DCIT, New Delhi V. M/s. Maruti Countrywide Auto Financial Services Pvt. Ltd., New Delhi

ITA 4593/DEL/2011

• Counselvise Citation: 459320114 RSA 2011
• Duration Of Justice: 2 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 19-12-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 17-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI SENIOR
• Assessee Lawyers: VINAY SINGH AL CAS
• Keywords: Capital asset; Depreciation; Business expenditure; Question of law; Bad and doubtful debts; Commercial expediency
• Section: 143(3); 28

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI RAJPAL YADVA, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.4593/DEL./2011 (ASSESSMENT YEAR : 2008-09) DCIT, CIRCLE 6 (1), VS. M/S. MARUTI COUNTRYWIDE AU TO FINANCIAL NEW DELHI. SERVICES LTD., 401, 402, 4 TH FLOOR, AGGARWAL MILLENIUM TOWER, E 123, NETAJI SUBHASH PLACE, PITAMPURA, DELHI 110 034. (PAN : AAACM6101B) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI TARANDEEP SINGH & VINAY SINGH AL, CAS REVENUE BY : SHRI R.S. NEGI, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THIS APPEAL AGAINST THE ORDE R OF CIT (APPEALS)- IX, NEW DELHI DATED 29.07.2011 FOR THE ASSESSMENT Y EAR 2008-09. THE GROUNDS OF APPEAL READ AS UNDER :- 1. 'THE ORDER OF LEARNED CIT (APPEALS) IS ERRONEOU S & CONTRARY TO FACTS & LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(APPEALS) HAS ERRED IN DELETING DISALLOW ANCE OF LOSS CLAIMED ON SALE OF REPROCESSED ASSET MADE BY T HE ASSESSING OFFICER ON THE GROUND THAT THE SAME IS NO T A BUSINESS LOSS. ITA NO.4593/DEL./2011 2 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LEARNED CIT(A) APPEALS ERRED IN DELETING THE DISALL OWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADVERTI SING AND PROMOTION EXPENSES HOLDING THAT THE SAME WAS NOT IN CURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE ASSE SSEE. 4. THE APPELLANT CARVES LEAVE TO ADD, TO ALTER, OR AMEND ANY GROUNDS OF APPEAL RAISED ABOVE AT THE TIME OF HEARI NG.' 2. IN THIS CASE, RETURN OF INCOME WAS FILED ON 30.0 9.2008 DECLARING INCOME AT RS.74,93,303/-. THE SAME WAS PROCESSED UNDER SE CTION 143(1) OF INCOME- TAX ACT, 1961. THEREAFTER, SCRUTINY ASSESSMENT UND ER SECTION 143(3) WAS MADE ON 20.12.2010. THE ASSESSEE IS A NON-BANKING FINANCIAL COMPANY ENGAGED IN THE BUSINESS OF AUTO FINANCE, LEASE AND HIRE PURCHASE. THE ASSESSEE IS A JOINT VENTURE COMPANY OF MARUTI UDYOG LIMITED - 26%, HOUSING DEVELOPMENT FINANCE CORPORATION LTD. 37% AND GE CAPITAL SERVICES INDIA 37%. 3. GROUND NOS.1 & 4 ARE GENERAL IN NATURE AND DO NO T REQUIRE ANY ADJUDICATION. 