ACIT, New Delhi V. M/s Dabon International India Pvt. Ltd., New Delhi

ITA 600/DEL/2011

• Counselvise Citation: 60020114 RSA 2011
• Duration Of Justice: 1 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 23-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 03-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP KUMARDR
• Assessee Lawyers: LALITHA KRISHNAMURTHYAR
• Keywords: Additional evidence; Revenue expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI B BENC H BEFORE SHRI R.P. TOLANI , JM & SHRI A.N. PAHUJA, AM ITA NO.600/DEL/2011 ASSESSMENT YEAR:2006-07 A.C.I.T., CIRCLE 10(1), NEW DELHI V/S . M/S DABON INTERNATIONAL INDIA PVT. LTD., 3 RD FLOOR, PUNJABI BHAWAN, 10, ROUSE AVENUE, NEW DELHI [PAN : AAACD 3039 P) (APPELLANT) (RESPONDENT) ASSESSEE BY SMT. LALITHA KRISHNAMURTHY,AR REVENUE BY SHRI PRADEEP KUMAR,DR DATE OF HEARING 23-02-2012 DATE OF PRONOUNCEMENT 29-02-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 03.02.2011 BY THE REVENUE AGAI NST AN ORDER DATED 01.12.2010 OF THE LD. CIT(A)-XIII, NEW DELHI, RAISES THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A)HAS ERRED IN DELETING THE ADDITI ON MADE BY THE ASSESSING OFFICER ON A/C OF ADVERTISEMENT & PUBLICITY EXPENSES. 2. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY GROUND OF APPEAL RAISED ABOVE AT THE TIME OF TH E HEARING. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THA T RETURN DECLARING LOSS OF ` `4,95,16,792/- FILED ON 29 TH NOVEMBER, 2006 BY THE ASSESSEE, MANUFACTURING AND TRADING IN CHEESE AND OTHER DAIRY PRODUCTS, AFT ER BEING PROCESSED ON 28 TH JULY, 2007 U/S 143 (1) OF INCOME-TAX ACT, 1961 (HER EINAFTER REFERRED TO AS THE ACT), WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE ACT ITA N O.600 /DEL./2011 2 ON 29 TH SEPTEMBER, 2007. DURING THE COURSE OF ASSESSMENT PROCEEDINGS,ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT, THE ASSESSI NG OFFICER (A.O. IN SHORT) NOTICED THAT AN AMOUNT OF ` `16,73,800/- WAS CLAIMED ON ACCOUNT OF ADVERTISEMENT AND PUBLICITY. TO A QUERY BY THE AO, THE ASSESSEE DID NOT SUBMIT ANY REPLY NOR JUSTIFIED THE CLAIM FOR DEDUCTION OF SUCH HEAVY EXPENDITURE. ACCORDINGLY, THE AO DISALLOWED THE AMOUNT OF ` ` 16,73,800/-. 3. ON APPEAL, THE LD. CIT(A) AFTER ADMITTING THE A DDITIONAL EVIDENCE IN TERMS OF RULE 46A OF THE I.T. RULES, 1962 CONCLUDED AS UNDER:- 4. .1 FINDING :- CONSIDERING THE SUBMISSIONS OF THE APPELLANT AND IN ORDER TO IMPART SUBSTANTIVE JUSTICE THE ADDITIONAL EVIDENCES IN FOR M OF BILLS/ VOUCHERS ETC ARE ADMITTED UNDER RULE 46A. I HAVE CA REFULLY CONSIDERED THE SUBMISSIONS AND PAPER BOOK FILED BY THE APPELLANT. THE NATURE OF ADVERTISEMENT EXPENSES HAVE ALSO BEEN PROVIDED IN A SUMMARIZED FORM. THESE ARE INTER ALIA RELATED TO FEES FOR ADVERTISEMENT SERVICE PAID TO AN AGENCY NAMELY TLG INDIA P. LTD.; SPONSORSHIP EXPENSES; MISCELLANEOUS EXPENSES, ON CO LOR PRINTS/ LEAFLETS; EXPENSES ON PRODUCTS SAMPLE; EXPENSES PAI D ON PANEER TASTING ACTIVITY ON MONTHLY TO BASIS TASTERS; EXPEN SES ON GLOW SIGN BOARDS/ DISPLAY BOARDS ETC. ALL THE ABOVE EXPENSES ARE CLEARLY RELATED TO ADVERTISEMENT, PROMOTION AND FOR INCREAS ING MARKET PENETRATION AND PRODUCT AWARENESS AND VISIBILITY AN D ARE NECESSARY CONCOMITTENT FOR A PRODUCT MANUFACTURED AND SOLD BY THE APPELLANT, WHICH IS HIGHLY DEPENDENT ON ITS MARKET VISIBILITY. WHILE ON THIS ISSUE I AM ALSO RELY ON THE DECISION OF HON'BLE SC. IN BOMBAY STEAM NAVIGATION CO. 56 ITR 52, WHEREIN THE NATURE OF REVENUE INCURRED FOR THE PURPOSE OF BUSINESS WAS EX PLAINED AS FOLLOWS:- 'WHETHER A PARTICULAR EXPENDITURE IS REVENUE EXPEND ITURE INCURRED FOR THE PURPOSE OF BUSINESS MUST BE DETERM INED ON A CONSIDERATION OF ALL FACTS AND CIRCUMSTANCES, AND BY THE APPLICATION OF PRINCIPLES OF COMMERCIAL TRADING . THE QUESTION MUST BE VIEWED IN THE LARGER CONTEXT OF BU SINESS NECESSITY OR EXPEDIENCY. IF THE OUTGOING OR EXPENDI TURE IS SO RELATE TO THE CARRYING ON OR CONDUCT OF THE BUSI NESS, THAT IT MAY BE REGARDED AS AN INTEGRAL PART OF THE PROFI T EARNING ITA N O.600 /DEL./2011 3 PROCESS AND NOT FOR ACQUISITION OF AN ASSET OR A RI GHT OF A PERMANENT CHARACTER, THE PROCESSION OF WHICH IS A CONDITION OF THE CARRYING OF THE BUSINESS, THE EXPE NDITURE MAY BE REGARDED AS REVENUE EXPENDITURE.' IT IS ALSO NOTED FROM THE AO'S ORDER THAT HE HAS TR EATED THE ENTIRE ADVERTISEMENT & PUBLICITY EXPENSE AS CAPITAL IN NA TURE, WITHOUT GIVING ANY SPECIFIC FINDING WITH RESPECT TO THE SAM E. IN VIEW OF THE FACTS OF THE CASE AND NATURE OF EXPENSES AND PLACIN G RELIANCE ON THE CASE LAW CITED ABOVE THE ADDITION MADE FOR RS. 16,73,800/- IS DIRECTED TO BE DELETED AS THE SAME IS HELD AS REVEN UE EXPENDITURE IN NATURE. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. DR RELIED ON TH E ORDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE SUPPORTED THE FINDINGS OF THE LD. CIT(A) IN THE IMPUGNED ORDER. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. WE FIND THAT THE LD. CIT(A) AFTER ADMITTING ADDITIONAL EVIDENCE IN THE FORM OF BILLS/VOUCHERS IN RELATION TO ADVERTISEMENT AND PUBLICITY EXPENSES CONCLUDED THAT THE AMOUNT RELATED TO FEES FOR ADVERTISEMENT S ERVICE PAID TO AN AGENCY NAMELY TLG INDIA P. LTD.; SPONSORSHIP EXPENSES; MIS CELLANEOUS EXPENSES ON COLOR PRINTS/ LEAFLETS; EXPENSES ON PRODUCTS SAMPLE ; EXPENSES PAID ON PANEER TASTING ACTIVITY ; EXPENSES ON GLOW SIGN BOARDS/ DI SPLAY BOARDS ETC. . SINCE THESE EXPENSES WERE INCURRED FOR MARKET PENETRATION AND PRODUCT AWARENESS , THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE.THE LD. DR APPEARING BEFORE US DID NOT CONTROVERT THESE FINDINGS OF FACTS RECORDED BY THE LD. CIT(A) NOR PLACED ANY MATERIAL BEFORE US SO AS TO ENABLE US TO TAKE A DI FFERENT VIEW IN THE MATTER. IN THE ABSENCE OF ANY BASIS, WE ARE NOT INCLINED TO IN TERFERE WITH THE FINDINGS OF THE LD. CIT(A).THEREFORE, GROUND NO.1 IN THE APPEAL IS DISMISSED. 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.2 IN THE APPEAL, ACCORDINGLY, T HIS GROUND IS DISMISSED. ITA N O.600 /DEL./2011 4 7. NO OTHER SUBMISSION OR ARGUMENT WAS MADE BEFORE US. 8. IN RESULT, APPEAL IS DISMISSED. SD/- SD/- (R.P. TOLANI) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. ACIT, CIRCLE 10(1), NEW DELHI. 2. M/S DABON INTERNATIONAL INDIA PVT. LTD., 3 RD FLOOR, PUNJABI BHAVAN, 10, ROUSE AVENUE, NEW DELHI. 3. CIT CONCERNED. 4. CIT(A)-XIII,NEW DELHI 5. DR, ITAT,B BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT