ACIT, New Delhi V. M/s. Daurala Foods & Beverages Pvt. Ltd., New Delhi

ITA 5030/DEL/2012

• Counselvise Citation: 503020114 RSA 2012
• Duration Of Justice: 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 25-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSAN D GEORGE
• Keywords: Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B NEW DELHI BEFORE SHRI J.SUDHAKAR REDDY, AM AND SHRI RAJPAL YADAV, JM ITA NO. 5030/DEL/2012 ASSESSMENT YEAR : 2008-09 ACIT, CIRCLE 10(1) VS. M/S DAURALA FOODS & BEVERAG ES P.LTD. NEW DELHI 6 TH FLOOR, KANCHENJUNGA BLDG. NEW DELHI PAN: AAACD 3518 P C.O. 440/DEL/2012 (IN ITA NO. 5030/DEL/2012) ASSESSMENT YEAR : 2008-09 M/S DAURALA FOODS & BEVERAGES P.LTD. VS. ACIT, CIRC LE 10(1) NEW DELHI NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY:- MS. SUSAN D GEORGE, SR.D.R. RESPONDENT BY:- SH.SANJAY SHARMA, C.A. O R D E R PER J.SUDHAKAR REDDY, AM THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AG AINST THE ORDER OF THE LD.CIT(A)-XIII DATED 22.2.2012 PERTAINING TO A SSESSMENT YEAR 2008- 09 ON THE FOLLOWING GROUND. 1. WHETHER THE LD.CIT(A) UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW IS JUSTIFIED I N TREATING THE PAYMENT FOR MARKETING AND TECHNICAL ASSISTANCE FEE AMOUNTING TO RS.24,70,581/- AS REVENUE EXPENDITURE AGAINST THE C APITAL IN NATURE AS ASSESSED BY THE ASSESSING OFFICER? 2. THE CROSS OBJECTION IS FILED BY THE ASSESSEE. ITA 5030/DEL/2012 PAGE 2 OF 4 C.O. 440/DEL/2012 DAURALA FOODS & BEVERAGES P.LTD. ASSESSMENT YEAR 2008-09 3. WE HAVE HEARD MS.SUSAN D.GEORGE, SR.DR ON BEHALF OF THE REVENUE AND SHRI SANJAY SHARMA, THE LD.COUNSEL FOR THE ASSESSEE. 4. AFTER HEARING RIVAL CONTENTIONS, WE FIND THAT TH E COMMISSIONER OF INCOME TAX (APPEALS) HAS FOLLOWED THE TRIBUNAL ORDE R ON THE ISSUE AS TO WHETHER MARKETING AND TECHNICAL ASSISTANCE FEE OF R S.24.71 LAKHS PAID BY THE ASSESSEE TO M/S SEA GRAM MANUFACTURING LTD. IS REVENUE EXPENDITURE OR NOT. AT PARA 3.2 OF HIS ORDER THE C OMMISSIONER OF INCOME TAX (APPEALS) HAS BROUGHT OUT THE FACTS AND HIS DE CISION WHICH IS EXTRACTED FOR READY REFERENCE. 3.2.AS IN THE EARLIER YEARS, DURING THE YEAR UNDER APPEAL, THE APPELLANT COMPANY WAS ENGAGED IN THE BUSINESS OF MA NUFACTURING OF INDIAN MADE FOREIGN LIQUOR (IMFL) ON BEHALF OF M /S SEAGRAM MANUFACTURING LTD. AN AGREEMENT WAS ENTERED INTO B ETWEEN THE TWO PARTIES AS PER WHICH M/S SEA GRAM MANUFACTURING LTD. WAS TO PROVIDE TECHNICAL ASSISTANCE FOR THE PRODUCTION AND MARKETING OF THE IMFL BY THE APPELLANT. SALES WERE MADE BY THE APPELLANT TO THE PARTIES WHOSE DETAILS WERE PROVIDED BY OF M/S S EAGRAM MANUFACTURING LTD. AND THE APPELLANT RECEIVED RS.42 PER CASE TOWARDS BOTTLING CHARGES. IN TURN, THE TECHNICAL A ND MARKETING ASSISTANCE FEE PAID BY THE APPELLANT TO OF M/S SEAG RAM MANUFACTURING LTD WAS CHARGED ON THE BASIS OF UNITS PRODUCED AND MARKETED BY THE APPELLANT AND TDS WAS DEDUCTED BY THE APPELLANT FROM THIS PAYMENT MADE. THE ASSESSING OF FICER HAS HELD THAT THIS PAYMENT WAS CAPITAL IN NATURE WHEREAS THE AGREEMENT BETWEEN THE TWO PARTIES CLEARLY MENTIONED THAT THE APPELLANT WILL HAVE TO SURRENDER THE TRADE MARK BEING USED BY IT O F M/S SEAGRAM MANUFACTURING LTD. UPON TERMINATION OF THE AGREEME NT AND THAT THE INVENTORY OF ALL PRODUCTS, MATERIALS, PACKAGES, ETC. WILL BE BOUGHT OR CAUSE TO BE BOUGHT FROM THE APPELLANT OF M/S SEAGRAM MANUFACTURING LTD. WHICH WILL ALSO BEAR THE COST OF UNDISPOSED OR UNLIFTED GOODS. THEREFORE, IT IS OBVIOUS THAT THE PAYMENT MADE BY THE APPELLANT AS TECHNICAL AND MARKETING ASSISTANCE FEE IS NOT FOR OBTAINING ANY BENEFIT OF ENDURING NATURE. RATHER, IT IS DEPENDENT UPON THE UNITS OF PRODUCTS MANUFACTURED AND SOLD DU RING THE YEAR. THE ASSISTANCE BEING PROVIDED BY OF M/S SEAGRAM MAN UFACTURING ITA 5030/DEL/2012 PAGE 3 OF 4 C.O. 440/DEL/2012 DAURALA FOODS & BEVERAGES P.LTD. ASSESSMENT YEAR 2008-09 LTD. WOULD LAST ONLY SO LONG AS THE APPELLANT MANUF ACTURED THE IMFL ON ITS BEHALF. THEREFORE, I AM OF THE VIEW TH AT THE PAYMENT MADE BY THE APPELLANT BY WAY OF TECHNICAL AND MARKE TING ASSISTANCE FEE WAS OF REVENUE NATURE AND THE SAME I S TO BE ALLOWED. 5. THERE AFTER HE REFERRED TO THE DECISION OF THE I TAT FOR THE ASSESSMENT YEAR 2002-03 ORDER DT. 21.11.2008, WHERE IN A SIMILAR CLAIM OF THE EARLIER YEAR WAS ALLOWED AS REVENUE EXPENDIT URE. 6. THUS WE FIND NO INFIRMITY IN THE ORDER OF THE CO MMISSIONER OF INCOME TAX (APPEALS). WE DISMISS THIS APPEAL OF TH E REVENUE. 7. COMING TO THE C.O. WE FIND THAT THIS IS AN ALTER NATIVE CLAIM MADE BY THE ASSESSEE. THE SAME DOES NOT SURVIVE IN VIE W OF OUR UPHOLDING ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). IN THE RESULT THE C.O. IS ALSO DISMISSED. 8. IN THE RESULT APPEAL FILED BY THE REVENUE AS WEL L AS THE CROSS OBJECTION FILED BY THE ASSESSEE, BOTH ARE DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH DECEMBER,2012. SD/- SD/- (RAJPAL YADAV) (J.SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBE R DATED: THE 10 TH DECEMBER, 2012 *MANGA ITA 5030/DEL/2012 PAGE 4 OF 4 C.O. 440/DEL/2012 DAURALA FOODS & BEVERAGES P.LTD. ASSESSMENT YEAR 2008-09 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT (A); 5.DR; 6.GUARD FILE BY ORDER DY. REGISTRAR 1. DATE OF DICTATION: 2. DRAFT PLACED BEFORE THE AUTHOR ON: 3. DRAFT PROPOSED AND PLACED BEFORE SECOND MEMBER ON: 4. DRAFT DISCUSSED/APPROVED BY THE SECOND MEMBER ON: 5. APPROVED DRAFT CAME TO SR.P.S. ON: 6. DATE OF PRONOUNCEMENT : 7. FILE SENT TO BENCH CLERK ON : 8. DATE ON WHICH FILE GIVEN TO HEAD CLERK ON: 9. DATE OF DISPATCHING THE ORDER ON :