4. GROUND NO.2 IN REVENUES APPEAL IS AGAINST DELET ING THE DISALLOWANCE OF LOSS CLAIMED ON SALE OF REPROCESSED ASSET MADE BY T HE ASSESSING OFFICER ON THE GROUND THAT THE SAME IS NOT A BUSINESS LOSS. 5. AT THE OUTSET OF THE HEARING, THE LEARNED AR SUB MITTED THAT THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F ITAT IN ASSESSEES OWN FOR ASSESSMENT YEAR 2006-07 AND THE ITATS DECISION HAS BEEN AFFIRMED BY ITA NO.4593/DEL./2011 3 THE HON'BLE DELHI HIGH COURT. THE LEARNED DR WAS A LSO NOT HAVING ANY CONTRARY VIEW IN THIS REGARD. ITAT, DELHI BENCH E IN ASSESSEES OWN CASE IN ITA NO.2181 2183/DEL/2010 DATED 29.04.2011, A COPY OF ORDER WHICH IS PLACED AT PAGES 13 TO 32 OF THE PAPER BOOK, HAS HEL D AS UNDER :- 2. ALL THESE APPEALS WERE HEARD TOGETHER. THESE IN VOLVE COMMON ISSUE ALSO, HENCE, FOR THE SAKE OF CONVENIEN CE, ALL THESE APPEALS ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER. GROUND NO.1 IN ALL THE APPEALS IS GENERAL, WHICH NEEDS NO SEPARATE ADJUDICATION. IN ALL THE APPEALS GROUND NO.2 REPRES ENT ONE IDENTICAL ISSUE WHICH IS REGARDING LOSS ON SALE OF REPOSSESSED ASSETS. IT IS THE CONTENTION OF THE ASSESSEE THAT F OR ASSESSMENT YEAR 2002-03 THE TRIBUNAL HAS DECIDED THIS ISSUE IN THE CASE OF THE ASSESSEE AND COPY OF ORDER IS PLACED AT PAGES 6 -13 OF THE PAPER BOOK. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE IS A JOINT VENTURE COMPANY BETWEEN MARUTI UDYOG LTD., HO USING DEVELOPMENT FINANCE CORPN. AND GE CAPITAL SERVICES INDIA. THE ASSESSEE IS A NON-BANKING FINANCIAL COMPANY (NB FC) ENGAGED INTER ALIA IN THE BUSINESS OF AUTO FINANCE, LEASE AND HIRE PURCHASE. IT WAS NOTICED BY THE ASSESSING OFFICER T HAT THE ASSESSEE HAD CLAIMED CERTAIN EXPENSES ON ACCOUNT OF LOSS ON SALE OF REPOSSESSED ASSETS. ACCORDING TO THE ASSESSING O FFICER, SUCH EXPENDITURE WAS CAPITAL IN NATURE. IT WAS EXPLAINED THAT THE ASSESSEE WAS PROVIDING FINANCIAL ASSISTANCE TO CUST OMERS IN ACQUIRING WIDE RANGE OF CONSUMER AND AUTO PRODUCTS. DURING THE COURSE OF REGULAR BUSINESS, IT HAS TO PROVIDE FROM TIME TO TIME CERTAIN AUTO/CONSUMER LOANS AND ASSETS ON HIRE PURC HASE/LEASE. IN THE CASE OF HIRE PURCHASE TRANSACTION, THE ASSESSEE DOES NOT CLAIM ANY DEPRECIATION AND REFLECTS THE HIRE PURCHASE REC EIVABLES FROM THE HIRERS IN THE BALANCE SHEET AS HIRE PURCHASE RE CEIVABLES. IN THE CASE OF SECURED AUTO OR CONSUMER LOAN, THE LOAN IS HYPOTHECATED AGAINST THE AUTO/TWO WHEELER OR THE CO NSUMER DURABLE AS A SECURITY WHICH, IN THE EVENT OF DEFAUL T OF THE CUSTOMER IS REPOSSESSED. SIMILARLY, IN THE CASE OF HIRE PURCHASE, IN THE EVENT OF DEFAULT ON THE PART OF THE HIRER IN THE PAYMENT OF INSTALLMENTS THE ASSESSEE REPOSSESSES THE ASSET. AS AND WHEN A HYPOTHECATED ASSET IS REPOSSESSED UNDER LOAN/HIRE P URCHASE TRANSACTION, THE SAME