M/s.. Synthes Medical Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 6005/DEL/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6305 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 09-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 07-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PIYUSH KAMAL; S. GAUTAM JAIN
• Keywords: Capital asset; Depreciation; Business expenditure; Rule of consistency; Services rendered outside India; Retrospective amendment; Bad and doubtful debts; Commercial expediency; Revenue expenditure; Capital expenditure; TDS
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 40(a)(ia); 37(1); 143(1); 195; 201; 143(2); 207; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G , NEW DELHI BEFORE SH. SUDHANSHU SRIVASTAVA , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO S . 6005 & 6006 / DEL/ 2013 ASSESSMENT YEAR S : 2007 - 08 & 2008 - 09 SYNTHES MEDICAL PVT. LTD., C/O - JURIS CONSULTANT, 207, ESSEL HOUSE, 10 ASAF ALI ROAD, NEW DELHI VS. DCIT, CIRCLE - 7(1), NEW DELHI PAN : AAACM3591K (APPELLANT) (RESPONDENT) AND ITA NO. 5807 / DEL/ 2013 ASSESSMENT YEAR: 2008 - 09 DCIT, CIRCLE - 7(1), ROOM NO. 238A, 2 ND FLOOR, C.R. BUILDING, I.P. ESTATE, NEW DELHI VS. SYNTHES MEDICAL PVT. LTD., 207 - ESSEL HOUSE, 10 ASAF ALI ROAD, NEW DELHI PAN : AAACM3591K (APPELLANT) (RESPONDENT) ASSESSEE BY S/SH. GAUTAM JAIN & PIYUSH KAMAL, ADVOCATES DEPARTMENT BY SH. N.K. BANSAL, SR.DR DATE OF HEARING 23.02.2017 DATE OF PRONOUNCEMENT 31.03.2017 ORDER PER O.P. KANT , A. M. : THESE THREE APPEALS (TWO BY THE ASSESSEE AND ONE BY THE REVENUE) ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD. COMMISSIONER OF INCOME - TAX (APPEALS) - X, NEW DELHI , {IN SHORT THE CIT(A) } DATED 21/08/2 013 RELATING TO ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 2 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 RESPECTIVELY. SINCE THE ISSUES INVO LVED IN THE APPEALS ARE COMMON, THEREFORE , ALL THE THREE APPEALS WERE HEARD TOGE THER AND DISPOSED OF BY THIS CONSOLIDATED ORDER. ITA NO. 6005/DEL/2013 FOR AY: 2007 - 08 2. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE IN ITA NO. 6005/DEL/2013. ON EARLIER DATE OF HEARING , THE ASSESSEE WAS DIRECTED TO FILE CONCISE GROUNDS OF APPEAL . THE CONCISE GROUNDS FILED BY T H E ASSESSEE ON 20/03/2017 ARE REPRODUCED AS UNDER: I. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED BOTH IN LAW AND ON FACTS IN UPHOLDING DISALLOWANCE OF A SUM OF RS.50,33,418/ - BY RESTRICTING THE CLAIM OF DEDUCTION IN RESPECT OF LOANER AND DEMO SETS AT RS.40,28,706/ - INSTEAD OF CLAIM OF RS.93,97,124/ - BY THE APPELLANT COMPANY BY HOLDING THAT SUCH ASSETS ARE CAPITAL ASSETS ELIGIBLE FOR DEPRECIATION U/S 32(1) OF THE ACT. II. THAT IN ANY CASE THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT EXPENDITURE CLAIMED WAS ELIGIBLE REVENUE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND AS SUCH ELIGIBLE FOR DEDUCTION U/S 37(1) OF THE ACT. III. THAT THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING DISALLOWANCE OF SUM OF RS.11,49,037/ - OUT OF EXPENDITURE INCURRED OF RS.22,98,075/ - UNDER THE HEAD ADVERTISEMENT AND PROMOTIONAL EXPENSES INCURRED BY THE APPELLANT COMPAN Y. IV. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED IN NOT DELETING DISALLOWANCE OF SUM OF RS.2,08,711/ - REPRESENTING EXPENDITURE INCURRED UNDER THE HEAD SELLING COMMISSION BY TREATING IT AS PRIOR PERIOD EXPENSES AND INSTEAD THERE OF, DIRECTING THAT ON VERIFICATION IF THE FACTUAL MISTAKE IS DETECTED, THE LEARNED ASSESSING OFFICER IS DIRECTED TO DELETE THIS ADDITION. V. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO ERRED IN NOT DELETING DISALLOWANCE OF SUM OF RS.7,07,20 9/ - REPRESENTS PROVISION FOR DOUBTFUL DEBTS AND INSTEAD THEREOF DIRECTING THAT THE LEARNED ASSESSING OFFICER IS DIRECTED TO VERIFY THIS CONTENTION OF THE A.R. OF THE APPELLANT AND IF THE AMOUNT HAS 3 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 ALREADY BEEN ADDED BACK BY THE APPELLANT, THERE IS NO JUS TIFICATION FOR SUSTAIN THIS ADDITION. VI. IT IS, THEREFORE, PRAYED THAT, THE DISALLOWANCE SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND DISPUTED IN THIS APPEAL MAY KINDLY BE DELETED AND APPEAL OF THE APPELLANT COMPANY BE ALLOWED. 3 . T HE FACTS IN BRIEF OF THE CASE ARE THAT THE ASSESSEE COMPANY, A SUBSIDIARY OF SYNTHES GMBH, SWITZERLAND, WAS ENGAGED IN MARKETING THE MEDICAL ORTHOPAEDIC IMPLANTS, RELATED SERVICES AND TOOLS THROUGHOUT THE INDIA THROUGH THE NETWORK OF DEALERS AND SALES TEAM . FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE FILED RETURN OF INCOME ON 31/10/200 7 DECLARING TOTAL INCOME OF RS.10,14, 38 , 903/ - . THE CASE WAS SELECTED FOR SCRUTINY AND NOTI CE UNDER SECTION 143(2) OF THE INCOME - T AX ACT, 1961 (IN SHORT THE ACT ) WAS ISSUED AND COMPLIED WITH. AFTER MAKING CERTAIN ADDITIONS/DISALLOWANCES THE T OTAL INCOME WAS ASSESSED AT RS.10,99, 91,720/ - UNDER SECTION 143(3) OF THE ACT ON 21/12/2010. ON APPEAL, THE LD. CIT - A ALLO WED PART RELIEF TO THE ASSESSEE . AGGRIEVED , THE ASSESSEE IN APPE AL BEFORE THE TRIBUNAL RAISING T HE GROUNDS AS REPRODUCED ABOVE. 4. T HE GROUNDS NO. 1 AND 2 REL ATES TO THE DISALLOWANCE OF RS.50, 3 3, 418/ - WHEREIN THE ASSESSING OFFICER HAS TREATED THE LOANER AND DEMO SETS AS CAPITAL ASSET AGAINST CLAIM OF THE ASSESSEE AS SAME WERE PART OF INVENTORY . THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER HAS NOTED THAT THE ASSESSEE PURCHASES EQUIPMENTS/INSTRUMENTS EITHER FOR THE SALE OR USE BY THE DOCTORS OR HOSPITALS ON RETURNABLE BASIS. DURING THE COURSE OF ASSESSMEN T PROCEEDING, THE ASSESSEE CONTENDED THAT EQUIPMENT S /INSTRUMENTS WERE NEEDED FOR SURGICAL FIXATION/CORRECTION AND REGENERATION OF HUMAN SKELETON AND IT WAS NECESSARY TO PROVIDE SUCH EQUIPMENTS TO DOCTORS/HOSPITALS SO AS TO FACILITATE SALE OF PRODUCTS , NAM ELY , SURGICAL 4 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 IMPLANTS. IT WAS CONTENDED THAT AFTER EVERY USE, THE EQUIPMENTS WERE STERILIZED AND THEN GIVEN TO NEXT CUSTOMERS AND ESTIMATED USEFUL LIFE OF SUCH EQUI PMENTS/INSTRUMENTS WAS 36 MONTHS AND THE ASSESSEE HAS CONSISTENTLY AMORTIZED THE COST ACCOR DINGLY . THE ASSESSING OFFICER , HOWEVER , WAS NOT CONVINCED WITH THE ABOVE EXPLANATION AND HELD THAT SINCE THE ASSESSEE HAD ITSELF ACCEPTED THAT THE INSTRUMENTS/EQUIPMENTS