ITO, New Delhi V. M/s. Elca Cosmetics (P) Ltd., New Delhi

ITA 4704/DEL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4298 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 05-04-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 28-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Business expenditure; Opportunity of being heard; Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B NEW DELHI) BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.4704 /DEL/2010 ASSESSMENT YEAR : 2006-07 ITO, M/S ELKA COSMETIC PVT. LTD., WARD-11 (1), 202-206, TOLSTOY HOUSE, NEW DELHI. V. 15-TOLSTOY MRG, N. DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AABCE AABCE AABCE AABCE- -- -1111 1111 1111 1111- -- -C CC C APPELLANT BY : MS. MONA MOHANTY, SR. DR. RESPONDENT BY : SHRI SURINDER MEHRA, C.A. ORDER PER A.K. GARODIA, AM: THIS IS REVENUE'S APPEAL DIRECTED AGAINST THE ORDER OF LD CIT(A)- XIII, NEW DELHI DATED 20.8.2010 FOR ASSESSMENT YEAR 200 6-07. 2. GROUND NO.1 IS GENERAL. GROUND NO.2 OF THE APPEAL IS AS UNDER:- 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF EXPENSES ON A CCOUNT OF COST OF TESTERS & MERCHANT DISPLAYS AMOUNTING TO `.7,28, 699/- & `.15,216,720/- RESPECTIVELY. A) IGNORING THAT THE FACTS OF THE CASE LAW OF CIT V. SALORA INTERNATIONAL LTD. 308 ITR 199 AS RELIED UPON BY CIT (A) ARE DIFFERENT AS IN THE SAID CASE THE PAYMENTS OF PROFESSIO NAL FEE TO PAGE 2 OF 11 ITA NO.4704/DEL/10 THE CONSULTANTS WERE IN THE PICTURE, WHICH IS NOT AT A LL IN THIS CASE. B) IN THE CASE UNDER CONSIDERATION THE ASSESSING OFFICER HAS SPECIFICALLY TALK ABOUT THE BUILDING UP OF GOODWILL BY THE ASSESSEE BY INCURRING THOSE EXPENSES. THIS ASPECT REMAINED TO BE CONTROVERTED IN THE APPELLATE ORDER. 3. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THE ASSESSEE COMPANY HAS DEBIT ED A SUM OF `.7,28,699/- UNDER THE HEAD COST OF TESTERS UNIT. WHEN THE ASSESSING OFFICER RAISED THE QUESTIONS, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER THAT IN THE COSMETICS B USINESS, THE CUSTOMERS WANT TO TRY THE PRODUCTS ON THEM BEFORE PURCHASING THE SAME. IT WAS SUBMITTED THAT THE AMOUNT OF `.7,28,699/ - WAS DEBITED TOWARDS COST OF TESTERS UNIT BECAUSE THREE TESTERS WERE SUP PLIED TO RETAILERS ALONG WITH CUSTOMS DUTY AND CLEARING AND FO RWARDING CHARGES PAID ON THE SAME. SIMILARLY, IT IS NOTED BY THE ASSESSIN G OFFICER THAT THE ASSESSEE COMPANY HAS DEBITED AN AMOUNT OF `.15,26,72 0/- UNDER THE HEAD COST OF MERCHANT DISPLAY. WHEN THE ASSESSING OFFICER MADE ENQUIRIES, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSE SSING OFFICER THAT THE ITEMS DEBITED UNDER THE HEAD MERCHA NT DISPLAY INCLUDES SHOPPING BAGS, SPATULA, WIPES, LACQUER APPLICA TORS, DISPOSABLE SPONGES, DISPOSABLE LIPGLOSS APPLICATORS, DISPOSABLE LIQUID LINER, MAC PLASTIC BAGS ETC. IT WAS SUBMITTED THAT THESE MATERIALS ARE ALSO TO BE SUPPLIED FREE OF COST TO THE RETAILERS IN ORDER TO PRO MOTE THE SALES OF THE PRODUCTS. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. IT WAS HELD BY HIM THAT THE ASSESSEE COMPANY HAS INCURRED THESE EXPENSES TO EARN GOODWILL WH ICH WILL BENEFIT THE BUSINESS IN THE LONG RUN AND BRING BENEFIT OF ENDURING NATURE. HE, THEREFORE, DISALLOWED BOTH THESE ITEMS OF EXPENSES AS PAGE 3 OF 11 ITA NO.4704/DEL/10 CAPITAL EXPENSES TOTALING `.22,55,419/-. BEING AGGRIE VED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT (A) WHO HAS DELETED THIS DISALLOWANCE IN FULL AND NOW THE REVENUE IS IN APPEAL BEFORE US. 4. IT WAS SUBMITTED BY THE LD DR OF THE REVENUE THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE ON THIS BASIS THAT THESE EX PENSES ARE INCURRED BY THE ASSESSEE TO EARN GOODWILL AND THIS ASPEC T HAS NOT BEEN CONSIDERED AND DECIDED BY LD CIT(A).IT IS ALSO SUBMITTE D THAT LD CIT(A) HAS FOLLOWED THE JUDGMENT OF HONBLE DELHI HIGH COUR T RENDERED IN THE CASE OF CIT V. SALORA INTERNATIONAL LTD. AS REPORTED IN 308 ITR 199 BUT THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE BEC AUSE THE FACTS ARE DIFFERENT. 5. AS AGAINST THIS, LD AR OF THE ASSESSEE SUPPORTED THE ORD ER OF LD CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY LD CIT(A) AS PER PARA NO.2.1. OF HIS ORDER, WHICH IS REPRODUCED BELOW:- 2.1. I HAVE GONE THROUGH THE FACTS OF THE CASE AND S UBMISSIONS MADE BY THE APPELLANT COMPANY AND I FIND THAT THE N ATURE OF EXPENDITURE INCURRED IN APPELLANTS LINE OF BUSINESS IS ABSOLUTELY ESSENTIAL FOR DAY TO DAY CONDUCT OF THE BUSINESS OF THE APPELLANT COMPANY AND THE SAME IS ALLOWABLE AS REVENUE EXPENDITU RE. IT IS ALSO OBSERVED THAT THERE IS A DIRECT NEXUS BETWEEN THE ABOVE REFERRED EXPENSES ON TESTERS AND MERCHANT DISPLAY A ND IN THE BUSINESS OF THE APPELLANT IT HAS TO BE NECESSARILY IN CURRED TO MEET THE COMPETITION IN THE MARKET AND TO SELL ITS PR ODUCT WHICH PAGE 4 OF 11 ITA NO.4704/DEL/10 ARE HIGH END AND ADVERTISEMENT, PROMOTION,. INCENTIV E & FREEBIES DRIVEN. THAT UNLESS THE APPELLANT MADE THE EFFICACY O F ITS PRODUCTS KNOWN IN THE MARKET ITS BUSINESS WOULD SUFFER. IT IS THUS NOTED FROM THE FACTS OF APPELLANTS CASE THAT IT IS AN INSTANCE WHERE THE EXPENDITURE EVEN IF GIVING ENDURI NG BENEFIT THE TEST OF ENDURING BENEFIT BREAKS DOWN (EMPIRE JUTE CO. LTD. V. CIT (SC) 124 ITR 11. THE RATIO OF THE DECISION OF TH E DELHI HIGH COURT IN THE CASE OF CIT V. SALORA INTERNATIONAL LTD . AT 308 ITR 199 IS ALSO APPLICABLE TO THE PRESENT CASE. APPLYING T HE RATIO OF THE DECISIONS OF THE HON'BLE COURTS TO THE FACTS OF THE APPELLANTS CASE THE DISALLOWANCE MADE BY THE ASSESSING OFFICER FOR `.22,55,419/- (`.7,28,699/- + `.15,26,720/-) ON THI S ACCOUNT IS DELETED. 