IS INCLUDED IN THE REPOSSESSE D STOCK OF THE COMPANY UNDER THE CURRENT ASSETS. THEREAFTER, THE A SSESSEE TAKES ITA NO.4593/DEL./2011 4 A COMMERCIALLY PRUDENT DECISION FOR SELLING THOSE R EPOSSESSED ASSETS TO THE INTERESTED BUYERS. ON SALE, THE EXCES S/SHORTFALL OF THE SALE PROCEEDS VIS-A-VIS THE AMOUNT RECOVERED FR OM THE HIRER IS BOOKED AS BUSINESS PROFIT/LOSS IN THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD LOSS ON SALE OF REPOSSESSED ASSETS. THE UNSOLD REPOSSESSED STOCK LYING IN THE POSSESSION OF THE AS SESSEE AS AT THE END OF THE YEAR CONTINUE TO FORM PART OF THE CU RRENT ASSETS. ACCORDINGLY, IT IS THE CASE OF THE ASSESSEE THAT RE POSSESSED ASSETS ARE NOT CAPITAL ASSETS OF THE COMPANY. THE LOSS ARO SE CONSEQUENT TO THE SALE OF REPOSSESSED ASSETS WHICH REPRESENT D ISTRIBUTION OF THE REALIZABLE VALUE/SALE PROCEEDS VIS-A-VIS THE AM OUNT RECOVERABLE FROM THE HIRER WHICH CONSTITUTE THE LOS S INCURRED BY THE ASSESSEE AS BUSINESS LOSS. ON THESE FACTS, THE TRIBUNAL FOR ASSESSMENT YEAR 2003-04 HAS UPHELD THE ORDER OF CIT (A) VIDE WHICH THE SIMILAR ADDITION WAS DELETED. THE ORDER O F THE TRIBUNAL IS DATED 14TH SEPTEMBER, 2010 RENDERED IN ITA NO.3620/DEL/2008. THE OBSERVATIONS OF THE TRIBUNAL WHILE DECIDING THE ISSUE IN FAVOUR OF THE ASSESSEE ARE AS UNDER:- 5. WE HAVE HEARD LD. COUNSELS OF BOTH THE PARTIES AND PERUSED THE RECORDS. LD. DEPARTMENTAL REPRESENTATIV E FAIRLY AGREED THAT THE ISSUE IS COVERED IN FAVOUR O F THE ASSESSEE BY THE DECISION OF DELHI BENCH B OF THE ITAT DATED 13.11.2009 IN THE CASE OF M/S CITI CORP. MARU TI FINANCE LTD. IN ITA NOS.3749 & 3750/D/2009 FOR ASSESSMENT YEARS 2003-04 AND 2004-05. THE TRIBUNAL IN THE SAID CASE HAS REFERRED TO THE ORDER OF CIT (A) WHEREIN THE CIT (A) HAD HELD THAT DEDUCTION CLAIMED BY THE ASSESSEE WAS ADMISSIBLE U/S 36 OF THE INCOME-TAX AC T. THE OBSERVATIONS OF THE CIT (A) IN THE SAID PARTICU LAR CASE ARE REPRODUCED HEREUNDER:- THERE IS NO DISPUTE THAT THE APPELLANT IS A NBFC AND IS IN THE BUSINESS OF MONEY LENDING GIVING FINANCE FOR PURCHASE OF VEHICLE UNDER HIRE PURCHASE SCHEME. THE OWNER OF THE VEHICLE IS THE PURCHASER AND APPELLANT IS ONLY LENDER OF MONEY. I HAVE GONE THROUGH THE MODUS-OPERANDI OF TRANSACTION AND THE MODEL OF ENTRIES PASSED IN CONNECTION WITH THE TRANSACTION STARTING WITH THE FINANCE AND ITS LOGICAL END. FROM PERUSAL OF THE ITA NO.4593/DEL./2011 5 ENTRIES IT IS ABUNDANTLY CLEAR THAT IT IS CLEAR CUT CASE OF WRITE OFF OF BAD DEBTS. ALTHOUGH THE APPELLANT COMPANY HAS USED THE NOMENCLATURE AS LOSS ON SALE OF REPOSSESSED ASSETS AS PROVIDE UNDER NBFC NORMS BUT THE FACT OF THE MATTER IS THAT IT IS A W RITE OFF OF BAD DEBTS. WHEN THE CUSTOMER MAKES DEFAULT