WERE LASTING MORE THAN A YEAR AND , THEREFORE , THERE IS NO DOUBT THAT SUCH EQUIPMENT S /I NSTRUMENTS USED BY THE ASSESSEE FOR ITS BUSINESS INTEREST WERE NOT CONSUMED WITHIN THE YEAR. HE , THEREFORE , HELD THAT SUCH EQUIPMENT/INSTRUMENTS ARE CAPITAL ASS ETS OF THE ASSESSEE COMPANY AND, THEREFORE, SHOULD BE TREATED UNDER THE HEAD PLANT AND MACHINER Y FOR THE PURPOSE OF DEPRECIATION. HE, ACCORDINGLY , HELD THAT SINCE THE ASSESSEE CLAIMED AMORTIZATION OF RS.93,97, 124/ - THE SAME WOULD TRANSLATE INTO ASSETS OF RS. 2,81,91, 372/ - AND , THEREFORE , AFTER ALLOWING DEPRECIATION AT THE RATE OF 15% ON THE AFORESAID SUM, WHICH WAS COMPUTED AT RS.42,28,706/ - , HE MADE DISALLOWANCE OF RS.50,33,418 / - AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE. THE LD. CIT - A CONFIRMED THE AFORESAID DISALLOWANCE AND HELD THAT INSTRUMENTS IN REFERENCE ARE CAPITAL IN NATURE AND CLAIM OF THE ASSESSEE BASED ON THE PRINCIPLE OF DEFERRED REVENUE EXPENDITURE WAS NOT A CORRECT CLAIM. HE ALSO HELD THAT PRINCIPLE OF CONSISTENCY CANNOT BE APPLIED AS EACH YEAR IS A SEPARATE YEAR AND EFFECTS HAVE TO BE EXAMINED ACCORDINGLY. 4.1 BEFORE US, LEARNE D COUNSEL OF THE ASSESSEE CONTENDED THAT THE CLAIM OF THE ASSESSEE IS MAINTAINABLE ON THE PRINCIPLE OF CONSISTENCY AND IN SUPPORT HE REFERRED TO THE JUDGMENT OF THE APEX COURT IN THE CASE OF CIT VS. EXCEL INDUSTRIES LTD ., 358 ITR 295. IT WAS SUBMITTED THAT SINCE AMORTIZATION OF LOANER SETS HAD CONSISTENTLY BEEN ACCEPTED AS REVENUE EXPENDITURE OVER A PERIOD OF 13 YEARS FROM ASSESSMENT YEAR 1994 - 95 TO 5 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 2006 - 07, EVEN IN ASSESSMENT FRAMED UNDER S ECTION 143 (3) OF THE ACT, DENIAL OF DEDUCTION IN THE YEAR UNDER CONSIDERATION WAS NOT TENABLE. IT WAS SUBMITTED THAT THE FINDING THAT SINCE THE ASSESSEE DERIVED ENDURING BENEFITS THEREFORE, THE EXPENDITURE IS CAPITAL IN NATURE IS CONTRARY TO THE JUDGMENT OF THE APEX C OURT IN THE CASE OF EMPIRE JUTE COMPANY L IMITED VS. CIT , 124 ITR 1. IT WAS SUBMITTED THAT IMPLANTS WERE SURGICALLY FIXED IN THE HUMAN BODY TO TREAT VARIOUS BONE FRACTURES/CORRECTIONS/REGENERATION WITH THE HELP OF THE SPECIALIZED INSTRUMENTS AN D POWER TOOLS AND SINCE THESE INSTRUMENTS ARE REGULARLY USED BY THE SURGEONS IN THE OPERATION THEATRE, THERE IS A REGULAR WEAR AND TEAR TO THESE INSTRUMENTS AND BASED ON THE PAST TREND/EXPERIENCE AND PROFESSION AL ADVICE , USEFUL LIFE OF THESE INSTRUMENTS WA S ASSESSED TO 36 MONTHS. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD DISCLOSED THE SAID LOANER SETS UNDER INVENTORY CONSISTENTLY AND THE SAID STAND OF THE ASSESSEE HAS BEEN ACCEPTED THROUGHOUT IN THE PAST. IT WAS ALSO CONTENDED THAT THE CLAIM OF THE ASSESSEE IS IN ACCORDANCE WITH ACCOUNTING STANDARD - 2 (AS - 2) MANDATED BY THE INDIAN C HARTERED A CCOUNTANT INSTITUTE (ICAI) AND AS SUCH AMORTIZATION SHOULD BE ACCEPTED IN ARRIVING AT THE VALUE OF STOCK OF LOANER SETS. ALTERNATIVELY, IT WAS CONTENDED THAT THE EXPENDITURE WAS REVENUE IN NATURE AS IT WAS A CASE WHERE THE ASSESSEE ADOPTED TO AMORTIZE THE REVENUE EXPENDITURE IN AC CORDANCE WITH THE JUDGMENT IN TAPARIA T OOLS LTD . VS. JCIT 372 ITR 605(SC) AND CIT VS. CITI FINANCIAL C ONSUMER LTD ., 335 ITR 29 (DEL). IT WAS FURTHER SUBMITTED THAT COMPUTATION OF DISALLOWANCE BY THE ASSESSING OFFICER IS NOT CORRECT AND IN THIS REGARD IT WA S STATED THAT THE REVENUE HAS NOT ALLOWED DEPRECIATION ON THE ESTIMATED WDV OF THE INSTANT YEAR. FURTHERMORE, IT WAS ALSO SUBMITTED THAT EVEN THE FIGURES ADOPTED BY THE ASSESSING OFFICER FOR COMPUTING THE VALUE OF LOANER SETS AT RS. 28,19,137/ - WAS 6 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 BASED ON ASSUMPTION AN D THE CORRECT FIGURE WAS OF RS.4,18,66, 126/ - AND ON TH E BASIS , ADOPTED BY THE ASSESSING OFFICER, T HE DEPRECIATION WOULD BE OF RS.62,79, 919/ - AND THUS THE DISAL LOWANCE AT BEST COULD BE OF RS.31,17, 205/ - AND NOT AT RS.50,33, 418/ - COMPUTED BY THE ASSESSING OFFICER. 4.2 ON THE OTHER H AND , THE LD. S ENIOR DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT CLAIM OF AMORTIZATION WAS NOT IN ACCORDANCE WITH LAW. 4.3 WE HAVE CONSIDERED THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE ASSESSEE COMPANY WAS ENGAGED IN TRADING OF MEDICAL IMPLANTS, SURGICAL INSTRUMENTS ETC IN THE FIELD OF ORTHOPAEDIC. THE ASSESSEE IN THE COURSE OF TRADING O PERATIONS, PURCHASED EQUIPMENTS/INSTRUMENTS FOR FIXING THE IMPLANTS IN THE HUMAN BODY AND OUT OF THOSE FEW ITEMS WERE GIVEN AS LOANER SETS TO VARIOUS HOSPITALS/DOCTORS ON RETURNABLE BASIS. THE ISSUE THEREFORE, IS WHETHER EQUIPMENTS/INSTRUMENTS GIVEN AS LOANER SETS ARE CAPITAL ASSETS OR PART OF INVENTORY AS CLAIMED BY THE ASSESSEE, MORE PARTICULARLY HAVING REGARD TO THE FACT THAT THIS CLAIM OF THE ASSESSEE HAS BEEN ACCEPTED SINCE ASSESSMENT YEAR 1994 - 95. A CHART OF THE CLAIM MADE BY THE ASSESSEE IN VARI OUS YEARS IS REPRODUCED AS UNDER: AY OPENING STOCK (A) PURCHASE (B) A+B CLOSING STOCK (D) DIMINUTION IN VALUE AMORTIZED DISALLO WANCE IF ANY ASSESSMENT U/S 1994 - 95 - 60,05,907 60,05,907 55,05,415 5,00,492 NIL 143(1) 1995 - 96 55,05,415 - 55,05,415 35,03,446 20,01,969 143(1) 1996 - 97 35,03,446 6,74,430 41,77,876 21,42,237 20,35,639 143(1) 1997 - 98 21,42,237 13,62,096 35,04,332 15,68,865 19,35,467 143(1) 1998 - 99 15,68,865 31,90,278 47,59,143 36,52,622 11,06,521 143(1) 1999 - 00 36,52,622 19,29,118 55,81,740 34,23,120 21,58,620 143(1) 2000 - 01 34,23,120 9,58,008 43,81,129 22,73,265 21,07,864 143(1) 2001 - 02 22,73,265 21,99,857 44,73,122 25,07,361 19,65,761 143(1) 2002 - 03 25,07,361 53,65,247 78,72,608 57,85,431 20,87,177 143(1) 2003 - 04 57,85,431 52,22,341 1,10,07,771 76,67,855 33,39,916 143(3) AND 7 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 143(3)/147 2004 - 05 76,67,855 71,02,372 1,47,70,227 95,93,546 51,76,681 143(1) 2005 - 06 95,93,546 88,86,794 1,84,80,340 1,18,92,073 65,88,267 143(1) 2006 - 07 1,18,92,073 72,84,329 1,91,76,401 1,16,55,123 75,21,278 143(1) 4. 