7. FROM THE ABOVE PARA OF LD CIT(A)S ORDER, WE FIND THAT A CLEAR FINDING HAS BEEN GIVEN BY LD CIT(A) THAT THE NATURE OF EXPENDITURE INCURRED IN ASSESSEES LINE OF BUSINESS IS ABSOLUTELY ESSENTIAL FOR DAY TODAY CONDUCT OF THE BUSINESS OF THE ASSESSEE COMPANY AND THE SAME IS ALLOWABLE AS REVENUE EXPENDITURE. THIS FINDINGS OF L D CIT(A) COULD NOT BE CONTROVERTED BY THE LD DR OF THE REVENUE AND HENCE, IN THE LIGHT OF THESE FACTS, WE HOLD THAT THERE IS NO INFIRMI TY IN THE ORDER OF LD CIT(A). LD CIT(A) HAS REFERRED IN THE SAME PARA THAT THE RATIO OF THE DECISION OF HONBLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT V. SALORA INTERNATIONAL LTD. (SUPRA) IS ALSO APPLICABLE I N THE PRESENT CASE BUT THAT IS NOT THE ONLY BASIS FOR DELETION OF THIS DISA LLOWANCE. THE MAIN BASIS OF DELETION IS THAT THE EXPENSES INCURRED BY THE ASSESSEE ARE ABSOLUTELY ESSENTIAL FOR DAY TODAY CONDUCT OF THE BUSINESS OF THE ASSESSEE COMPANY. HENCE, THIS OBJECTION OF LD DR IS NOT PROPER THAT LD CIT(A) HAS NOT CONSIDERED THIS OBJECTION OF THE ASSESSING OFFICER THAT THESE ARE FOR EARNING GOODWILL. WHEN IT IS HELD BY LD CIT(A) THAT THESE PAGE 5 OF 11 ITA NO.4704/DEL/10 ARE ESSENTIAL BUSINESS EXPENSES, THIS OBJECTION OF THE ASSESSI NG OFFICER STANDS REJECTED THAT THESE EXPENSES ARE FOR EARNING GOOD WILL. MOREOVER, WHEN WE EXAMINE THE FACTS IN THE CASE OF CI T V. SALORA INTERNATIONAL LTD. (SUPRA), WE FIND THAT THE FACTS O F THAT CASE ARE ALSO SIMILAR ALTHOUGH NOT IDENTICAL. IN THAT CASE, THE EXP ENDITURE IN DISPUTE WAS FOR LAUNCHING OF ITS PRODUCTS BY THE ASSESSEE. IN THAT CASE ALSO, THE ASSESSING OFFICER WAS OF THE VIEW THAT SUCH EXPENDITURE W AS OF AN ENDURING NATURE AND HE TREATED 1/3 RD OF THE EXPENSES AS CAPITAL EXPENDITURE AND ALLOWED REMAINING 2/3 RD OF THE EXPENDITURE. UNDER THESE FACTS, IT WAS HELD BY THE TRIBUNAL THAT THERE WA S DIRECT NEXUS BETWEEN THE ADVERTISING EXPENDITURE AND THE BUSINESS OF THE ASSESSEE AND HELD THAT ENTIRE EXPENDITURE ON ADVERTISEMENT IS OF REVENUE NATURE AND ALLOWED THE SAME. HONBLE HIGH COURT OF DELHI H AS CONFIRMED THIS TRIBUNAL ORDER IN THAT CASE. IN THE PRESENT CASE ALSO, WE HAVE NOTED THAT CLEAR FINDING HAS BEEN GIVEN BY LD CIT(A) THAT THE EXPENSES INCURRED BY THE ASSESSEE COMPANY HAS A DIRECT NEXUS WITH THE BUSINESS CARRIED ON BY THE ASSESSEE AND HENCE, THE RATIO O F THIS JUDGMENT IS APPLICABLE IN THE PRESENT CASE ALSO. WE, TH EREFORE, DECLINE TO INTERFERE IN THE ORDER OF LD CIT(A). THIS GROUND OF THE REVENUE IS REJECTED. 