IN PAYMENT OF LOAN THE VEHICLE IS REPROCESSED AND SOLD. THE AMOUNT REALIZED ON SALE IS CREDITED TO TH E CUSTOMER A/C AND BALANCE LEFT IN THE ACCOUNT OF CUSTOMER IS WRITTEN OFF AS LOSS ON SALE OF REPOSSESSED ASSETS WHICH IS NOTHING A WRITE OFF OF BAD DEBTS. NOMENCLATURE DOES NOT CHANGE THE REAL CHARACTER OF THE TRANSACTION. THE COURT HAVE INVARIABLY HELD THAT NOMENCLATURE GIVEN TO THE TRANSACTION AND THE TREATMENT GIVEN TO EXPENDITURE IN PARTICULARS MANNER OR THE ACCOUNTING ENTRIES DOES N OT CHANGE THE REAL CHARACTER OF TRANSACTION AND ARE NO T DETERMINATIVE AND DECISIVE FOR TAX PURPOSES. THE CLAIM OF THE ASSESSEE SHOULD BE DECIDED AS PER PROVISION OF LAW ) SEE CASE OF BURGER PAINTS INDIA LTD., 254 ITR 503 (CAL) AND KEDAR NATH JUTE MANUFACTURING CO. 82 ITR SUPREME COURT. I HAVE ALSO GONE THROUGH THE PROVISION OF SECTION 36(1)(VII) AND SECTION 36(2) OF THE ACT WHICH PROVI DE THAT WRITE OFF MADE BY THE COMPANY WHICH ARE IN MONEY LENDING BUSINESS ARE ADMISSIBLE DEDUCTION UNDER SECTION 36 OF THE ACT. THE RELEVANT EXTRACT O F SECTION 36 (2) OF THE ACT INTER ALIA PROVIDES AS UN DER: IN MAKING ANY DEDUCTION FOR A BAD DEBT OR PART THEREOF, THE FOLLOWING PROVISIONS SHALL APPLY: NO SUCH DEDUCTION SHALL BE ALLOWED UNLESS SUCH DEBT OR PART THEREOF HAS BEEN TAKEN INTO ACCOUNT IN COMPUTING THE INCOME OF THE ASSESSEE OF THE PREVIOUS YEAR IN WHICH THE AMOUNT OF SUCH DEBT OR PART THEREOF IS WRITTEN OFF OR OF AN EARLIER PREVIOUS YEAR, OR REPRESENTS MONEY LENT IN THE ORDINARY COURSE OF THE ITA NO.4593/DEL./2011 6 BUSINESS OF BANKING OR MONEY-LENDING WHICH IS CARRIED ON BY THE ASSESSEE FROM PERUSAL OF THE FACTS OF THE CASE AND THE LEGAL POSITION FOR IT TRANSPIRE THAT THE APPELLANT CASE IS FULLY C OVERED BY SECTION 36(1)(VII) READ WITH SECTION 36 (2) OF THE ACT. IT IS NOT A CASE OF TRADING LOSS U/S 28 OF THE ACT AS ALL EGED BY ASSESSING OFFICER FOLLOWING THE CASE OF ALLAHABAD H IGH COURT SUPRA. COMING ON THE LEGAL SIDE, I HAVE PERUSED THE CASE O F M/S MOTOR GENERAL SALES PVT. LTD. 226 ITR 137 RELIED UP ON BY ASSESSING OFFICER AND I AM OF THE VIEW THAT FACT S OF THE CASE ARE DIFFERENT IN THE SENSE THAT THERE THE ISSU E WAS OF TRADING LOSS CLAIMED U/S 28 OF THE ACT WHEREAS IN APPELLANT CASE IT IS A CASE OF WRITE OF DEBT (ALTHO UGH) THE NOMENCLATURE GIVEN IS LOSS ON SALE OF REPOSSESSED ASSETS. IT CAN BE SEEN FROM THE JUDGMENT OF ALLAHABAD HIGH COURT SUPRA THAT CASE IS SQUARELY COVERED U/S 36(1) (II) READ WITH SECTION 36(2) OF THE ACT. IN FACT, CASE R ELIED UPON BY ASSESSING OFFICER ON ONE WAY GOES IN FAVOUR OF THE APPELLANT IN MUCH AS THE OBSERVATION MADE THERE IN CLEARLY STATES THAT IT IS A CASE OF DEDUCTION U/S 36(1)(VII)/36(2) OF THE ACT AND NOT