3.1 T HE LD. CIT - A HAS NOT ACCEPTED THE CLAIM BY OBSE RVING THAT THE PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO THE INCOME TAX PROCEEDINGS. WE DO AGREE WITH THE SAID PRINCIPLE, HOWEVE R, THE HON BLE APEX C OURT IN THE CASE OF CIT VS. EXCEL I NDUSTRIES LTD . (SUPRA) HAS UPHELD THE PRINCIPLE OF CONSISTENCY. THE HON BLE APEX C OURT IN THE SAID CASE FO LLOWED JUDGMENT OF RADHA SOAMI SATSANG VS. CIT 193 ITR 321 (SC) AND OBSERVED AS UNDER: 29. IN RADHASOAMI SATSANG SAOMI BAGH V. COMMISSIONER OF INCOME TAX , [1992] 193 ITR 321 (SC) THIS COURT DID NOT THINK IT APPROPRIATE TO ALLOW THE RECONSIDERATION OF AN ISSUE FOR A SUBSEQUENT ASSESSMENT YEAR IF THE SAME 'FUNDAMENTAL ASPECT' PERMEATES IN DIFFERENT ASSESSMENT YEARS. IN ARRIVING AT THIS CONCLUSION , THIS COURT REFERRED TO AN INTERESTING PASSAGE FROM HOYSTEAD V. COMMISSIONER OF TAXATION , 1926 AC 155 (PC) WHEREIN IT WAS SAID: 'PARTIES ARE NOT PERMITTED TO BEGIN FRESH LITIGATION BECAUSE OF NEW VIEWS THEY MAY ENTERTAIN OF TH E LAW OF THE CASE, OR NEW VERSIONS WHICH THEY PRESENT AS TO WHAT SHOULD BE A PROPER APPREHENSION BY THE COURT OF THE LEGAL RESULT EITHER OF THE CONSTRUCTION OF THE DOCUMENTS OR THE WEIGHT OF CERTAIN CIRCUMSTANCES. IF THIS WERE PERMITTED, LITIGATION WOULD H AVE NO END, EXCEPT WHEN LEGAL INGENUITY IS EXHAUSTED. IT IS A PRINCIPLE OF LAW THAT THIS CANNOT BE PERMITTED AND THERE IS ABUNDANT AUTHORITY REITERATING THAT PRINCIPLE. THIRDLY, THE SAME PRINCIPLE, NAMELY, THAT OF SETTING TO REST RIGHTS OF LITIGANTS, APPLI ES TO THE CASE WHERE A POINT, FUNDAMENTAL TO THE DECISION, TAKEN OR ASSUMED BY THE PLAINTIFF AND TRAVERSABLE BY THE DEFENDANT, HAS NOT BEEN TRAVERSED. IN THAT CASE ALSO A DEFENDANT IS BOUND BY THE JUDGMENT, ALTHOUGH IT MAY BE TRUE ENOUGH THAT SUBSEQUENT LI GHT OR INGENUITY MIGHT SUGGEST SOME TRAVERSE WHICH HAD NOT BEEN TAKEN.' 31. IT APPEARS FROM THE RECORD THAT IN SEVERAL ASSESSMENT YEARS, THE REVENUE ACCEPTED THE ORDER OF THE TRIBUNAL IN FAVOUR OF THE ASSESSEE AND DID NOT PURSUE THE MATTER ANY FURTHER BUT IN RESPECT OF SOME ASSESSMENT YEARS THE MATTER WAS TAKEN UP IN APPEAL BEFORE THE BOMBAY HIGH COURT BUT WITHOUT ANY SUCCESS. THAT BEING SO, THE REVENUE CANNOT BE ALLOWED TO FLIP - FLOP ON THE ISSUE AND IT OUGHT LET THE MATTER REST RATHER THAN SPEND THE TAX P AYERS' MONEY IN PURSUING LITIGATION FOR THE SAKE OF IT. 8 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 4. 3.2 I N THE INSTANT CASE, WE ALSO FIND THAT THERE IS NO CHANGE IN THE FACTS OR POSITION OF LAW WHEREBY LOANER SETS ARE DECLARED AS INVENTORY AND ACCEPTED AS INVENTORY BY THE DEPARTMENT. WE D O NOT FIND ANY JUSTIFIABLE BASIS TO ADOPT A CONTRARY STAND IN THE INSTANT YEAR. ACCORDING TO THE REVENUE, SINCE THE ASSESSEE HAS ACCEPTED THAT USEFUL LIFE OF THE LOANER SET I S 36 MONTHS, THEREFORE , THEY ARE CAPITAL ASSETS. THE ABOVE CONCLUSION TO OUR MIND IS CONTRARY TO THE JUDGMENT OF THE HON BLE A PEX C OURT IN THE CASE OF EMPIRE JUTE COMPANY L IMITED VS. CIT (SUPRA) WHEREIN IT HAS BEEN HELD THAT EXPENDITURE EVEN IF INCURRED FOR OBTAINING ADVANTAGE OF ENDURING BENEFIT, MAY NONETHELESS, BE ON REVENUE ACCOUNT AND THE TESTS OF ENDURING BENEFIT MAY BREAKDOWN. IT WAS HELD THAT IF THE ADVANTAGE CONSISTS MERELY IN FACILITATING, THE ASSESSEE S TRADING OPERATION OR ENABLING THE MANAGEMENT AND CONDUCT OF THE ASSESSEE S BUSINESS TO BE CARRIED ON MORE EFFICIENTLY AND MOR E PROFITABLY WHILE LEAVING THE FIXED CAPITAL UNTOUCHED, THE EXPENDITURE WOULD BE ON REVENUE ACCOUNT, EVEN THOUGH THE ADVANTAGE MAY ENDURE FOR AN INDEFINITE FUTURE. IN THE CASE OF THE ASSESSEE, WE FIND THAT ADMITTEDLY LOANER SETS ARE MADE AVAILABLE TO THE DOCTORS FOR THE PURPOSE OF ENCOURAGING SALE OF IMPLANTS AND THEREFORE, ADVANTAGE TO THE ASSESSEE IS TO FACILITATE THE TRADING OPERATION OF THE IMPLANTS. THE LOANER OR DEMO SETS ARE NOT INSTRUMENTS OF EARNING INCOME SO AS TO QUALIFY AS CAPITAL ASSET BU T THOSE ARE FOR ENCOURAGING THE USE OF ASSESSEE S PRODUCTS IN DOCTOR COMMUNITY, WHICH IN TURN WOULD RECOMMEND FOR THE SALE OF THE PRODUCTS OF THE ASSESSEE . THE LOANER SETS HAVE BEEN FOUND TO HAVE AVERAGE LIFE OF 36 MONTHS . IN SUCH CIRCUMSTANCES, MERELY BECAUSE THE ASSESSEE HAS AMORTIZED THE EXPENDITURE, IT DOES NOT WARRANT THE CONCLUSION THAT SUCH EXPENDITURE IS CAPITAL EXPENDITURE. THE ASSESSEE HAS CONSISTENTLY DISCLOSED THE SAID LOANER SETS A S INVENTORY AND VALUED THE SAME IN 9 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 ACCORDANCE WITH THE ACCOUNTING STANDARD - 2 OF ICAI, WHICH PRESCRIBES AN ASSESSEE TO VALUE THE INVENTORY AT COST OR NET REALIZABLE VALUE, WHICHEVER IS LOWER. 4.3.3 MOREOVER, THE FINDING OF THE LD. CIT - A THAT THE CLAIM OF ASSESSEE IS BASED ON THE PRINCIPLE OF DEFERRED REVENUE EXPENDITURE, IS NOT CORRECT. IT IS A CASE OF VALUATION OF INVENTORY AND THE METHOD OF VALUATION HAS BEEN CONSISTENTLY ACCEPTED BY THE REVENUE. MOREOVER EVEN OTHERWISE EXPENDITURE ON PURCHASE OF LOANER SETS IS NOT CAPITAL EXP ENDITURE AND THEREFORE ELIGIBLE FOR DEDUCTION AS REVENUE EXPENDITURE, WHICH AT THE OPTION OF THE ASSESSEE CAN BE AMORTIZED OVER A PERIOD OF YEARS AS HELD IN THE JUDGMENT OF THE HON BLE APEX COURT IN THE CASE OF TAPARIA T OOLS LTD VS. JCIT (SUPRA), AS UNDER : THUS, THE FIRST THING WHICH IS TO BE NOTICED IS THAT THOUGH THE ENTIRE EXPENDITURE WAS INCURRED IN THAT YEAR, IT WAS THE ASSESSEE WHO WANTED THE SPREAD OVER. THE COURT WAS CONSCIOUS OF THE PRINCIPLE THAT NORMALLY REVENUE EXPENDITURE IS TO BE ALLOWED IN THE SAME YEAR IN WHICH IT IS INCURRED, BUT AT THE INSTANCE OF THE ASSESSEE, WHO WANTED SPREADING OVER, THE COURT AGREED TO ALLOW THE ASSESSEE THAT BENEFIT WHEN IT WAS FOUND THAT THERE WAS A CONTINUING BENEFIT TO THE BUSINESS OF THE COMPANY OVER THE ENTIRE PERIOD. 18. WHAT FOLLOWS FROM THE ABOVE IS THAT NORMALLY THE ORDINARY RULE IS TO BE APPLIED, NAMELY, REVENUE EXPENDITURE INCURRED IN A PARTICULAR YEAR IS TO BE ALLOWED IN THAT YEAR. THUS, IF THE ASSESSEE CLAIMS THAT EXPENDITURE IN THAT YEAR, THE IT DEPARTMENT CANNOT D ENY THE SAME. HOWEVER, IN THOSE CASES WHERE THE ASSESSEE HIMSELF WANTS TO SPREAD THE EXPENDITURE OVER A PERIOD OF ENSUING YEARS, IT CAN BE ALLOWED ONLY IF THE PRINCIPLE OF 'MATCHING CONCEPT' IS SATISFIED, WHICH UPTO NOW HAS BEEN RESTRICTED TO THE CASES OF DEBENTURES. 