DCIT, New Delhi V. M/s. FNS India Inc., New Delhi

ITA 4737/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5163 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-06-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 29-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANSHUL PRAKASH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.4737/DEL/2014 ASSESSMENT YEAR : 2006-07 DCIT, CIRCLE-25(1), NEW DELHI. VS. FNS INDIA INC., PD, 3-B, PITAMPURA, NEW DELHI. PAN: AABFF3525A (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE DEPARTMENT BY : SHRI ANSHUL PRAKASH, SR. DR DATE OF HEARING : 16.08.2017 DATE OF PRONOUNCEMENT : 18.08.2017 ORDER PER R.S. SYAL, VP: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER PASSED BY THE CIT(A) ON 26.06.2014, DELETING THE PE NALTY OF RS.13,76,062/- IMPOSED BY THE ASSESSING OFFICER U/S 271(1)(C) OF THE ITA NO.4737/DEL/2014 2 INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2006-07. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE INCURRED RS.54,22,650/- UNDER THE HEAD ADVERTISING AND PUBL ICITY EXPENSES. THIS AMOUNT WAS TREATED AS DEFERRED EXPENDITURE IN AUDIT REPORT (FORM NO.3CEB) AND 20% OF SUCH EXPENDITURE WAS DEBITED TO THE PROFIT & LOSS ACCOUNT. THE REMAINING 80% WAS DEFERRED IN AC COUNTS TO BE WRITTEN OFF IN NEXT FOUR YEARS. HOWEVER, IN THE CO MPUTATION OF INCOME, SUCH REMAINING 80% OF THE EXPENDITURE WAS ALSO CLAI MED AS DEDUCTION. THE ASSESSING OFFICER DID NOT ALLOW DEDUCTION FOR T HE REMAINING 80% AND, THEREAFTER, IMPOSED PENALTY AT 100% OF THE TAX SOUGHT TO BE EVADED. THE LD. CIT(A) DELETED THE PENALTY. THE REVENUE IS IN APPEAL AGAINST THE DELETION OF PENALTY. 3. WE HAVE HEARD THE LD. DR AND PERUSED THE RELEVAN T MATERIAL ON RECORD. THERE IS NO APPEARANCE FROM THE SIDE OF TH E ASSESSEE DESPITE NOTICE. WE ARE, THEREFORE, PROCEEDING TO DISPOSE O F THIS APPEAL EX PARTE QUA THE ASSESSEE. ITA NO.4737/DEL/2014 3 4. IT CAN BE SEEN FROM THE FACTUAL POSITION RECO RDED ABOVE THAT THE ASSESSING OFFICER HAS IMPOSED PENALTY BY MERELY DIS ALLOWING 80% OF THE EXPENDITURE WHICH WAS CLAIMED BY THE ASSESSEE A S DEDUCTION. IN OUR CONSIDERED OPINION, A MERE DISALLOWANCE OF EXPENSES CANNOT BE BROUGHT WITHIN THE MISCHIEF OF SECTION 271(1)(C). THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. RELIANCE PETRO PRODUCTS PVT. LTD. (2010) 32 2 ITR 158 (SC) HAS HELD THAT SIMPLY FOR THE REASON THAT THE ASSES SING OFFICER DID NOT FIND THE CLAIM OF THE ASSESSEE TO BE SUSTAI NABLE IN LAW UP TO A CERTAIN EXTENT, CANNOT BE A CASE FOR PENALTY U/S.27 1(1)(C), MORE SO, WHEN THE PARTICULARS FURNISHED BY THE ASSESSEE WERE NOT INACCURATE. IN VIEW OF THE FOREGOING DISCUSSION, WE ARE SATISFIED THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE PENALTY IMPOSED BY THE AO U/S 271(1)(C) IN RESPECT OF DISALLOWANCE OF EXPENSE. 5. EVEN OTHERWISE, ON MERITS, WE FIND THAT ADVER TISEMENT AND PUBLICITY EXPENSE ARE REVENUE IN NATURE AND CALL FOR DEDUCTIO N IN THE YEAR OF INCURRING ITSELF. NOTWITHSTANDING THE FACT THAT TH E ADDITION MADE BY THE ITA NO.4737/DEL/2014 4 ASSESSING OFFICER WAS NOT CHALLENGED, WE UPHOLD THE ACTION OF THE LD. CIT(A) IN DELETING THE PENALTY. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.08.201 7. SD/- SD/- [K. NARASIMHA CHARY] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 18 TH AUGUST, 2017. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.