OF TRADING LOSS U/S 28 OF THE ACT. THE RELEVANT OBSERVATION OF THE HONBLE COURT IS GIVEN AS UNDER:- THE TRIBUNAL HAS REACHED THE CONCLUSION THAT THOUGH THE ASSESSEES BUSINESS IS THAT OF FINANCING TRUCKS ON HIRE-PURCHASE BASIS, ACTUALLY IT IS A MON EY LENDING BUSINESS AND AS SUCH ANY LOSS OCCASIONED TO THE ASSESSEE ON ACCOUNT OF NON-RECOVERY OF INSTALLMENTS FINANCED BY IT, WOULD BE A LOSS INCIDENTAL TO ITS MONEY-LENDING BUSINESS, AND THEREFORE, IT MUST BE ALLOWED U/S 36(1)(VII) R/W SECTION 36 (2) AS A BAD DEBT. ACCORDINGLY, THE TRIBUNAL, WHILE SETTING ASIDE THE ORDER OF THE CIT (A), HELD THAT THE LOSS CAUSED TO THE ASSESSEE IS NOT A TRADING LOSS CLAIMING ITA NO.4593/DEL./2011 7 DEDUCTION U/S 28 OF THE ACT. HOWEVER, ACCORDING TO THE TRIBUNAL, THE ASSESSEES CLAIM COMES U/S 36 (1)(VII) R/W SECTION 36(2) OF THE ACT AND ACCORDINGLY BENEFIT WAS GIVEN TO THE ASSESSEE HOLDING THAT IT IS A BAD DEBT AND THAT DEBT BECOME BAD IN THE PREVIOUS YEAR. NOW, I COME TO CASES RELIED UPON BY LEARNED AR AND FOUND THAT CASES REFERRED SUPPORT THE VIEW OF THE APPELLANT. IN CASE A.W. FIGGLES & C. PVT. LTD. (200 2) 254 ITR 63 (CAL) RELIED UPON IT WAS HELD THAT THE AMOU NT ADVANCED BY THE ASSESSEE DURING THE COURSE OF BUSIN ESS BUT COULD NOT BE RECOVERED WAS HELD ALLOWABLE AS BA D DEBT U/S 36(2) OF THE ACT. SIMILARLY JUDGMENT DELHI ITA T IN CASE OF POYSHA OXYGEN LTD. (2008) 19 SOT 711 AS WEL L OTHER JUDGMENT OF JURISDICTIONAL COURT CITED IN SUB MISSION HOLDING THE SIMILAR VIEW. 5.1 THE TRIBUNAL IN THE AFORESAID CASE OF M/S CITI CORP. MARUTI FINANCE LTD. (SUPRA) DELETED THE IMPUGNED AD DITIONS BY OBSERVING IN PARA 6 OF ITS ORDER AS UNDER:- 6. ON CONSIDERING THE SUBMISSIONS OF BOTH THE PART IES, PERUSING THE ORDERS OF THE TAX AUTHORITIES BELOW, W E ARE OF THE OPINION THAT THE A.O. WHILE DISALLOWING THE CLA IM OF THE ASSESSEE HAS WRONGLY PLACED RELIANCE ON THE DEC ISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF M/S MOTOR GENERAL SALES P. LTD. (SUPRA) AND THE SAME HA S BEEN RIGHTLY ANALYSED AND DISTINGUISHED BY THE CIT (A) IN HIS ORDER. WE FURTHER FIND THAT THE CIT (A) IN HIS WELL REASONED ORDER AND RELYING UPON THE VARIOUS DECISIO NS WHICH WERE RELEVANT TO THE ISSUE UNDER CONSIDERATIO N BEFORE US HAS RIGHTLY DELETED THE IMPUGNED ADDITION S OF RS.1,56,04,644/- (IN A.Y. 2003-04) AND RS.2,00,14,4 97/- (IN A.Y. 2004-05) RESPECTIVELY. ACCORDINGLY, THE WE LL REASONED AND WELL DISCUSSED ORDERS OF CIT (A) DO NO T CALL FOR ANY INTERFERENCE FROM OUR SIDE AND THE SAME ARE UPHELD. GROUND NOS.1 AND 2 OF THE APPEALS OF THE REVENUE ARE REJECTED. 