19. IN THE INSTANT CASE, AS NOTICED ABOVE, THE ASSESSEE DID NOT WANT SPREAD OVER OF THIS EXPENDITURE OVER A PERIOD OF FIVE YEARS AS IN THE RETURN FILED BY IT, IT HAD CLAIMED THE ENTIRE INTEREST PAID UPFRONT AS DEDUCTIBLE EXPENDITURE IN THE SAM E YEAR. IN SUCH A SITUATION, WHEN THIS COURSE OF ACTION WAS PERMISSIBLE IN LAW TO THE ASSESSEE AS IT WAS IN CONSONANCE WITH THE PROVISIONS OF THE ACT WHICH PERMIT THE ASSESSEE TO CLAIM THE EXPENDITURE IN THE YEAR IN WHICH IT WAS INCURRED, MERELY BECAUSE A DIFFERENT TREATMENT WAS GIVEN IN THE BOOKS OF ACCOUNT CANNOT BE A FACTOR WHICH WOULD DEPRIVE THE ASSESSEE FROM CLAIMING THE ENTIRE EXPENDITURE AS A DEDUCTION. IT HAS BEEN HELD REPEATEDLY BY THIS COURT THAT ENTRIES IN THE BOOKS OF ACCOUNT ARE NOT DETERMINAT IVE OR CONCLUSIVE AND THE MATTER IS TO BE EXAMINED ON THE TOUCHSTONE OF PROVISIONS CONTAINED IN THE ACT [SEE - KEDARNATH JUTE MFG. CO. LTD. V. CIT [1971] 82 ITR 363 (SC) ; TUTICORIN ALKALI CHEMICALS & FERTILIZERS LTD. V. CIT [1997] 227 ITR 172/93 TAXMAN 502 10 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 (SC) ; SUTLEJ COTTON MILLS LTD. V. CIT [1979] 116 ITR 1 (SC) AND UNITED COMMERCIAL BANK V. CIT [1999] 240 ITR 355/106 TAXMAN 601 (SC) . 20. AT THE MOST, AN INFERENCE CAN BE DRAWN THAT BY SHOWING THIS EXPENDITURE IN A SPREAD OVER MANNER IN THE BOOKS OF ACCOUNT, THE ASSESSEE HAD INITIALLY INTENDED TO MAKE SUCH AN OPTION. HOWEVER, IT ABANDONED THE SAME BEFORE REACHING THE CRUCIAL STAGE, INASMUCH AS, IN THE INCOME TAX RETURN FILED BY THE ASSESSEE, IT CHOSE TO CLAIM THE ENTIRE EXPENDITURE IN THE YEAR IN WHICH IT WAS SPENT/PAID BY INVOKING THE PROVISIONS OF SECTION 36(1)(III) OF THE ACT. ONCE A RETURN IN THAT MANNER WAS FILED, THE AO WAS BOUND TO CAR RY OUT THE ASSESSMENT BY APPLYING THE PROVISIONS OF THAT ACT AND NOT TO GO BEYOND THE SAID RETURN. THERE IS NO ESTOPPEL AGAINST THE STATUTE AND THE ACT ENABLES AND ENTITLES THE ASSESSEE TO CLAIM THE ENTIRE EXPENDITURE IN THE MANNER IT IS CLAIMED. 4.3.4 I N THE AFORESAID JUDGMENT , THERE LORDSHIPS HAVE HELD THAT NORMALLY REVENUE EXPENDITURE IS TO BE ALLOWED IN THE YEAR IN WHICH IT IS INCURRED BUT AT THE INSTANCE OF THE ASSESSEE, SPREADING OUT OF THE EXPENDITURE IS PERMISSIBLE. 4.3.5 IN SUCH CIRCUMSTANCES, WE ARE OF CONSIDERED OPINION THAT THE AMOUNT OF RS.50,33, 418/ - TREATING LOANER SETS EXPENDITURE AS CAPITAL EXPENDITURE WAS NOT IN ACCORDANCE WITH LAW AND THEREFORE, DIRECTED TO BE DELETED. THUS , THE GROUND S NO. 1 AND 2 OF THE APPEAL ARE ACCORDINGLY ALLOWE D. 5. THE GROUND NO. 3 RELATES TO DISALLOWANCE OF RS.11,49, 037/ - OUT OF EXPENDITURE OF RS.28,72, 572/ - UNDER THE HEAD ADVERTISEMENT AND PROMOTIONAL EXPENSES INCURRED BY THE ASSESSEE COMPANY. THE ASSESSING OFFICER DISALLOWED A SUM OF RS.22,98, 075/ - AND ALLOWED 1/5 TH OF THE EXPENDITURE , AMOUNTING TO RS.5,75, 118/ - N OUT OF THE TOTAL EXPENDITURE OF RS. 28,72,592/ - BY FOLLOWING THE DECISION IN THE CASE OF MADRAS INDUSTRIAL I NVESTMENT CORPORATION L IMITED VS. CIT 225 ITR 802. THE LD. CIT - A ACCEPTED THE CLAIM OF EXPENDITURE INCURRED ON ADVERTISEMENT OF RS. 42,000/ - BUT AS REGARD THE EXPENDITURE INCURRED OR SALES PROMOTION OF RS.22, 03,897/ - , HE DISALLOWED 50% OF THE CLAIM FOR 11 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 WANT OF PROPER DOCUMENTATION AND ADEQUATE EVIDENCE REGARDING USE OF SAID ITEMS FOR BUSIN ESS PURPOSE. 5.1 BEFORE US , THE LEARNED COUNSEL SUBMITTED THAT THE AD - HOC DISALLOWANCE OF REVENUE EXPENDITURE IS NOT IN ACCORDANCE WITH LAW. HE RELIED ON THE JUDGMENT IN THE CASE OF CIT VS. THE SALORA I NTERNATIONAL LTD . REPORTED IN 308 ITR 199 (DEL) AND C IT VS. SPICE DISTRIBUTION LTD . REPORTED IN 374 ITR 30 (DEL) TO SUBMIT THAT EXPENDITURE INCURRED ON SALES PROMOTION IS REVENUE EXPENDITURE. IT WAS CONTENDED THAT THERE IS NO CONCEPT OF DEFERRED REVENUE EXPENDITURE UNDER THE ACT AS HELD IN THE CASE OF CIT VS . CITI FINANCIAL C ONSUMER FIN . L IMITED , 330 ITR 29. 5.2 ON THE CONTRARY, THE LD. S ENIOR DR SUBMITTED THAT THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF EXPENDITURE INCURRED AND FAILED TO ESTABLISH THE NEXUS OF EXPENDITURE INCURRED WITH THE BUSINESS OF TH E ASSESSEE AND THEREFORE, IN SUCH CIRCUMSTANCES THE LD. CIT - A WAS JUSTIFIED IN RESTRICTING THE CLAIM OF EXPENDITURE TO THE EXTENT OF 50%. 5.3 HAVING CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD, WE ARE OF THE OPINION THAT NO BASIS WHATSOEVER HAS BEEN STATED BY THE AUTHORITIES TO RESTRICT THE EXPENDITURE TO 50% OF THE CLAIM OR 1/5 TH OF THE CLAIM. THE RELIANCE PLACED BY THE ASSESSING OFFICER ON THE JUDGMENT OF THE MADRAS I NDUSTRIAL INVESTMENT CORPORATION L IMITED VS. CIT (SUPR A) IS MISCONCEIVED, MISPLACED AND CONTRARY TO THE JUDGMENT OF THE HON BLE APEX C O URT IN THE CASE OF THE TAPARIA T O OLS L IMITED VS. JCIT (SUPRA) , WHEREIN IT IS LAID DOWN THAT THERE IS NO CONCEPT OF DEFERRED REVENUE EXPENDITURE AND IS ONLY AT THE INSTANCE OF THE ASSESSEE, A REVENUE EXPENDITURE CAN BE SPREAD OR UNDER THE PRINCIPLE OF MATCHING CONCEPT AND NOT OTHERWISE. THE LD. CIT - A HAS OBSERVED THAT IN RESPECT OF EXPENDITURE OF KEY CHAINS AMOUNTING TO RS.96, 546/ - TO DISTRIBUTORS AND AMOUNTING TO RS.3,23, 560/ - TO DOCTORS, THE ASSESSEE DID NOT 12 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 ESTABLISH THAT SAME WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. WE OBSERVED THAT THE AS SESSEE VIDE REPLY DATED 12/08/2013 HAD SUBMITTED BEFORE THE LD. CIT - A THAT SUCH EXPENDITURE WAS INCURRED FOR BUSINESS OF THE COMPANY AMONGST VARIOUS DOCTORS AND HEALTH WORKERS WHO ATTENDED SEMINARS. IT WAS ALSO STATED THAT TURNOVER OF THE ASSESSEE COMPANY HAS INCREASED FROM RS 31.86 CRORES TO RS. 42.04 CRORES. WE FIND THAT NEITHER THE ASSESSING OFFICER NOR THE LD. CIT - A HAS DISPUTED THE GENUINENESS OF THE EXPENDITURE. IN SUCH CIRCUMSTANCES, ONCE THE GENUINENESS OF THE EXPENDITURE IS NOT IN DISPUTE, THE COMM ERCIAL EXPEDIENCY CANNOT BE REJECTED ON THE GROUND OF SUSPICION. NO MATERIAL WAS LED BY THE REVENUE TO ALLEGE THAT THE EXPENDITURE INCURRED IN THE COURSE OF BUSINESS IS NOT AN ELIGIBLE EXPENDITURE. WE ACCEPT THE CONTENTION OF THE LD. COUNSEL THAT IT IS NOT POSSIBLE TO GET RECEIPT OF KEYCHAINS EITHER FROM THE DOCTORS OR DISTRIBUTORS DISTRIBUTED FOR THE PURPOSE OF DEVELOPMENT OF THE BUSINESS OF THE ASSESSEE . THE ENTIRE ACTION OF THE AUTHORITIES BELOW IS BASED ON SUSPICION AND THEREFORE FOUND UNTENABLE. ACCO RDINGLY, THE DISALLOWANCE MADE ON THIS ACCOUNT IS DELETED AND THE GROUND NO. 3 OF THE APPEAL IS ALLOWED. 6. THE GROUND NO. 4 RELATES TO DISALLOWANCE OF RS.2,08, 711/ - REPRESENTING EXPENDITURE UNDER THE HEAD SELLING COMMISSION BY TREATING IT AS PRIOR PERIO D EXPENSES. WE FIND THAT THE LD. CIT - A IN RESPECT OF AFORESAID DISALLOWANCE HAS OBSERVED AS UNDER: 6.3 AFTER GOING THROUGH THE OBSERVATIONS OF THE A.O. AND SUBMISSIONS OF THE A.R. OF THE APPELLANT, THE A.O. IS DIRECTED TO VERIFY WHETHER CONTENTION OF THE A.R. OF THE APPELLANT ON THIS ISSUE IS JUSTIFIED. IT APPEARS THAT THE A.R. HAS STATED IT TO BE A MISTAKE APPARENT FROM RECORD. ON VERIFICATION, IF THE FACTUAL MISTAKE IS DETECTED, THE A.O. IS DIRECTED TO DELETE THIS ADDITION. ACCORDINGLY, THIS GROUND IS TR EATED AS PARTLY ALLOWED SUBJECT TO VERIFICATION. 13 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 6.1 SINCE THE AFORESAID ISSUE IN DISPUTE HAS ALREADY BEEN ALLOWED BY THE LD. CIT - A SUBJECT TO VERIFICATION BY THE ASSESSING OFFICER, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDING OF THE LD. CIT - A AND THE GROUND OF APPEAL IS THEREFORE REJECTED. 7. THE GROUND NO. 5 RELATES TO DISALLOWANCE OF RS.7,07, 209/ - REPRESENTING A PROVISION FOR DOUBTFUL DEBTS. DURING THE COURSE OF ASSESSMENT PROCEEDING, IT WAS CONTENDED THAT THE ENTIRE PROVISION HAD BEEN ADDED BACK BY THE ASSESSEE COMPANY IN THE COMPUTATION OF INCOME. ON THE ISSUE IN DISPUTE, THE LD. CIT - A OBSERVED AS UNDER: 7.3 AFTER GOING THROUGH THE OBSERVATIONS OF THE A.O. AND SUBMISSIONS OF THE A.R. OF THE APPELLANT, IT APPEARS THAT THE APPELLANT HAS ON IT S OWN ALREADY ADDED BACK THIS AMOUNT OF RS. 7,07,209/ - IN THE TOTAL ADDITION OF RS.29,45,009/ - . THE A.O. IS DIRECTED TO VERIFY THIS CONTENTION OF THE A.R. OF THE APPELLANT. IF THE AMOUNT HAS ALREADY BEEN ADDED BACK BY THE APPELLANT, THERE IS NO JUSTIFICATI ON FOR SUSTAINING THIS ADDITION. THIS GROUND IS TREATED AS PARTLY ALLOWED SUBJECT TO VERIFICATION. 7.1 SINCE THE AFORESAID ISSUE IN DISPUTE HAS ALSO BEEN ALLOWED BY THE LD. CIT - A, SUBJECT TO VERIFICATION BY THE AO THAT THE AMOUNT WAS ALREADY ADDED BACK IN THE COMPUTATION, WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF THE LD. CIT - A ON THE ISSUE IN DISPUTE AND ACCORDINGLY, THE GROUND OF APPEAL IS THEREFORE REJECTED. ITA NOS. 6006/DEL/2013 & 5807/DEL/2013 FOR AY: 2008 - 09 8 . NOW WE TAKE UP APPEAL IN I TA NO. 6006/DEL/2013 AND 5807/DEL/2013 FOR ASSESSMENT YEAR 2008 - 09. THE CONCISE GROUNDS RAISED BY THE ASSESSEE ARE REPRODUCED AS UNDER: I. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING DISALLOWANCE OF A SUM OF RS. 1,93,04,806/ - BY RESTRICTING THE CLAIM OF DEDUCTION IN RESPECT OF LOANER AND DEMO SETS AT RS. 34,06,736/ - INSTEAD OF CLAIM OF RS. 14 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 2,27,11,536/ - BY THE APPELLANT COMPANY BY HOLDING THAT SUCH ASSETS ARE CAPITAL ASSETS ELIGIBLE FOR DEPRECIATION U/S 32(1) OF THE ACT. II. THAT IN ANY CASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FAILED TO APPRECIATE THAT EXPENDITURE CLAIME D WAS ELIGIBLE REVENUE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND AS SUCH ELIGIBLE FOR DEDUCTION U/S 37(1) OF THE ACT. III. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING DISALLOWANCE OF SUM OF RS. 25,60,981/ - OUT OF EXPENDITURE INCURRED OF RS. 51,21,962/ - UNDER THE HEAD ADVERTISEMENT AND PROMOTIONAL EXPENSES INCURRED BY THE APPELLANT COMPANY. IV. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS FURTHER ER RED IN NOT DELETING DISALLOWANCE OF SUM OF RS. 26,45,655/ - REPRESENTING EXPENDITURE INCURRED UNDER THE HEAD SELLING COMMISSION BY TREATING IT AS PRIOR PERIOD EXPENSES AND INSTEAD THEREOF, DIRECTING THAT ON VERIFICATION IF THE FACTUAL MISTAKE IS DETECTED, THE LEARNED ASSESSING OFFICER IS DIRECTED TO DELETE THIS ADDITION. V. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF RS. 15,88,440/ - REPRESENTING EXPENDITURE INCURRED FOR HOLDING A S ALES CONFERENCE BY THE APPELLANT COMPANY. VI. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING A DISALLOWANCE OF RS. 17,83,914/ - REPRESENTING EXPENDITURE INCURRED ON PAYMENT MADE BY THE APPELLANT COMPANY T O OVERSEAS EDUCATION FOUNDATION FOR PARTICIPATION OF SELECTED INDIAN DOCTORS FOR ADVANCE TRAINING COURSE HELD OUTSIDE INDIA BY INVOKING SECTION 40(A)(I) OF THE ACT. VII. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO ERRED BOTH IN LAW AND ON FA CTS IN SUSTAINING A DISALLOWANCE OF RS.13,31,716/ - REPRESENTING EXPENSES ON TRAINING OF DOCTORS IN INDIA 15 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 VIII. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF SUM OF RS.12,03,128/ - REPRES ENTING THE PROFESSIONAL FEES PAID BY THE APPELLANT COMPANY TO M/S. S. R. BATLIBOI & CO. IN THE YEAR UNDER CONSIDERATION BY THE APPELLANT COMPANY BY INVOKING THE PROVISIONS CONTAINED IN SECTION 40(A)(IA) OF THE ACT. IX. IT IS THEREFORE, PRAYED THAT, THE DISALL OWANCES SUSTAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND DISPUTED IN THIS APPEAL MAY KINDLY BE DELETED AND APPEAL OF THE APPELLANT COMPANY BE ALLOWED. 8. THE GROUNDS RAISED BY THE REVENUE FOR ASSESSMENT YEAR 2008 - 09 ARE AS UNDER: I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN LAW AND MERITS OF THE CASE IN RESTRICTING THE DISALLOWANCE TO 50% INSTEAD OF 4/5 TH OF RS.5121962/ - TOTAL EXPENSES CLAIMED BY THE ASSESSEE ON ACCOUNT OF ADVERTISEMENT AND PUBLICITY. II. ON THE FAC TS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN LAW AND MERITS OF THE CASE IN DELETING THE ADDITION OF RS.4006070/ - ON ACCOUNT OF RECRUITMENT AND TRAINING EXPENDITURE. III. THE APPELLANT CRAVES TO AMEND MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 9. T HE GROUNDS NO. 1 AND 2 OF THE APPEAL OF THE ASSESSEE ARE IDENTICAL TO GROUNDS NO. 1 AND 2 RAISED IN APPEAL FOR ASSESSMENT YEAR 2007 - 08. WE HAVE ALREADY HELD WHILE DISPOSING OFF THE APPEAL FOR ASSESSMENT YEAR 2007 - 08 THAT DENIAL OF CLAIM OF DEDUCTION OF LOANER SETS HOLDING THE SAME AS CAPITAL EXPENDITURE WAS NOT IN ACCORDANCE WITH LAW, THEREFORE , FOLLOWING THE AFORESAID FINDING, WE ALSO DELETE THE DISALLOWANCE IN T HE INSTANT YEAR AN D ACCORDINGLY , ALLOW THE GROUNDS NO. 1 AND 2 OF THE APPEAL. 10. THE GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE AND GROUND NO. 1 OF THE APPEAL OF THE REVENUE RELATE TO DISALLOWANCE OF ADVERTISEMENT EXPENSES WHICH IS ALSO IDENTICAL TO GROUND NO. 3 RAISED IN APPEAL FOR 16 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 ASSESSMENT YEAR 2007 - 08. THUS , FOR THE REASONS STATED WHILE DISPOSING OF GROUND NO. 3 FOR ASSESSMENT YEAR 2007 - 08, WE HOLD THAT CLAIM OF THE ASSESSEE IS IN ACCORDANCE WITH LAW. ACCORDINGLY, DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUST AINED BY LD. CIT - A IS DELETED. THUS, GROUND NO. 3 OF THE ASSESSEE S APPEAL IS ALLOWED AND GROUND NO. 1 OF THE REVENUE S APPEAL IS DISMISSED. 11. THE GROUND NO. 4 RELATE S TO DISALLOWANCE OF SUM OF RS.26,45, 655/ - REPRESENTING THE EXPEND ITURE INCURRED UNDER THE HEAD SELLING COMMISSION BY TREATING IT AS PRIOR PERIOD EXPENSES. THE FINDING OF THE LD. CIT - A ON THE ISSUE IN DISPUTE IS EXTRACTED AS UNDER: 6.3 AFTER GOING THROUGH THE OBSERVATIONS OF THE A.O. AND SUBMISSIONS OF THE A.R. OF THE APPELLANT, AS ALREA DY DECIDED BY THE UNDERSIGNED IN MY EARLIER DECISION IN A.Y. 2007 - 08 IN THE APPELLANT S OWN CASE, THE A.O. IS DIRECTED TO VERIFY WHETHER CONTENTIONS OF THE A.R. OF THE APPELLANT ON THIS ISSUE IS JUSTIFIED. IT APPEARS THAT THE A.R. HAS STATED IT TO BE A MIS TAKE APPARENT FROM RECORD. ON VERIFICATION, IF THE FACTUAL MISTAKE IS DETECTED, THE A.O. IS DIRECTED TO DELETE THIS ADDITION. ACCORDINGLY, THIS GROUND IS TREATED AS PARTLY ALLOWED SUBJECT TO VERIFICATION. 11.1 BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDED THAT THE LD. CIT - A HAS MECHANICALLY APPLIED THE CONCLUSION FOR ASSESSMENT YEAR 2007 - 08 TO THE INSTANT YEAR. IT WAS CONTENDED THAT THE LIABILITY FOR EXPENDITURE ON ACCOUNT OF SELLING COMMISSION CRYST ALLIZED IN THE INSTANT YEAR AND THEREFORE, IT WAS ALLOWABLE IN THE INSTANT YEAR. 11.2 HAVING REGARD TO THE ABOVE AND THE CONTENTION NOT DISPUTED BY THE LD. S ENIOR DR, WE FIND THAT LD. CIT - A HAS NOT CORRECTLY APPRECIATED THE FACTUAL METRICS FOR THE INSTAN T YEAR. WE THEREFORE, CONSIDER IT APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERING AFRESH, WHO SHALL DECIDE THE ISSUE AFTER GRANTING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE GROUND NO. 4 OF THE ASSESSEE S APPEAL IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 17 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 12. THE GROUND NO. 5 RELATES TO DISALLOWANCE OF A SUM OF RS.15,88, 440/ - REPRESENTING EXPENDITURE INCURRED FOR HOLDING SALES CONFERENCE BY THE ASSESSEE COMPANY. THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSE E DEBITED A SUM OF RS.15,88, 440/ - TO A COMPANY CALLED, MAKE MY TRIP AND STATED THAT THIS S U M WAS ADVANCED TO MAKE MY TRIP . AS THE ASSESSEE FAILED TO FURNISH ANY EXPLANATION FOR ALLOWABILITY OF THE SAID CLAIM, THE ASSESSING OFFICER DENIED THE C LAIM OF EXPEN DITURE. BEFORE THE, LD. CIT - A, THE ASSESSEE CONTENDED TH AT SUCH EXPENDITURE PERTAIN TO TRAVEL EXPENSES AND THE ASSESSEE WAS HOSTING A TRAINING PROGRAM AT A PLACE CALLED PHUKET . THE ASSESSEE FURTHER SUBMITTED DETAILS OF PAYMENT TO ESTABLISH THE GENUINENESS OF THE EXPENDITURE AND CONTENDED THAT THE EXPENDITURE WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. T HE LD. CIT - A HELD THAT THE RELEVANT DETAILS HAD NOT BEEN PRODUCED BEFORE THE ASSESSING OFFICER, THEREFORE , THE ASSESSING OFFICER WAS FULLY JUSTIFIED IN MAKING THE DISALLOWANCE AS ASSESSEE FAILED TO ESTABLISH THAT THE EXPENDITURE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 12.1 BEFORE US, THE LEARNE D COUNSEL OF THE ASSESSEE SUBMITTED THAT COMPLETE EVIDENCES IN SUPP ORT OF THE CLAIM WERE FURNISHED BEFORE THE AUTHORITIES AND THEREFORE, EXPENDITURE IN QUESTION WAS ELIGIBLE FOR CLAIMING AS BUSINESS EXPENDITURE AND THE AUTHORITIES BELOW HAVE PROCEEDED ON SURMISES, CONJECTURE AND SUSPICION IN DENYING THE CLAIM OF THE EXPE NDITURE. 12.2 THE LD. SENIOR DR SUPPORTED THE FINDING OF THE LD. CIT - A AND ASSESSING OFFICER AND CONTENDED THAT THE DENIAL OF THE CLAIM OF THE ASSESSEE WAS IN ACCORDANCE WITH LAW. 12.3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MA TERIAL ON RECORD. WE FIND THAT THE ASSESSING OFFICER STATED 18 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 THAT EVIDENCES IN SUPPORT OF THE EXPENDITURE WERE NOT FURNISHED, WHEREAS THE LD. CIT - A HAS ACCEPTED THAT THE EVIDENCES WERE FURNISHED BEFORE HIM, STILL HE CONFIRMED THE ACTION OF THE ASSESSING OFF ICER. IN THE FACTS OF THE CASE, IN OUR OPINION, THE AUTHORITIES BELOW HAVE NOT EXAMINED THE EVIDENCE SUPPORTING THE CLAIM THAT STAFF MEMBERS OF THE ASSESSEE HAVE ATTENDED THE TRAINING PROGRAMS CONDUCTED BY THE ASSESSEE. IN SUCH CIRCUMSTANCES, WE FEEL IT AP PROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION OF THE CLAIM OF THE ASSESSEE VIZ - A - VIZ THE EVIDENCES TENDERED AND THEN DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GRANTING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. AC CORDINGLY, THE GROUND NO. 5 OF THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 13. THE GROUND NO. 6 RELATES TO DISALLOWANCE OF RS.17,83, 914/ - REPRESENTING EXPENDITURE INCURRED ON PAYMENT MADE BY THE ASSESSEE COMPANY TO OVERSEAS EDUCATION FOUNDATION FOR PART ICIPATION OF SELECTED INDIAN DOCTORS FOR ADVANCE TRAINING COURSE OUTSIDE INDIA BY INVOKING SECTION 40(A)(IA) OF THE ACT. 13.1 THE LD. COUNSEL CONTENDED THAT THE EXPENDITURE WAS INCURRED FOR PROVIDING TRAINING TO DOCTORS AND IT WAS NOT IN ANY WAY IN THE N ATURE OF FEE FOR TECHNICAL SERVICES. IN SUPPORT OF THE CONTENTION, THE COUNSEL RELIED ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF HOLCIM S ERVICES SOUTH ASIA LTD . VS. DCIT 157 ITD 892. 13.2 ON THE CONTRARY, THE LD. S ENIOR DR RELIED ON THE FINDING OF THE LOWER AUTHORITIES. 13.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT ON THE ISSUE IN DISPUTE, THE LD. CIT - A HAS OBSERVED AS UNDER: 19 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 8.3 AFTER GOING THROUGH THE FACTS OF THE CASE, OBSER VATIONS OF THE A.O. AND SUBMISSIONS OF THE A.R. OF THE APPELLANT, IT IS OBSERVED THAT THE SERVICES FOR WHICH THE PAYMENT WAS MADE WAS PROVIDED TO HIGHLIGHT TRAINED DOCTORS AND PROFESSIONALS WHO WERE CERTAINLY IMPARTED TECHNICAL TRAINING AND, THEREFORE, THE SERVICES COULD ONLY BE CONSIDERED AS TECHNICAL SERVICES. THOUGH THE A.R. OF THE APPELLANT HAS ARGUED THAT THIS WAS ONLY TRAINING AND COULD NO BE CONSTRUED AS FEE FOR TECHNICAL SERVICES, SINCE THE NATURE OF SERVICES WERE OF TECHNICAL NATURE HAVING BEEN IMPARTED TO SPECIALIZED AND TECHNICAL PEOPLE, INCLUDING DOCTORS AND OTHER SPECIALIZED STAFF, I AM INCLINED TO AGREE WITH THE FINDINGS OF THE ASSE SSING OFFICER THAT THE PROVISIONS OF SECTION 195 WERE ATTRACTED IN THE PRESENT CASE AND SINCE NO TDS HAD BEEN DEDUCTED BY THE APPELLANT, THIS DISALLOWANCE U/S 40(A)(I) WAS FULLY JUSTIFIED. 