8. GROUND NO.3 OF THE REVENUES APPEAL IS AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF EXPENSES ON A CCOUNT OF PROMOTIONAL EXPENSES OF `.38,23,227/-. A) IGNORING THAT THE ASSESSING OFFICER HAS SPECIFICALLY MEN TIONED THAT THE COMPLETE DETAILS OF THE SAID EXPENSES WERE NOT FILED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. B) WITHOUT APPRECIATING THAT EVEN WHEN THE REMAND R EPORT WAS CALLED ON THE SAID PARTICULAR POINT, THE THEN ASSESSING OFFICER HAS PAGE 6 OF 11 ITA NO.4704/DEL/10 MENTIONED THAT MERELY A LEDGER COPY OF ACCOUNT OF T HE SAID EXPENSES HAS BEEN FORWARDED TO HIM AND THE FULL NAMES A ND ADDRESSES OF THE CONCERNED PARTIES ARE NOT ASCERTAINABLE FROM THE DETAILS FILED. NO DETAILS OF THE SAID EXPENSES INCL UDING DETAILS AS TO WHETHER THE ASSESSEE HAS CONTRACTS WITH THE SAID PAR TIES REMAINED TO BE FURNISHED BEFORE ASSESSING OFFICER EVEN A T THE APPELLATE STAGE. THUS, THE SPECIFIC ADVERSE COMMENTS O F THE ASSESSING OFFICER AS MENTIONED IN THE REMAND REPORT REM AINED TO BE ADDRESSED IN THE APPELLATE ORDER. 9. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE ASSESSING OFFICER ON PAGE NO.2 OF THE ASSESSMENT ORDER THAT THE ASSESSEE COMP ANY WAS ASKED TO FURNISH DETAILS OF PAYMENTS MADE WHERE THE P ROVISIONS OF SECTION 40(A)(IA) OF THE ACT ARE APPLICABLE AND DETA ILS OF TDS PAYMENT THEREOF. THEREAFTER, IT IS NOTED BY THE ASSESSING OFFIC ER THAT THE ASSESSEE COMPANY HAS FILED DETAILS OF TDS ONLY ON EXPENSE S UNDER THE HEAD SALARY, LEGAL AND PROFESSIONAL EXPENSES AND SUCH DET AILS FOR OTHER EXPENSES WERE NOT GIVEN. THEREAFTER, IT IS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE COMPANY DID NOT FURNISH THE COMPLETE DETAILS OF EXPENSES DEBITED UNDER THE HEAD PROMOTIONAL EXPEN SES: AMOUNTING TO `.38,23,227/- AND IT ALSO DID NOT FURNI SH THE DETAILS OF TDS ON THIS AMOUNT. THE ASSESSING OFFICER DISALLOWED THIS EXPENSES OF `.38,23,227/- BY INVOKING THE PROVISIONS OF SECTION 4 0(A)(IA) OF THE ACT. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPE AL BEFORE LD CIT (A) WHO HAS DELETED THIS DISALLOWANCE AND NOW TH E REVENUE IS IN APPEAL BEFORE US. 10. LD DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LD AR OF THE ASSESSEE SUPPORTED THE ORDER OF LD CIT(A). 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE T HROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IT IS NOT ED BY THE LD CIT(A) IN PAGE 7 OF 11 ITA NO.4704/DEL/10 PARA NO.3 OF HIS ORDER THAT THE ASSESSEE COMPANY HAS GIVE N BREAK UP OF THE PROMOTIONAL EXPENSES THROUGH THE PAPER BOOK ON WHICH REMAND REPORT WAS CALLED FROM THE ASSESSING OFFICER. IT IS NOTE D BY THE LD CIT(A) THAT THE ASSESSEE COMPANY HAS CATEGORIZED THESE E XPENSES UNDER THREE CATEGORY. FIRST CATEGORY OF EXPENSES IS THO SE EXPENSES ON WHICH TAX WAS DEDUCTED AND PAID AND THE EXPENSES INCUR RED UNDER THIS CATEGORY IS `.15,57,857/-. IN THE LIGHT OF THESE FAC TS TDS WAS DEDUCTED AND PAID BY THE ASSESSEE ON THESE EXPENSES OF `.15,57,857/ -, NO DISALLOWANCE CAN BE MADE U/S 40(A)(IA) OF THE ACT AND HENCE THERE IS NO INFIRMITY IN THE ORDER OF LD CIT(A) REGARDING TH IS PART OF DELETION OF DISALLOWANCE. 12. THE SECOND CATEGORY IS OF THOSE EXPENSES ON WHICH, T AX WAS NOT REQUIRED TO BE DEDUCTED AND IT IS NOTED BY THE LD CI T(A) THAT LIST OF THESE ITEMS HAS ALSO BEEN GIVEN IN THE PAPER BOOK ALONG WITH THE COPY OF INVOICES AND THE SAME IS RELATED TO HOTEL/PURCHASE/SU PPLY BILLS AND A CREDIT NOTE IN ONE CASE AND NO TAX WAS DEDUCTIBLE O N THESE AMOUNTS. THIS FINDING OF LD CIT(A) COULD NOT BE CONTROVERTED BY THE LD DR OF THE REVENUE THAT TAX WAS NOT DEDUCTIBLE ON THIS CATEGORY OF EXPENSES TOTALING `.21,34,680/-. HENCE, FOR THIS PART OF DISAL LOWANCE ALSO, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD CIT(A). 13. THE THIRD CATEGORY IS OF THOSE EXPENSES ON WHICH T AX WAS NOT DEDUCTED AS THE AMOUNT PAID TO EACH PERSON DID NOT EX CEED RS.20,000/- AND THE TOTAL OF SUCH EXPENSES IS RS.1,30,693 /-. REGARDING THESE EXPENSES ALSO, IT IS NOTED BY THE LD CIT(A) THAT T HE DETAILS ARE GIVEN ON PAGE NO.12 OF THE PAPER BOOK. ON THIS ASPECT ALSO, LD DR OF THE REVENUE COULD NOT CONTROVERT THIS FINDING OF LD CIT(A) AND HENCE REGARDING THIS PART DELETION OF DISALLOWANCE ALSO, WE DO NOT FIND ANY PAGE 8 OF 11 ITA NO.4704/DEL/10 INFIRMITY IN THE ORDER OF LD CIT(A). HENCE, GROUND NO.3 OF THE REVENUE IS ALSO REJECTED. 14. GROUND NO.4 OF THE REVENUES APPEAL IS AS UNDER:- 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF LEGAL EXPEN SES OF `.1,17,830/- OVERLOOKING THE FACT THAT THE SAID EXPE NSES WERE SUBSTANTIVELY INCURRED FOR CONSULTATION FOR INCREASE O F CAPITAL AND OTHER CAPITAL RELATED MATTERS. IT IS NOT APPRECIATED THAT DURING THE YEAR THE CAPITAL HAS BEEN INCREASED FROM 1 LAKH T O `.47,79,947/- AND THE SAME WAS RECEIVED FROM OUTSIDE I NDIA. IT IS CLEARLY EVIDENT FROM THE IMPUGNED BILL THAT THE PRO FESSIONAL MAINLY CHARGED THE FEE FOR MAKING CONSULTATION WITH THE RBI. 15. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY TH E ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THE ASSESSEE COMPANY HAS CLAI MED A SUM OF `.1,17,830/- AS LEGAL EXPENSES. THEREAFTER, IT IS O BSERVED BY THE ASSESSING OFFICER THAT FROM VERIFICATION OF DETAILS, IT WAS FOUND THAT THESE EXPENSES WERE FOR CONSULTATION FOR INCREASE OF CAP ITAL AND OTHER CAPITAL RELATED MATTERS. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT THE ASSESSEE COMPANY IS NOT AN INDUSTRIAL UNDERTAKING AN D HENCE THESE EXPENSES OF `.1,17,830/- ARE DISALLOWED AND ADDE D U/S 35D OF THE ACT. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTE R IN APPEAL BEFORE LD CIT (A) WHO HAS DELETED THIS DISALLOWANCE ON THIS BASIS THAT SECTION 35D IS NOT APPLICABLE IN THE PRESENT CASE. NOW , THE REVENUE IS IN APPEAL BEFORE US. 16. LD DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER WHEREAS LD AR OF THE ASSESSEE SUPPORTED THE ORDER OF LD CIT(A). IT IS ALSO PAGE 9 OF 11 ITA NO.4704/DEL/10 SUBMITTED THAT COPY OF BILL OF M/S DUA ASSOCIATES IS AVAI LABLE ON PAGES 13-16 OF THE PAPER BOOK REGARDING PAYMENT OF `.1,15 ,177/- OUT OF `.1,17,830/- CLAIMED BY THE ASSESSEE AS LEGAL EXPENSES. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GONE T HROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THIS IS A PRIMARY OBJECTION OF THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THESE EXP ENSES ARE INCURRED FOR CONSULTATION FOR INCREASE OF CAPITAL AND OTHER CAPITAL RELATED MATTERS. THEREAFTER, THE ASSESSING OFFICER HAS STA TED THAT HE IS DISALLOWING THESE EXPENSES U/S 35D OF THE INCOME TAX ACT , 1961. WHILE DELETING THIS DISALLOWANCE, LD CIT(A) HAS PROCEE DED ON THIS BASIS THAT THE PROVISIONS OF SECTION 35D ARE NOT APPLICABLE IN THE PRESENT CASE. BUT HE HAS NOT GIVEN ANY FINDING REGARDING FIR ST ASPECT I.E. THE ALLEGATION OF THE ASSESSING OFFICER THAT THESE EXPENSES A RE INCURRED FOR CONSULTATION FOR INCREASE OF CAPITAL AND OTHER CAPITA L RELATED MATTERS. FROM THE BILL OF M/S DUA ASSOCIATES , IT IS SEEN THAT TH IS ASPECT IS NOT GETTING CLEARED AS TO WHETHER THE WHOLE OR PART OF T HIS LEGAL EXPENSES ARE IN CONNECTION WITH INCREASE IN CAPITAL OR OTHER CAPITAL RELATED MATTERS AS HAS BEEN ALLEGED BY THE ASSESSING OFFICER. UNDE R THESE FACTS, WE FEEL THAT THIS MATTER SHOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION. HENCE, WE SET ASIDE THE ORDER OF THE LD CIT(A) ON THIS ISSUE AND RESTORE THIS MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION. THE ASSESSEE HAS T O EXPLAIN EACH ITEM FOR WHICH BILL HAS BEEN RAISED BY M/S DUA ASSO CIATES AND IT HAS TO BE EXPLAINED AND SATISFIED THAT THE SAME IS NOT I N CONNECTION WITH INCREASE IN CAPITAL OR OTHER CAPITAL RELATED MA TTERS. THEREAFTER, THE ASSESSING OFFICER SHOULD PASS NECESSARY ORDER AS PER LAW AFT ER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. THIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPO SES. PAGE 10 OF 11 ITA NO.4704/DEL/10 18. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED FOR STATISTICAL PURPOSES, 19. ORDER PRONOUNCED IN THE OPEN COURT ON THE DAY O F 13TH APRIL, 2011. SD/- SD/- (I.P. BANSAL) (A.K. GAR ODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 13.4.2011. HMS 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). DATE OF HEARING DATE OF DICTATION DATE OF ORDER SIGNED BY THE HON'BLE MEMBER. DATE OF ORDER SENT TO THE CONCERNED BENCH PAGE 11 OF 11 ITA NO.4704/DEL/10