6. FACTS IN THE PRESENT CASE BEING IDENTICAL AND BO TH THE LD. COUNSEL HAVING FAIRLY AGREED THAT THE ISSUE STANDS COVERED ITA NO.4593/DEL./2011 8 IN FAVOUR OF THE ASSESSEE, WE UPHOLD THE ORDER OF L D. CIT (A) AND DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DI SMISSED. 3. THOUGH IT HAS BEEN THE CASE OF LD. DR THAT THE AFOREMENTIONED DECISION IS DISTINGUISHABLE ON THE G ROUND THAT IT IS NOT COMING OUT OF THE ORDER OF THE ASSESSING OFF ICER AND CIT (A) THAT WHETHER OR NOT WHO WAS THE OWNER OF THE RE POSSESSED VEHICLE AND, THEREFORE, THE RATIO OF THE DECISION I N THE CASE OF M/S CITI CORP. MARUTI FINANCE LTD. COULD NOT BE FOLLOWE D WITHOUT ASCERTAINING THAT FACT. HOWEVER, AS AGAINST THAT IT IS THE CASE OF LD. AR THAT ALL THE FACTS HAVE BEEN CONSIDERED AND DISCUSSED IN THE ORDER OF ASSESSING OFFICER AND CIT (A). IT HAS CLEARLY BEEN BROUGHT OUT IN THE ORDER OF THE ASSESSING OFFICER A ND CIT (A) THAT THE ASSESSEE DID NOT BECOME THE OWNER AND NO D EPRECIATION WHATSOEVER WAS CLAIMED BY THE ASSESSEE. AFTER HEARI NG BOTH THE PARTIES, WE FIND THAT NO DISTINGUISHABLE FEATURE HA S BEEN BROUGHT ON RECORD BY THE LD. DR TO DEVIATE US FROM THE DECI SION TAKEN BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2003- 04. THEREFORE, THE FACTS BEING IDENTICAL, WE ARE O F THE OPINION THAT LEARNED CIT (A) HAS RIGHTLY DELETED THE ADDITI ON AND HIS ORDER ON THIS ISSUE IS UPHELD. THE COMMON GROUND TA KEN IN ALL THE APPEALS REGARDING LOSS ON SALE OF REPOSSESSED A SSETS IS DISMISSED. THE HON'BLE DELHI HIGH COURT HAS AFFIRMED THE DECIS ION OF ITAT IN THE ASSESSEES OWN CASE IN ITA NOS.1145-1147/2011 VIDE ORDER DATED 13.10.2011 AS UNDER :- ITA NOS.1145-1147/2011 ALL THESE APPEALS ARE THE SAME ASSESSEE AND PERTAI N TO DIFFERENT PERIODS. OUT OF THESE, IN TWO APPEALS, T WO ISSUES HAVE BEEN RAISED AND IN ONE APPEAL ONLY ONE OF THESE ISS UES ARISES, WHICH ARE AS UNDER :- ITA NO.4593/DEL./2011 9 IN ITA NO.1145/2011 1. WHETHER LEARNED ITAT ERRED IN DELETING THE ADDIT ION OF RS.4,80,03,895/- MADE BY THE ASSESSING OFFICER O N ACCOUNT OF DISALLOWING THE LOSS ON SALE OF REPOSSES SED ASSETS? 2. WHETHER LEARNED ITAT ERRED IN DELETING THE ADDIT ION OF RS.3,15,24,257/- MADE BY ASSESSING OFFICER ON ACCOUNT OF DISALLOWING 50% OF EXPENSES INCURRED ON ADVERTISEMENT AND BUSINESS PROMOTIONS EXPENSES. IN ITA NO.1146/2011 1. WHETHER LEARNED ITAT ERRED IN DELETING THE ADDIT ION OF RS.5,00,59,438/- MADE BY THE ASSESSING OFFICER O N ACCOUNT OF DISALLOWING THE LOSS ON SALE OF REPOSSES SED ASSETS? 2. WHETHER LEARNED ITAT ERRED IN DELETING THE ADDIT ION OF RS.2,19,44,530/- MADE BY ASSESSING OFFICER ON ACCOUNT OF DISALLOWING 50% OF EXPENSES INCURRED ON ADVERTISEMENT AND BUSINESS PROMOTION EXPENSES. IN ITA NO.1147/2011 1. WHETHER LEARNED ITAT ERRED IN DELETING THE ADDI TION OF RS.1,95,89,4655/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWING THE LOSS ON SALE OF REPOSSE SSED ASSETS?' IN SO FAR AS THE FIRST ISSUE IS CONCERNED IT HAD A RISEN IN ITA NO.583/2011. THE SAID APPEAL WAS DISMISSED ON 23RD MAY, 2011 FOLLOWING THE JUDGMENT DATED 9TH NOVEMBER, 2010 IN ITA NO.1712/2010 & 1714/2010 IN THE CASE TITLED AS CIT VS. CITICORP MARUTI FINANCE LTD. IN SO FAR AS THE SECOND ISSUE IS CONCERNED THAT HA S ALSO BEEN DECIDED AGAINST THE REVENUE IN ITA NO. 966/200 9 IN THE CASE ENTITLED AS CIT VS. AGRO BEVERAGES VIDE ORDER DATED 19 TH NOVEMBER, 2011. FOLLOWING THOSE ORDERS, THESE APPEALS ARE DISMISSE D AS NO QUESTION OF LAW ARISES. ITA NO.4593/DEL./2011 10 6. AFTER HEARING BOTH THE SIDES AND GOING THROUGH T HE ORDER OF ITAT ON THE SAME ISSUE AND CONSIDERING THE FACT THAT NOTHIN G HAS BEEN BROUGHT ON RECORD BY REVENUE WHICH CAN DISTINGUISH THE FACTS O F THE CASE, WE ARE OF THE VIEW THAT LEARNED CIT (A) HAS RIGHTLY DELETED THE A DDITION. WE UPHOLD THE ORDER OF THE CIT (A) ON THIS GROUND. THIS GROUND O F REVENUES APPEAL STANDS DISMISSED. 6. THE GROUND NO.3 OF REVENUES APPEAL IS DELETING THE ADDITION MADE ON ACCOUNT OF ADVERTISING AND PROMOTION EXPENSES. THE ASSESSING OFFICER TREATED THE PART OF THE EXPENSES AS NOT INCURRED WH OLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE ASSESSEE. THE CIT (A) GRANTED THE RELIEF BY HOLDING AS UNDER:- 5.5 THE APPELLANT HAS COUNTERED THE ALLEGATION OF THE LD. AO BY STATING THAT THE BENEFIT TO THE THIRD PARTY DOES NOT DISENTITLE APPELLANT'S CLAIM. IT WAS ALSO SUBMITTED THAT THE M ERE FACT THAT THE EXPENDITURE ENDURES BENEFIT TO A THIRD PARTY CA NNOT IN LAW DEFEAT THE CLAIM OF EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. ACCORDINGLY, IF ANY EX PENDITURE HAS BEEN INCURRED ON GROUND OF COMMERCIAL EXPEDIENCY TH EN IT SHALL BE TREATED AS NORMAL BUSINESS EXPENDITURE EVEN IF S OMEBODY OTHER THAN THE APPELLANT IS ALSO BENEFITED BY THE S AME EXPENDITURE. THE APPELLANT HAS ALSO RELIED ON A NUM BER OF JUDICIAL PRECEDENTS TO SUPPORT ITS CLAIM INCLUDING THOSE RENDERED BY THE JURISDICTIONAL ITAT IN THE CASE OF THE APPEL LANT ITSELF. 5.6 THE FINDINGS OF THE LD. AO AS PER THE ASSESSMEN T ORDER AND THE ARGUMENTS ADVANCED BY THE LD. AR ON BEHALF OF THE APPELLANT AND VARIOUS JUDICIAL PRECEDENTS RELIED UP ON HAVE BEEN CONSIDERED. I HAVE EXAMINED THIS ISSUE AT LENGTH WH ILE DISPOSING OFF THE APPELLANT'S APPEAL IN APPEAL NO. 59/09-10 F OR AY 2007- 08. THE FACTS OF THE INSTANT CASE ARE SIMILAR TO TH OSE OF THE AY 2007-08. FOLLOWING MY FINDING ON THIS ISSUE IN AY 2 007-08 AND RESPECTFULLY FOLLOWING THE APPELLATE ORDERS RENDERE D IN CASE OF ITA NO.4593/DEL./2011 11 THE APPELLANT ITSELF BY HON'BLE ITAT AND MY LD. PRE DECESSORS, THE DISALLOWANCE MADE IS DIRECTED TO BE DELETED. 7. AT THE OUTSET OF THE HEARING, LEARNED AR SUBMITT ED THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION O F ITAT IN ASSESSEES OWN CASE, CITED SUPRA. THE DECISION OF ITAT WAS AFFIRM ED BY THE HON'BLE DELHI HIGH COURT BY RELYING ON ITS DECISION IN THE CASE O F CIT VS. AGRO BEVERAGES, ITA NO.966/2009 VIDE ORDER DATED 19.11.2011. THE L EARNED DR WAS ALSO NOT HAVING ANY CONTRARY VIEW IN THIS REGARD. 8. AFTER HEARING BOTH THE SIDES, WE HOLD THAT ITAT VIDE ORDER DATED 29.04.2011, CITED SUPRA, HAS HELD AS UNDER :- 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. THE GENUINE NESS AND THE ACTUAL INCURRENCE OF THESE EXPENDITURES HAVE NOT BE EN DOUBTED BY THE ASSESSING OFFICER. THE REASON ASSIGNED BY TH E ASSESSING OFFICER TO MAKE THE DISALLOWANCE IS THAT THE ASSESS EE BY INCURRING THESE EXPENDITURES HAS PROMOTED THE BRAND BELONGING TO MARUTI UDYOG LTD. IN OUR OPINION, THE ASSESSING OFFICER IS NOT RIGHT IN HOLDING SO. THE ASSESSEE HAS BEEN AUTH ORIZED TO DEAL, FINANCE THE AUTOMOBILE PRODUCED BY THE MARUTI. THE PROMOTION OF THE BRAND NAME MARUTI WILL DIRECTLY PROMOTE TH E BUSINESS OF THE ASSESSEE. IT CANNOT BE SAID THAT THE ASSESSEE F OR THE PURPOSE OF BENEFITING MARUTI UDYOG LTD. HAD INCURRED THOSE EXPENDITURES. ACCORDING TO THE CASE LAW RELIED UPON BY THE ASSESSEE BEFORE THE CIT (A), IT HAS BEEN CLEARLY LA ID DOWN THAT IF THE EXPENDITURES ARE INCURRED FOR THE PURPOSE OF BU SINESS OF THE ASSESSEE AND IF INCIDENTALLY THOSE EXPENDITURE BENE FIT THE OTHER PARTY, THEN ALSO NO PART OF THOSE EXPENDITURES COUL D BE DISALLOWED ON THE GROUND THAT THE ASSESSEE DID NOT INCUR SUCH EXPENDITURE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ITS BUSINESS. THEREFORE, WE FIND NO INFIRMITY IN THE OR DER OF THE CIT (A) VIDE WHICH THE IMPUGNED DISALLOWANCE HAS BEEN D ELETED. WE, THEREFORE, UPHOLD HIS ORDER ON THIS ISSUE FOR B OTH THE YEARS ITA NO.4593/DEL./2011 12 I.E., 2005-06 AND 2006-07. THE GROUND NO.3 IN RESPE CT OF BOTH THESE YEARS ARE DISMISSED. THE HON'BLE DELHI HIGH COURT AFFIRMED THE DECISION OF ITAT ON THIS ISSUE, WHICH IS CITED AND REPRODUCED ABOVE. FACTS REMAIN THE SAME, THEREFORE, WE FIND NO INFIRMITY IN THE ORDER OF THE CIT (A) IN WH ICH THE DISALLOWANCE HAD BEEN DELETED. WE UPHOLD THE ORDER OF THE CIT (A). GROUND NO.3 IN REVENUES APPEAL STANDS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 23 RD DAY OF DECEMBER, 2011. SD/- SD/- (RAJPAL YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 23 RD DAY OF DECEMBER, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-IX, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.