13.3 .1 F ROM THE AFORESAID, IT IS APPARENT THAT THE LD. CIT - A HAS HELD THE EXPENDITURE INCURRED BY THE ASSESSEE WAS IN THE NATURE OF FEE FOR TECHNICAL SERVICES AND THERE FOR, THE ASSESSEE WAS OBLIGED TO DEDUCT TDS UNDER SECTION 195 THE ACT AND DUE TO NON - DEDUCTION OF TDS, THE EXPENDITURE WAS LIABLE FOR DISALLOWANCE. WE OBSERVED THAT THE PAYMENT WAS MADE TO OVERSEAS EDUCATION FOUNDATION (OEF) FO R PROVIDING TRAINING TO DOCTORS . THE OEF IS A MEDICALLY GUIDED NON - PROFIT ORGANIZATION EDUCATION BODY LED BY AN INTERNATIONAL GROUP OF SURGEONS SPECIALIZED IN THE TREATMENT OF TR AUMA AND DISORDER S OF THE MUSCULOSKELETAL SYSTEM . THE DOCTORS ATTENDED THE TRAINING IN INDEPENDENT CAPACITY, THOUGH THE EXPENDITURE ON SUCH TRAINING WAS INCURRED BY THE ASSESSEE ON ACCOUNT OF COMMERCIAL EXPEDIENCY, WHICH ASPECT HAS NOT BEEN DISPUTED IN THI S APPEAL. THE PAYMENT WAS NOT PAID FOR RENDERING ANY MANAGERIAL, TEC HNICAL OR CONSULTANCY SERVICES. I N SUCH CIRCUMSTANCES, THE EXPENDITURE INCURRED TOWARDS PAYMENT TO TH E OVERSEAS EDUCATION FOUNDATION , CANNOT BE HELD AS FEE FOR TECHNICAL SERVICES PROVIDED TO THE ASSESSEE. THE TRIBUNAL IN THE CASE OF HOLCIM S ERVICES SOUTH ASIA LTD VS. DCIT (SUPRA) HAS HELD AS UNDER: 20 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PERUSED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDER. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS MADE PAYMENT TO HGSL WHICH IS A NON - RESIDENT COMPANY BASED AT SWITZERLAND. THE PAYMENT HAS BEEN MADE FOR TRAINING CONDUCTED BY THE HGSL TO ITS DELEGATES OUTSIDE INDIA. IT IS AN ADMITTED FACT HERE THAT NEITHER THE SERVICES HAVE BEEN RENDERED IN INDIA NOR SUCH SERVICES HAVE BEEN UTILIZED IN INDIA. OUT OF THE TOTAL PAYMENT OF RS. 65,49,217/ - , THE ASSESSEE HAD NOT DEDUCTED TDS ON THE PAYMENT AGGREGATING TO RS. 33,93,493/ - (ON THE BALANCE AMOUNT TDS HAS BEEN DEDUCTED), ON THE GROUND THAT, SUCH PAYME NT RELATE TO SERVICES RENDERED OUTSIDE INDIA. THE REVENUE'S CASE IS THAT, IN VIEW OF THE EXPLANATION BROUGHT IN THE STATUTE BY THE FINANCE ACT, 2010 WHICH GOT THE PRESIDENT'S ASSENT IN MAY, 2010 HAS BEEN BROUGHT IN THE STATUTE WITH RETROSPECTIVE EFFECT FOR M 1ST JUNE, 1976 AND SUCH AN EXPLANATION IS CLARIFICATORY IN NATURE WHICH NOW PROVIDES THAT, THE INCOME OF A NON - RESIDENT SHALL BE DEEMED TO ACCRUE IN INDIA UNDER CLAUSE (V) OR CLAUSE (VI) OR CLAUSE (VII) OF SUB - SECTION (1) OF SECTION 9 AND SHALL BE INCLUD ED TO THE TOTAL INCOME OF THE NON - RESIDENT, WHETHER OR NOT THE NON - RESIDENT HAS RESIDENT ( SIC ) OR PLACE OF BUSINESS OR BUSINESS CONNECTION IN INDIA OR A NON - RESIDENT HAS RENDERED SERVICES IN INDIA. THOUGH, SUCH AN AMENDMENT HAS BEEN BROUGHT IN THE STATUTE WITH RETROSPECTIVE EFFECT BUT AT THE TIME OF MAKING THE PAYMENT THERE WAS NO SUCH PROVISION UNDER THE ACT AND IN FACT, THE LAW OF THE LAND AS LAID DOWN BY THE HON'BLE SUPREME COURT WAS THAT, IF THE SERVICES HAS NOT BEEN RENDERED IN INDIA AND SUCH SERVICES ARE NOT UTILIZED IN INDIA THEN THERE IS NO LIABILITY FOR DEDUCTING TDS. THE AMENDMENT HAS BEEN BROUGHT SPECIFICALLY TO NEGATE THE DECISION OF HON'BLE SUPREME COURT. AN ASSESSEE WHO HAS TO MAKE THE PAYMENT CANNOT VISUALIZE OR APPREHEND THAT IN FUTURE A RETR OSPECTIVE AMENDMENT WOULD BE BROUGHT WHEREBY IT WOULD REQUIRE WITHHOLDING OF TAX. EVEN IF THE PURPORTED AMENDMENT HAS BEEN BROUGHT WITH THE INTENTION TO CLARIFY THE PROVISION BUT THERE WAS NO SUCH JUDICIAL INTERPRETATION THAT PAYMENTS MADE TO NON - RESIDENTS FOR RENDERING OF SERVICES IN INDIA IS TAXABLE IN INDIA IN ABSENCE OF ANY BUSINESS CONNECTION IN INDIA OR PE IN INDIA AND IN THE ABSENCE OF ANY CLEAR - CUT LAW, ASSESSEE CANNOT BE HELD TO BE LIABLE TO DEDUCT TDS. IT IS A TRITE LEGAL MAXIM. ' LEX NON COGIT AD IMPOSSIBLIA ' WHICH MEANS THAT, THE LAW CANNOT POSSIBLY COMPEL A PERSON TO DO SOMETHING WHICH IS IMPOSSIBLE TO PERFORM. THUS, WE HOLD THAT, AT THE TIME OF MAKING THE PAYMENT, ASSESSEE COULD NOT HAVE VISUALIZE TO DEDUCT TDS WHEN THERE WAS NO PROVISION UNDER THE ACT AND IN FACT, THERE WAS A ALREADY PREVAILING LAW LAID DOWN BY THE HON'BLE SUPREME COURT THAT IN SUCH A CASE, NO TDS WAS TO BE DEDUCTED, THEN OBVIOUS CONCLUSION IS THAT ON SUCH PAYMENT NO DISALLOWANCE UNDER SECTION 40(A)(I) CAN BE MADE. IF THE VIEW A ND CONTENTION RAISED BY THE REVENUE IS TO BE ACCEPTED THAT SUCH A LAW FIXING THE LIABILITY ON THE ASSESSEE IS TO BE RECKONED FROM RETROSPECTIVE DATE, THEN IT WILL CAUSE NOT ONLY GREAT HARDSHIP AND INJUSTICE BUT ALSO PREJUDICE TO THE ASSESSEE. ACCORDINGLY, WE HOLD THAT, DISALLOWANCE UNDER SECTION 40(A)(I) ON ACCOUNT OF ANY RETROSPECTIVE AMENDMENT IS WHOLLY VITIATED AND CANNOT BE SUSTAINED. ACCORDINGLY, GROUND RAISED BY THE ASSESSEE IS ALLOWED. 21 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 13.3 .2 THEREFORE, RESPECTFULLY FOLLOWING THE AFORESAID PRECEDEN T , WE DELETE THE DISALLOWANCE AND ALLOW THE GROUND NO. 6 OF APPEAL RAISED BY THE ASSESSEE. 14. THE GROUND NO. 7 RELATES TO DISALLOWANCE OF RS.13,31, 716/ - REPRESENTING EXPENSES ON TRAINING OF DOCTORS IN INDIA. FROM THE PERUSAL OF THE ORDER OF ASSESSMENT, W E FIND THAT A SUM OF RS. 19, 35, 311/ - WAS INCURRED TOWARDS BOOKING OF 13 ROOMS AND A BANQUET CHARGES IN LE MERIDIAN , BANGALORE. FURTHER , AN AMOUNT OF RS.18, 17, 305/ - HAS BEEN PAID TO H OTEL AMBASSADOR AND THE BILLS ARE IN DIFFERENT NAMES OF VARIOUS DOCTORS. ALSO AN AMOUNT OF RS.6,56, 126/ - WAS MADE TO HABITAT WORD . THE ASSESSING OFFICER HELD THAT IT WAS DIFFICULT TO VERIFY WHETHER THE EXPENDITURE WAS ON ACCOUNT OF BUSINESS OR PERSONAL IN NATURE. HE , THEREFORE , DISALLOWED 25% OF THE ABOVE EXPENDITUR E AGGREGATING TO RS. 8,52, 1 86/ - . APART FROM ABOVE, HE NOTED THAT AN AMOUNT OF RS.4,79, 530/ - WAS PAID TO H OTEL PRESIDENCY ON ACCOUNT OF EXPEN SES CLAIMED BY ONE GV ANMEGUTAK , HOWEVER , NO PROPER BILLS WERE SU BMITTED IN SUPPORT OF ITS CLAIM THOUGH A LETTER DA TED 23/09/2007 ALONGWITH COPY O F RECEIPT WAS FILED. THE LD. CIT - A CONFIRMED THE ABOVE DISALLOWANCE. 14.