGLY DIRECTED TO VERIFY ALL THE MATERIALS PLACED ON RECORD AND GRANT APPROPRIATE RELIEF. AS A RESULT, THE GROUND NO 6 IS CONSIDERED TO BE AL LOWED. 5.5 LD. CIT(A) HAS ALLOWED THE RELIEF ON THE BASIS OF SUBMISSIONS OF THE ASSESSEE THAT THESE EXPENSE WERE INADVERTENTLY REPO RTED IN AUDIT REPORT AND ITA NO.5661/DEL/2011 I.T.A.NO. 4832/DEL/2012 I.T.A.NO. 4443/DEL/2013 9 ACTUALLY THESE RELATED TO FINANCIAL YEAR 2008-09. WE DO NOT FIND ANY INFIRMITY IN HIS FINDINGS, THEREFORE, GROUND NO.3 I S ALSO DISMISSED. 5.6 IN VIEW OF ABOVE, I.T.A.NO. 5661/DEL/2011 IS DI SMISSED. 6. NOW, WE TAKE UP I.T.A.NOS. 4932/DEL/2012 AND 444 3/DEL/2013. THE ISSUES RAISED IN THESE TWO APPEALS ARE SIMILAR WHIC H RELATE TO ADVERTISEMENT EXPENDITURE AND DEPRECIATION ON COMPUTER PERIPHERAL S. LD. CIT(A) HAS ALLOWED ADVERTISEMENT EXPENDITURE WHICH THE A.O. HA D DISALLOWED HOLDING THAT THESE EXPENSE ARE OF ENDURING NATURE. HOWEVER , LD. CIT(A) HAS ALLOWED THE SAME BY HOLDING SIMILAR FINDINGS IN THE SE TWO APPEALS . FOR THE SAKE OF CONVENIENCE, THE FINDINGS AS RECORDED BY LD . CIT(A) IN A.Y. 2009- 10 ARE REPRODUCED BELOW: GROUND NO. 1 & 2ARE TAKEN TOGETHER. I HAVE EXAMINED THE ISSUE AND HAVE ALSO CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AS WELL AS FACTS STATED IN TH E ASSESSMENT ORDER, ON THE SAME INCLUDING ALL RELEVANT MATERIAL PLACED ON RECORD AND JUDICIAL PRECEDENTS RELIED UPON BY THE APPELLANT. I FIND NO MERIT IN THE ALLEGATION OF THE AO THAT MERELY AS THIS IS THE FIR ST YEAR OF OPERATION OF THE COMPANY, THE ADVERTISEMENT EXPENDITURE WOULD RE NDER ENDURING BENEFIT TO THE COMPANY. MOREOVER, THE AO HAS FAILED TO DEFINE THE PERIOD OVER WHICH SUCH BENEFIT IS EXPECTED TO BE IN CURRED. THUS, PLACING RELIANCE ON THE JUDICIAL PRECEDENTS SPECIFI CALLY THE DECISION JURISDICTIONAL DELHI HIGH COURT IN CASE OF SALORA I NTERNATIONAL (SUPRA) AND THE DECISION OF THE MADRAS HIGH COURT I N CASE OF BRILLIANT TUTORIALS P LTD (SUPRA) WHICH IS ON SIMILAR FACT PA TTERN, THE CLAIM OF ADVERTISEMENT EXPENDITURE MADE BY THE APPELLANT IS CORRECT AND THE ADDITION MADE BY THE AO IS DELETED. THIS ISSUE HAS ALSO BEEN DECIDED IN FAVOUR OF ASSESSEE'S SISTER CONCERN IN MY ORDER DATED 23.9.11 VIDE APPEAL 0.118/2010- L L FOR THE A.Y.2008-09. HENCE, THESE GROUNDS OF THE APPEAL ARE ALLOWED. GROUND NO.3. ITA NO.5661/DEL/2011 I.T.A.NO. 4832/DEL/2012 I.T.A.NO. 4443/DEL/2013 10 I HAVE EXAMINED THE ISSUE AND HAVE ALSO CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AS WELL AS FACTS STATED IN TH E ASSESSMENT ORDER, ON THE SAME INCLUDING ALL RELEVANT MATERIAL PLACED ON RECORD AND JUDICIAL PRECEDENTS RELIED UPON BY THE APPELLANT. T HE ACCESSORIES AND PERIPHERALS OF COMPUTER PROVIDE INPUT PROCESSING, S TORAGE AND VARIOUS OUTPUT DEVICES. THE OUTPUT DEVICES SUCH AS PRINTERS, SCANNER ETC. ARE COMPUTER PERIPHERALS AND FORM ESSENTIAL PA RTS OF THE COMPUTER. THESE OUTPUT DEVICES CANNOT WORK IN ISOLA TION AND ALSO WORKING ON COMPUTER SYSTEM WITHOUT AN OUTPUT DEVICE SUCH AS PRINTER WOULD BE FUTILE. IN VIEW OF THE SAME, THE CLAIM OF DEPRECIATION AT 60 PERCENT ON PRINTER, SCANNER, AND OTHER COMPUTER PER IPHERALS BY THE APPELLANT SEEMS JUSTIFIED. THE SAME POSITION HAS BE EN ACCEPTED BY VARIOUS TRIBUNALS WHEREIN IT HAS BEEN HELD THAT COM PUTER PERIPHERALS SUCH AS ROUTERS, SWITCHES, PRINTERS ETC ARE ELIGIBL E FOR DEPRECIATION AT THE RATE OF 60 PERCENT. IN VIEW OF THE SAME, THE CL AIM OF DEPRECIATION BY THE APPELLANT IS CORRECT AND THE ADDITION MADE B Y THE AO IS DELETED. THIS ISSUE HAS ALSO BEEN DECIDED IN FAVOUR OF THE A SSESSEE'S SISTER CONCERN IN MY ORDER DATED 23.9.11 VIDE APPEAL NO.11 8/2010-11 FOR THE A.Y.2008-09. HENCE, THE GROUND NO 3 OF THE APPE AL IS ALLOWED. 7. THE ABOVE FINDING OF LD. CIT(A) ARE BASED UPON T HE DECISION OF HONBLE JURISDICTIONAL HIGH COURT AND WE DO NOT FIN D ANY INFIRMITY IN THE SAME. 8. IN VIEW OF ABOVE, APPEALS IN I.T.A.NO. 4932 AND 4443 ARE DISMISSED. 9. IN NUTSHELL, ALL THE THREE APPEALS FILED BY THE REVENUE ARE DISMISSED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCT., 2014. SD./- SD./- ( I. C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 31 ST OCT., 2014 SP ITA NO.5661/DEL/2011 I.T.A.NO. 4832/DEL/2012 I.T.A.NO. 4443/DEL/2013 11 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNAT ION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK 31/10/14 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER