DCIT, New Delhi V. M/s. Shriram New Horizon Ltd., New Delhi

ITA 5431/DEL/2012

• Counselvise Citation: 543120114 RSA 2012
• Duration Of Justice: 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 17-10-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 26-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIDDI SRIVASTAVA
• Keywords: Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO. 5431/DEL/2012 ASSESSMENT YEAR: 2009-10 DCIT VS. M/S SHRIRAM NEW HORIZON CIRCLE- 8 (1), LTD. (FORMERLY KNOWN AS NEW ROOM NO. 163, HORIZON INDIA LTD. UGF, SOUTH C.R. BUILDING WING, NBCC PALACE, BHISHMA NEW DELHI- PITAMAH MARG, LODHI ROAD, NEW DELHI-110033 PAN: AABCN8178L (APPELLANT) (RESPONDENT) REVENUE BY : SMT. NIDDI SRIVASTAVA, SR. DR. ASSESSEE BY : SHRI. TARUN GULATI, CA. ORDER PER RAJPAL YADAV, JM : THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF LD. CIT (A) DATED 13.7.2012 PASSED FOR AY 2009-10. 2 2. THE GRIEVANCE OF REVENUE IS THAT LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.2,20,34,872/- WHICH WAS ADDED BY THE AO BY MAKING A DISALLOWANCE OUT OF ADVERTISEMENT EXPENSES. 3. THE BRIEF FACTS ARE THAT ASSESSEE HAS FILED ITS RETURN OF INCOME ON 30.9.2009, DECLARING TOTAL INCOME OF RS.1,65,03,498 /-. THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE COMPANY AT T HE RELEVANT TIME WAS ENGAGED IN THE BUSINESS OF IMPARTING EDUCATION, TRA INING IN COMPUTER SOFTWARE AND HARDWARE ETC. THE ASSESSEE HAD INCURRE D EXPENDITURE ON ADVERTISEMENT. LD. AO HAS OBSERVED THAT IN AY 2003- 04 UPTO 2008-09, THE AO HAS ALLOWED 1/5 OF THE ADVERTISEMENT EXPENDITURE AND 4/5 WERE DISALLOWED. ADOPTING THAT VERY YARDSTICK HE MADE DI SALLOWANCE OF RS.2,20,34,872/- BY RECORDING FOLLOWING FINDING: 3. DURING THE ASSESSMENT PROCEEDINGS, ON PERUSAL O F ASSESSMENT ORDERS PASSED BY THE AO IN A.Y.S 2003-04 , 2004-05, 2005-06, 2006-07, 2007-08 AND 2008-09, IT WAS NOTICED THAT THE EXPENDITURE INCURRED BY THE ASSESS EE UNDER THE HEAD ADVERTISEMENT EXPENSES WERE AMORTIZED IN 5 EQUAL INSTALLMENTS AND AFTER ALLOWIN G 1/5 TH EXPENSES FOR THE YEAR UNDER CONSIDERATION, BALANCE EXPENSES OF 4/5 TH WERE DISALLOWED. SINCE, DURING THE YEAR 3 UNDER CONSIDERATION ALSO, THE ASSESSEE HAS INCURRED ADVERTISEMENT EXPENSES TO THE TUNE OF ` 2,75,43,590/-, THEREFORE, THE ASSESSEE WAS ASKED TO PROVIDE DETAIL S OF ADVERTISEMENT EXPENSE AND THE ASSESSEES SUBMISSION ON THE DISALLOWANCES MADE IN EARLIER YEARS. HOWEVER TH E ASSESSEE HAS NOT SUBMITTED ANY DETAILS IN THIS REGA RD, WHICH SHOWS THAT IT HAS NO OBJECTION FOR SUCH DISALLOWANCE. 3.1 IT IS OBSERVED THAT IN THE ASSESSMENT ORDERS PA SSED BY THE ASSESSING OFFICERS FOR EARLIER ASSESSMENT Y EARS, IT HAS RIGHTLY BEEN HELD THAT INCURRING OF EXPENDITURE ON ADVERTISEMENT WILL PROVIDE BENEFIT TO THE ASSESSEE COMPANY NOT ONLY IN THE YEAR UNDER CONSIDERATION BU T ALSO IN THE COMING YEARS I.E. BENEFIT WILL SPARED O VER A PERIOD OF YEARS. THEREFORE, THE EXPENSES INCURRED O N ADVERTISEMENT HAVE RIGHTLY BEEN AMORTIZED OVER A PE RIOD OF 5 YEARS. HENCE FOLLOWING THE SAME, 1/5 TH EXPENDITURE ON ACCOUNT OF ADVERTISEMENT I.E. ` 55,08,718/- (1/5 TH OF ` 2,75,43,590/-) IS ALLOWED DURING THE YEAR UNDER CONSIDERATION AND THE BALANCE AMOUNT OF ` 2,20,34,872/-) ( ` 2,75,43,590 - ` 55,08,718) IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE COMPANY). (DISALLOWANCE OF ` 2,20,34,872/-) 4 4. ON APPEAL, LD. CIT (A) HAS DELETED THE DISALLOWA NCE BY OBSERVING THAT ADVERTISEMENT EXPENSES WERE ALLOWED TO THE ASSESSEE BY THE ITAT IN EARLIER ASSESSMENT YEARS. 5. BEFORE US LD. COUNSEL FOR THE ASSESSEE AT THE VE RY OUTSET SUBMITTED THAT IN AY 2005-06 AND 2006-07. SIMILAR EXPENSES WERE DI SALLOWED TO THE ASSESSEE BY THE AO BUT THE DISALLOWANCE HAS BEEN DE LETED BY THE ITAT. ON THE OTHER HAND LD. DR WAS UNABLE TO CONTROVERT THE SUBMISSION OF LD. COUNSEL FOR THE ASSESSEE. SHE RELIED UPON THE ORDER OF THE AO. 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. FROM PERUSAL OF THE FINDING RECOR DED BY THE AO (EXTRACTED SUPRA) WE FIND THAT LD. AO HAS NOT DISPUTED THE GEN UINENESS OR OTHERWISE OF THE EXPENSES. THE ONLY REASON ASSIGNED BY HIM IS TH AT ADVERTISEMENT EXPENSES WERE AMORTIZED IN 5 EQUAL INSTALLMENTS IN THE PAST. AFTER ALLOWING 1/5 FOR THE CONCERNED, BALANCE 4/5 WERE DISALLOWED. THEREFORE, SAME YARDSTICK IS TO BE ADOPTED IN THIS YEAR. IN THE PAS T IT HAS BEEN HELD THAT ADVERTISEMENT EXPENSES ARE REVENUE IN NATURE AND TH ERE IS NO CONCEPT IN THE INCOME TAX ACT TO DEFER REVENUE EXPENDITURE TO THE SUBSEQUENT YEAR FOR THE PURPOSE OF DEDUCTION. THE DISALLOWANCE HAS BEEN DEL ETED THERE IS NO DISPARITY ON FACTS BETWEEN 2003-04 TO 2005-06 TO TH IS YEAR. THEREFORE, WE 5 ARE OF THE OPINION THAT LD. CIT (A) HAS RIGHTLY DEL ETED THE ADDITION AND NO INTERFERENCE IS CALLED FOR. THE APPEAL OF THE REVEN UE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24/10/2013. SD/- SD/- ( T. S. KAPOOR ) (RAJP AL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 24/10/2013 *AK VERMA* COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(APPEALS) 5.DR: ITAT ASSISTANT REGISTRAR