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. RE GARDING THE DISALLOWANCE OF RS.8,52, 186/ - THE LD. COUNSEL CONTENDED THAT EXPENSES INCURRED WERE TOWARDS THE DOCTORS WHO WERE HIGHLY CLAIMED FACULTY AND WERE INVITED FROM ABROAD IN THE INTEREST OF B USINESS OF THE ASSESSEE COMPANY . WE FIND THAT THE ASSESSING OFFI CER HAS MADE DISALLOWANCE ON AD - HOC BASIS AT THE RATE OF 25% OF THE TOTAL EXPENSES OF RS 34,08,154/ - . WE ALSO FIND THAT THE ASSESSEE HAS CLAIMED OF REIMBURSING THE EXPENSES INCURRED BY THE DOCTORS ON THEIR STAY IN HOTELS ETC, WHILE ATTENDING THE CONFERENCE SEMINARS ORGANIZED BY THE ASSESSEE OR OTHER ORGANIZERS. HOWE VER , WE 22 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 FIND THAT THE ASSESSEE HAS NOT LINKED ALL THE EXPENSES WITH ANY PARTICULAR CONFERENCE OR TRAINING COURSE FOR THE DOCTORS OR ANY SPECIFIC EVENT RELATED TO THE BUSINESS OF THE ASSESSEE. IN SUCH CIRCUMSTANCES, WE FEEL IT APPROPRIATE TO RESTORE THE ISS UE TO THE FILE OF THE ASSESSING OFFICER DIRECTING THE ASSESS EE TO PRODUCE ALL NECESSARY EVIDENCE IN SUPPORT OF ITS CONTENTIONS OF INCURRING EXPENSES FOR THE PURPOSE OF BUSINESS OF THE ASSESSEE COMPANY. WITH RE GARD TO THE DISALLOWANCE OF RS.4,79, 530/ - THE L D. CIT - A OBSERVED THAT THE ASSESSEE MADE GENERAL OBSERVATION AND SUBMISSIONS THAT THE EXPENSES WERE TOWARDS HOTELS STAY AND OTHER EXPENSES FOR THE FOREIGN FACULTY, AND THE LD. AR OF THE ASSESSEE FAILED TO JUSTIFY THE NAME OF THE PERSON AGAINST WHOM THE BI LL WAS RAISED. BEFORE US, THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS ALREADY FILED COPY OF RECEIPTS ETC . AND IF REQUIRED FURTHER DOCUMENTARY EVIDENCE IN SUPPORT OF CONTENTION OF INCURRING EXPENSES FO R BUSINESS PURPOSE MAY BE FILED . IN SUCH CIRCUMSTANC ES, WE RESTORE THE ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO THE ASSESSEE TO PRODUCE NECESSARY EVIDENCE IN SUPPORT OF ITS CLAIM. THE GROUND NO. 7 OF THE APPEAL IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 15. THE GROUND NO. 8 RELATES TO DISALLOWANCE OF A SUM OF RS.12,03,128/ - REPRESENTING THE PROFESSIONAL FEES PAID BY THE ASSESSEE COMPANY TO M/S SR BATLIBOI & C OMPANY BY INVOKING THE PROVISIONS CONTAINED IN SECTION 40(A)(IA) OF THE ACT. 15.1 BEFORE US , THE LD. COUNSEL OF THE ASSESSEE PRAYED THAT THE ISSUE MAY KINDLY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION AFRESH. 15.2 THE LD. S ENIOR DR DID NOT OPPOSE THE AFORESAID PRAYER. THEREFORE, WE RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER F OR A FRESH ADJUDICATION. NEEDLESS TO MENTION, THE ASSESSING OFFICER SHALL PROVIDE 23 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. THE GROUND NO. 8 OF THE APPEAL IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 16. IN GROUND NO. 2 , THE REVENUE HAS RAISE D T HE ISSUE OF DISALLOWANCE OF RS.40, 06,070/ - ON ACCOUNT OF RECRUITMENT AND TRAINING EXPENDITURE. 16.1 WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD . WE FIND THAT THE LD. CIT - A HAS DELETED THE AFORESAID DISALLOWANCE BY HO LDING AS UNDER: 4.3 AFTER GOING THROUGH THE OBSERVATIONS OF THE A.O., SUBMISSIONS OF THE A.R. OF THE APPELLANT AND VARIOUS JUDICIAL PRONOUNCEMENTS, THIS GROUND IS BEING FINALIZED AFTER MAKING THE FOLLOWING OBSERVATIONS: (A) THE A.O. HAS MADE THIS DISALLOWANC E ON TRAINING EXPENSES BY TREATING IT AS DEFERRED REVENUE EXPENDITURE AND STATING THAT THE EXPENDITURE SHOULD BE ALLOWED OVER A PERIOD OF 5 YEARS. THE A.R., HAS, HOWEVER, ARGUED THAT I THE PAST, SIMILAR EXPENSES HAS BEEN ALLOWED AS A REVENUE EXPENDITURE AN D THERE WAS NO JUSTIFICATION FOR TREATING THIS AMOUNT AS DEFERRED REVENUE EXPENDITURE OVER 5 YEARS. THE A.R. ALSO RELIED UPON VARIOUS JUDICIAL PRONOUNCEMENTS TO ARGUE THAT SINCE NO ASSET WAS BEING CREATED IN THIS CASE, THERE WAS NO REASON FOR TREATING THIS AS A CAPITAL EXPENSE. (B) IT IS PERTINENT TO NOTE THAT IF THE AMOUNT IS TREATED AS DEFERRED REVENUE EXPENDITURE, THEN THE WHOLE ACCOUNTING COMPUTATIONS HAD TO BE ALTERED OVER THE NEXT 4 YEARS TO ALLOW THE CLAIM OF EXPENDITURE IN SEVERAL YEARS. THIS WILL CRE ATE COMPLICATIONS BOTH FOR THE DEPARTMENT AND THE APPELLANT AND MORE IMPORTANTLY IT WILL ALSO DISTURB THE CONSISTENT SYSTEM OF ACCOUNTING ON THIS ISSUE AS STRONGLY ARGUED BY THE A.R. OF THE APPELLANT. THE ASSESSING OFFICER HAS ALSO NOT DISPUTED THIS CONSIS TENT METHOD BEING FOLLOWED BY THE APPELLANT IN THE PAST. CONSIDERING THE DOCUMENTS OF THE A.R. OF THE APPELLANT AS WELL AS THE RELIANCE PLACED BY THE VARIOUS JUDICIAL PRONOUNCEMENTS, SUCH EXPENSES ON TRAINING SHOULD BE ALLOWED AS A REVENUE EXPENSE AND THE ASSESSING OFFICER HAS NOT JUSTIFIED AS TO WHY THERE IS A REASON FOR DISTURBING THE CONSISTENT METHODOLOGY ON THIS ISSUE. SINCE NO UNIQUE TRAINING PROGRAMME OR ASSET CREATION HAS BEEN POINTED OUT BY THE A.R. DURING THE RELEVANT ASSESSMENT YEAR WHICH WILL JU STIFY THE TREATMENT OF THESE EXPENSES AS DEFERRED REVENUE EXPENDITURE, AFTER CONSIDERING THE VARIOUS JUDICIAL PRONOUNCEMENTS ON THIS ISSUE, AS WELL AS THE PRINCIPLE OF CONSISTENCY, I DO NOT FIND ANY REASON TO UPHOLD THE DISALLOWANCE MADE BY THE ASSESSING O FFICER. ACCORDINGLY, THE A.O. IS DIRECTED TO DELETE THIS ADDITION AND TREAT THE SAME AS REVENUE EXPENDITURE PERTAINING TO THE RELEVANT ASSESSMENT YEAR. THIS GROUND IS, THEREFORE, TREATED AS ALLOWED. 24 ITA NOS . 6005 & 6006/DEL/2013 & ITA NO. 5807/DEL/2013 16. 2 T HE LD. CIT - A HAS CLEARLY HELD THAT NO ASSET WAS CREATED BY INCURRING EXPENDITURE ON RECRUITMENT AND TRAINING AND , THEREFORE , THERE WAS NO REASON FOR TREATING THIS EXPEN DITURE AS CAPITAL EXPENDITURE. T HE FINDING OF THE ASSESSING OFFICER HAS NOT BEEN FOUND BY THE LD. CIT - A IN ACCORDANCE WITH ACCOUNTIN G PRINCIPLES. HE ALSO FOUND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AGAINST THE PRINCIPLE OF CONSISTENCY. IN VIEW OF ABOVE, IN OUR OPINION, THE ORDER OF THE LD. CIT - A ON THE ISSUE IN DISPUTE IS WELL REASONED AND WE FIND NO JUSTIFICATION TO INTERFERE WITH THE AFORESAID FINDING OF THE LD. CIT - A, AND ACCORDINGLY T HE GROUND NO. 2 OF THE APPEAL OF THE R EVENUE IS DISMISSED. 17. IN THE RESULT, BOTH THE APPEAL S FOR ASSESSMENT YEARS 2007 - 08 AND 2008 - 09 FILED BY THE ASSESSEE ARE PARTLY ALLOWED FOR STATISTIC AL PURPOSE S AND THE APPEAL FILED BY THE R EVENUE IS DISMISSED. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 3 1 S T MARCH , 201 7 . S D / - S D / - ( SUDHANSHU SRIVASTAVA ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 3 1 S T MARCH , 201 7 . RK / - (D.T.D) COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI