ITO 12(3)(4), MUMBAI V. CREATION, MUMBAI

ITA 6014/MUM/2012

• Counselvise Citation: 601419914 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 03-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Rule of consistency; Revenue expenditure; Capital expenditure
• Section: 43B; 143(3)

Judgement Text

C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI .. , # %, & # ' BEFORE SHRI P.M. JAGTAP, AM AND SHRI SANJAY GARG, J M ./ I.T.A. NO.6094 /MUM/2012 ( &% % / ASSESSMENT YEAR : 2009-2010 M/S CREATION, 4, PAREKH VORA CHAMBERS, 66, NAGOINDAS MASTER ROAD, FORT, MUMBAI 400 001. / VS. I.T.O.- 12(3)(4), MUMBAI. . / PAN : AAAFC0639D ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO.6014 /MUM/2012 ( &% % / ASSESSMENT YEAR : 2009-2010 I.T.O.- 12(3)(4), MUMBAI. / VS. M/S CREATION, 4, PAREKH VORA CHAMBERS, 66, NAGOINDAS MASTER ROAD, FORT, MUMBAI 400 001. ./ PAN : AAAFC0639D ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI VIJAY MEHTA REVENUE BY : SHRI SANJEEV JAIN / DATE OF HEARING : 4-12-13 / DATE OF PRONOUNCEMENT : 10-1-14 [ / O R D E R PER P.M. JAGTAP, A.M . : .. , THESE TWO APPEALS, ONE BY THE ASSESSEE BEING ITA NO . 6094/MUM/2012 AND THE OTHER BY THE REVENUE BEING ITA NO. 6014/MUM /2012, ARE CROSS ITA 6094/M/12 & 6014/M/12 2 APPEALS WHICH ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A) 23, MUMBAI DATED 24-07-2012. 2. THE ISSUE RAISED IN GROUND NO. 1 OF THE ASSESSEE S APPEAL RELATES TO THE ADDITION OF RS. 162243/- MADE BY THE A.O. AND CONFI RMED BY THE LD. CIT(A) ON ACCOUNT OF DISALLOWANCE OUT OF INTEREST EXPENDITURE . 3. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM WHICH IS ENGAGED IN THE BUSINESS OF EXHIBITING CINEMA SLIDES AND SHO RT FILMS IN THEATRES AS WELL AS OUTDOOR PUBLICITY. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 25-9-2009 DECLARING A LOSS OF RS . 70,432/-. IN THE P&L ACCOUNT FILED ALONG WITH THE SAID RETURN, INTEREST EXPENDITURE OF RS. 6,48,973/- WAS DEBITED BY THE ASSESSEE. THE CLAIM O F THE ASSESSEE FOR DEDUCTION ON ACCOUNT OF THE SAID INTEREST EXPENDITU RE WAS EXAMINED BY THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDING. ON SUCH EXAMINATION, HE FOUND THAT THE MAJOR ACTIVITIES OF THE ASSESSEE WER E WITH ITS GROUP CONCERNS AND THE SUBSTANTIAL AMOUNT RECEIVABLE FROM THEM WAS OUTSTANDING FOR A CONSIDERABLY LONG PERIOD. HE NOTED IN THIS REGARD THAT THE AVERAGE FUNDS AVAILABLE IN THE PARTNERS CAPITAL ACCOUNT DURING T HE YEAR UNDER CONSIDERATION WERE ONLY TO THE TUNE OF RS. 14.37 LACS AND THE AVE RAGE SUNDRY CREDIT OUTSTANDING WERE TO THE EXTENT OF RS. 17.16 LACS. H E FOUND THAT THE AVERAGE NON-INTEREST BEARING FUNDS AVAILABLE WITH THE ASSES SEE THUS WERE ONLY TO THE EXTENT OF RS. 35.45 LACS WHEREAS THE AVERAGE AMOUNT RECOVERABLE FROM DEBTORS WAS RS. 51.81 LACS. KEEPING IN VIEW THE FACTS AND FIGURES, THE A.O. WAS OF THE OPINION THAT THERE WAS NO BUSINESS EXPEDIENCY IN PR OVIDING SUCH SUBSTANTIAL CREDITS BY THE ASSESSEE TO ITS GROUP CONCERNS ESPEC IALLY WHEN ITS TOTAL TURNOVER FOR THE YEAR UNDER CONSIDERATION WAS ONLY RS. 1.28 CRORES. WHEN HE REQUIRED THE ASSESSEE TO OFFER ITS EXPLANATION IN T HE MATTER, IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT ITS ENTIRE TURNOVER WAS RELATED TO THE SISTER CONCERNS AND THERE WAS NO ALTERNATIVE BUT TO ALLOW CREDIT TO THE SAID CONCERNS. IT WAS ALSO POINTED OUT BY THE ASSESSEE T HAT THE OUTSTANDING ITA 6094/M/12 & 6014/M/12 3 AMOUNT OF RS. 51 LACS WAS ON ACCOUNT OF SALES BILLS RAISED IN MARCH, 2009 AND THE SAME WAS DULY REALIZED IN THE IMMEDIATELY SUCCE EDING YEAR. THIS EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABL E BY THE A.O. ACCORDING TO HIM, THERE WAS NO BUSINESS EXPEDIENCY FOR SUCH L ONG TERM CREDITS OFFERED BY THE ASSESSEE TO ITS GROUP CONCERNS ESPECIALLY WH EN IT WAS OPERATING ON SUBSTANTIAL BORROWED FUNDS. HE HELD THAT THIS ARRAN GEMENT WAS DONE BY THE ASSESSEE TO REDUCE THE BURDEN OF TAX AND ACCORDINGL Y HOLDING THAT THE ENTIRE INTEREST EXPENDITURE COULD NOT BE FULLY ATTRIBUTED TO THE BUSINESS REQUIREMENT OF THE ASSESSEE, HE MADE A DISALLOWANCE OF RS. 1622 43/- BEING 25% OF THE TOTAL INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE. ON APPEAL, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE A.O. ON THIS ISSUE FOLLOWING HIS APPELLATE ORDER FOR A.Y. 2007-08 WHEREIN A SIMILAR DISALLOWANCE WAS CONFIRMED ON IDENTICAL FACTS AND CIRCUMSTANCES. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ENTIRE SALE OF THE ASSESSEE WAS TO ITS SISTER CONCERNS AND THE OUTSTAN DING BALANCE AS ON 31 ST MARCH, 2009 REPRESENTED ONLY THE SALES MADE BY THE ASSESSEE TO THE SISTER CONCERNS IN THE MONTH OF MARCH, 2009. HE INVITED O UR ATTENTION TO THE MONTH-WISE DETAILS OF TRANSACTION WITH THE SISTER C ONCERNS GIVEN ON PAGE 45 OF THE PAPER BOOK TO POINT OUT THAT THERE WAS NO UNUSU AL DELAY IN SETTLEMENT OF ACCOUNTS AND IT WAS NOT A CASE OF INORDINATE CREDIT PERIOD ALLOWED BY THE ASSESSEE TO ITS SISTER CONCERNS AS ALLEGED BY THE A .O. HE ALSO INVITED OUR ATTENTION TO THE BALANCE SHEET OF THE SISTER CONCER N OF THE ASSESSEE M/S CREATION PUBLICITY PVT. LTD. PLACED AT PAGE 47 OF T HE PAPER BOOK TO SHOW THAT GIVING LONGER CREDIT PERIOD IS THE NORM OF THE TRAD E. HE FURTHER INVITED OUR ATTENTION TO THE RELEVANT DETAILS GIVEN ON PAGE 49 OF THE PAPER BOOK TO SHOW THAT SIMILAR OUTSTANDING BALANCE WAS THERE IN ASSES SMENT YEARS 2001-02 TO 2006-07 BUT NO DISALLOWANCE OUT OF INTEREST EXPENDI TURE WAS MADE BY THE A.O. EVEN IN THE ASSESSMENTS COMPLETED U/S 143(3) O F THE ACT FOR ASSESSMENT YEARS 2001-02, 2005-06 AND 2006-07. HE CONTENDED T HAT THE INTEREST BEARING ITA 6094/M/12 & 6014/M/12 4 BORROWED FUNDS THUS WERE UTILIZED BY THE ASSESSEE D URING THE YEAR UNDER CONSIDERATION WHOLLY AND EXCLUSIVELY FOR ITS BUSINE SS AND ALTHOUGH THE TRIBUNAL VIDE ITS ORDER DATED 11-10-2013 PASSED IN ITA NO. 74 AND 408/MUM/2011 HAS SUSTAINED THE DISALLOWANCE MADE OU T OF INTEREST EXPENDITURE TO THE EXTENT OF 10%, NO SUCH DISALLOWA NCE CAN BE SUSTAINED IN THE YEAR UNDER CONSIDERATION. 4. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT A SIMILAR ISSUE INVOLVING IDENTICAL FACTS AND CIRCUMSTANCES HAS BEE N DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2007-08 RESTRICTING THE DISALLOWANCE MADE OUT OF INTEREST EXPENDITURE TO THE EXTENT OF 10% AND TH E SAME NEEDS TO BE FOLLOWED IN THE YEAR UNDER CONSIDERATION. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. ALTHOUGH THE LD. COUNSEL FOR THE ASSESSEE HAS MADE AN ATTEMPT TO SHOW THAT THERE BEI NG NO UNUSUAL EXCESS CREDIT ALLOWED BY THE ASSESSEE TO ITS SISTER CONCER NS AND THAT ALLOWING OF SUCH CREDIT BEING NORM OF THE TRADE, NO DISALLOWANCE OUT OF INTEREST EXPENDITURE IS WARRANTED/JUSTIFIED, IT IS OBSERVED THAT A SIMILAR ISSUE INVOLVED IN THE CASE OF THE ASSESSEE HAS ALREADY BEEN DECIDED BY THE TRIBUN AL FOR A.Y. 2007-08 VIDE ITS ORDER 11-10-2013 (SUPRA) SUSTAINING THE DISALLO WANCE OF 25% MADE OUT OF INTEREST EXPENDITURE TO THE EXTENT OF 10% FOR THE F OLLOWING REASONS GIVEN IN PARA 6 OF ITS ORDER:- 6. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE LD. REPRESENTATIVES OF BOTH THE PARTIES. THOUGH THERE SEEMS TO BE SOME FORCE IN THE CONTENTION OF THE LD. A.R. THAT SOME B USINESS EXIGENCY WAS INVOLVED FOR THE INTEREST EXPENDITURE CLAIMED. HOW EVER, AS OBSERVED BY THE A.O. CERTAIN MANIPULATION BY THE ASSESSEE TO RE DUCE ITS TAXABLE INCOME CANNOT BE RULED OUT. IN VIEW OF THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE DISALLO WANCE AT THE RATE OF 25% MADE BY THE A.O. WAS EXCESSIVE. HENCE, KEEPING IN VIEW OF THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, THE DI SALLOWANCE MADE UNDER THIS HEAD IS REDUCED AND CONFIRMED TO 10% OF THE TOTAL INTEREST EXPENDITURE CLAIMED. ITA 6094/M/12 & 6014/M/12 5 6. ALTHOUGH EVERY ASSESSMENT YEAR IS DIFFERENT AND THE RES-JUDICATA DOES NOT APPLY TO THE INCOME TAX PROCEEDING, IT IS TO BE NOTED THAT THE FACTS INVOLVED IN THE YEAR UNDER CONSIDERATION ARE MATERI ALLY SIMILAR TO THE FACTS INVOLVED IN A.Y. 2007-08. EVEN THIS ISSUE WAS DECI DED BY THE LD. CIT(A) BY HIS IMPUGNED ORDER FOLLOWING HIS APPELLATE ORDER FOR 20 07-08 WHICH AGAIN GOES TO SHOW THAT THE FACTS INVOLVED IN BOTH THE YEARS ARE MATERIALLY SIMILAR. IN OUR OPINION, THE RULE OF CONSISTENCY IS REQUIRED TO BE FOLLOWED AND JUDICIAL DISCIPLINE REQUIRES US TO FOLLOW THE DECISION OF CO -ORDINATE BENCH ON THE SIMILAR ISSUE WHEN THE RELEVANT FACTS ARE MATERIALL Y SIMILAR. WE, THEREFORE, FOLLOW THE DECISION OF THE TRIBUNAL IN ASSESSEES O WN CASE FOR A.Y. 2007-08 ON A SIMILAR ISSUE AND RESTRICT THE DISALLOWANCE MADE OUT OF INTEREST EXPENDITURE TO THE EXTENT OF 10% OF THE TOTAL INTEREST EXPENDIT URE CLAIMED BY THE ASSESSEE. THE IMPUGNED ORDER OF THE LD. CIT(A) IS ACCORDINGLY MODIFIED AND GROUND NO. 1 OF ASSESSEES APPEAL IS PARTLY ALLOWED. 7. AS REGARDS THE ISSUE RAISED IN GROUND NO. 2 OF ASSESSEES APPEAL RELATING TO THE DISALLOWANCE OF RS. 2,61,467/- MADE BY THE A .O. AND CONFIRMED BY THE LD. CIT(A) BEING 75% OF THE ELECTRICITY EXPENSES OF THE OFFICES CLAIMED TO BE USED BY THE ASSESSEE FIRM TO CARRY ON ITS BUSINESS ACTIVITIES, IT IS OBSERVED THAT A SIMILAR ISSUE INVOLVING IDENTICAL FACTS HAS BEEN RESTORED BY THE TRIBUNAL TO THE FILE OF THE A.O. IN A.Y. 2007-08 WITH THE FO LLOWING OBSERVATIONS/DIRECTIONS GIVEN IN PARA NO. 8 OF ITS ORDER DATED 11-10-2013 (SUPRA): 8. THE LD. AR HAS BROUGHT OUR ATTENTION TO THE FAC T THAT SIMILAR ADDITIONS WERE MADE IN THE CASE OF THE ASSESSEE FOR A.Y. 2005-06 WHICH WERE FURTHER CONFIRMED BY THE CIT(A). HOWEVER, IN APPEAL, THE ITAT, MUMBAI IN ITS ORDER DATED 13.07.2010, PASSED IN ITA NO.574/M/2010 FOR A.Y. 2005-06 HELD THAT THE BURDEN IS ON THE ASS ESSEE TO ESTABLISH THAT THE EXPENSES CLAIMED WERE WHOLLY AND EXCLUSIVE LY FOR THE PURPOSE OF BUSINESS. SINCE THE FACTS, IN THE OPINION OF THE ITAT, WERE SUBJECT TO VERIFICATION, THE ITAT REMITTED THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO CONSIDER THE FACTS AND DECIDE THE ISSUE AFRESH. ANOTHER CO-ORDINATE BENCH OF THE TR IBUNAL VIDE ORDER DATED 15.2.2011 PASSED IN ITA NO.3206/M/2010 FOR A SSESSMENT YEAR ITA 6094/M/12 & 6014/M/12 6 2006-07, HAS AGAIN RESTORED THE MATTER ON THE IDE NTICAL ISSUE RAISED IN THE CASE OF ASSESSEE TO THE A.O. FOR DECIDING TH E SAME FOLLOWING THE DIRECTIONS GIVEN BY THE TRIBUNAL FOR AY 2005-06. SI NCE THE ISSUE INVOLVED IN THIS GROUND IS IDENTICAL TO THAT INVOLV ED FOR A.Y. 2005-06, HENCE FOLLOWING THE SIMILAR LINE, THE MATTER IN THI S ISSUE IS REMITTED BACK TO THE FILE OF THE AO FOR DECIDING A FRESH IN TERMS AND DIRECTIONS GIVEN VIDE THE ORDER OF THE ITAT DT. 13.07.2010 FOR AY 2005-06. 8. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDE RATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR, WE RES PECTFULLY FOLLOW THE ORDER OF THE TRIBUNAL FOR A.Y. 2007-08 AND RESTORE THIS ISSU E TO THE FILE OF THE A.O. FOR DECIDING THE SAME AFRESH AS PER THE SAME DIRECTION AS GIVEN IN A.Y. 2007-08. GROUND NO. 2 OF THE ASSESSEES APPEAL IS ACCORDINGL Y TREATED AS ALLOWED FOR STATISTICAL PURPOSE. 9. THE ISSUE RAISED IN GROUND NO. 3 OF THE ASSESSE ES APPEAL RELATES TO THE DISALLOWANCE OF RS. 5,87,582/- MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) U/S 43B OF THE INCOME TAX ACT, 1961 ON ACCOU NT OF SERVICE TAX PAYABLE. 10. FROM THE RELEVANT DETAILS FURNISHED BY THE ASSE SSEE DURING THE COURSE OF ASSESSMENT PROCEEDING, IT WAS NOTICED BY THE A.O . THAT THE OPENING BALANCE OF SERVICE TAX PAYABLE AMOUNTING TO RS. 5,87,582/- HAS NOT BEEN PAID BY THE ASSESSEE. HE, THEREFORE, INVOKED THE PROVISIONS OF SECTION 43-B OF THE ACT AND MADE A DISALLOWANCE OF RS. 5,87,582/- ON ACCOUNT OF UN-PAID SERVICE TAX. BEFORE THE LD. CIT(A), IT WAS SUBMITTED ON BEHALF O F THE ASSESSEE THAT AS PER THE RELEVANT SERVICE TAX RULES, THE SERVICE PROVIDE R IS LIABLE TO MAKE THE PAYMENT OF SERVICE TAX BY THE 5 TH OF THE MONTH IMMEDIATELY FOLLOWING THE CALENDAR MONTH IN WHICH THE PAYMENTS ARE RECEIVED T OWARDS THE VALUE OF TAXABLE SERVICE. IT WAS CONTENDED THAT IF THERE IS NO LIABILITY TO MAKE THE PAYMENT TO THE CREDIT OF CENTRAL GOVERNMENT BECAUSE OF NON-RECEIPT OF PAYMENTS FROM THE RECEIVER OF THE SERVICES, THEN IT CANNOT BE SAID THAT SUCH SERVICE TAX HAS BECOME PAYABLE IN TERMS OF CLAUSE ( A) OF SECTION 43B AND NO DISALLOWANCE U/S 43B OF THE ACT CAN BE MADE ON ACCO UNT OF SUCH SERVICE TAX ITA 6094/M/12 & 6014/M/12 7 AMOUNT WHICH IS YET TO BE COLLECTED. RELIANCE IN S UPPORT OF THIS CONTENTION WAS PLACED BY THE ASSESSEE ON THE DECISION OF HONB LE DELHI HIGH COURT IN THE CASE OF CIT VS. NOBAL & HEWITT (I) PVT. LTD., 305 I TR 324 AND THAT OF THE TRIBUNAL IN THE CASE OF ACIT VS. REAL IMAGE MEDIA T ECHNOLOGIES (P) LTD. (2008) 114 ITD 573 (CHENNAI). 11. THE LD. CIT(A) DID NOT FIND MERIT IN THE SUBMI SSIONS MADE ON BEHALF OF THE ASSESSEE ON THIS ISSUE AND CONFIRMED THE DISALL OWANCE MADE BY THE A.O. ON ACCOUNT OF SERVICE TAX PAYABLE U/S 43B OF THE AC T FOR THE FOLLOWING REASONS GIVEN IN PARA NO. 5.3 OF HIS IMPUGNED ORDER:- THE ASSESSING OFFICERS ORDER, SUBMISSIONS MADE FO R THE APPELLANT AND MATERIALS ON RECORD HAVE BEEN CONSIDERED. THE APPEL LANTS CONTENTION IS THAT IN RESPECT OF SERVICE TAX THERE IS NO LIABILIT Y TO MAKE PAYMENT TO THE CREDIT OF GOVERNMENT AND IT IS OUTSIDE THE PURVIEW OF S.43B, AND THAT IT IS NOT ROUTED THROUGH ITS P& L ACCOUNT AND NO AMOUN T HAS BEEN CLAIMED AS AN EXPENSE. THE ASSESSING OFFICERS ORDE R STATES THAT THE APPELLANT HAS BILLED CERTAIN AMOUNTS AND HAS NOT SU BSTANTIATED THAT THE AMOUNTS BILLED HAVE BEEN PAID, OR THAT THE AMOU NTS WERE PAID BEFORE DUE DATE OF FILING OF RETURN. THE APPELLANT HAS NOT FURNISHED EVIDENCE TO REBUT THESE FINDINGS OF THE ASSESSING O FFICER IN APPEAL PROCEEDINGS EITHER. THE DECISION OF REAL IMAGE MEDI A TECHNOLOGIES IS INAPT AS IT DEALS WITH A CASE OF NON-RECEIPT OF PAY MENT FROM THE RECEIVER OF SERVICES. IN NOBLA & HEWIT (I) P. LTD, THE ASSES SEE HAD NOT DEBITED THE EXPENDITURE TO ITS P&L ACCOUNT. IN THE PRESENT CASE THE APPELLANT HAS NOT DEMONSTRATED AS TO WHICH AMOUNTS WERE RECEIVED AND WHICH WERE NOT RECEIVED FROM THEIR CLIENTS, NOR HAS IT DEMONST RATED WHETHER THE AMOUNTS WERE/WERE NOT ROUTED THROUGH IT P&L ACCOUNT . THE APPELLANT HAS MERELY FURNISHED STATEMENT OF SERVICE TAX GIVIN G OPENING BALANCE, SERVICE TAX BILLED AND SERVICE TAX PAID. IN THESE C IRCUMSTANCES, THE ADDITION MADE BY THE ASSESSING OFFICER IS CONFIRMED . 12. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDE S AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE COPY OF SERVICE TAX PA YABLE ACCOUNT FOR F.Y. 2007- 08 PLACED AT PAGE 54 OF THE PAPER BOOK TO SHOW THAT THE SERVICE TAX IN QUESTION WAS PAYABLE BY THE ASSESSEE FOR THE FINANC IAL YEAR 2007-08 AND AS PER THE RELEVANT SERVICE TAX RULES, THE SAME WAS PA YABLE AFTER RECOVERY FROM THE RECEIVER OF THE SERVICE. HE SUBMITTED THAT SUC H RECOVERY WAS MADE BY THE ITA 6094/M/12 & 6014/M/12 8 ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND TH E SERVICE TAX PAYABLE FOR FINANCIAL YEAR 2007-08 WAS DULY PAID ON SUCH RECOVE RY WITHIN THE STIPULATED PERIOD. HE CONTENDED THAT THE CASE OF THE ASSESSEE ON THIS ISSUE COULD NOT APPRECIATED BY THE LD. CIT(A) IN THE RIGHT PERSPECT IVE AND HE CONFIRMED THE DISALLOWANCE MADE BY THE A.O. U/S 43-B OF THE ACT. THE LD. D.R., ON THE OTHER HAND, HAS SUBMITTED THAT THE CASE AS MADE OUT BY TH E LD. COUNSEL FOR THE ASSESSEE ON THE BASIS OF DETAILS FURNISHED ON PAGE 54 OF THE PAPER BOOK RELATING TO THE SERVICE TAX FOR FINANCIAL YEAR 2007 -08 REQUIRES VERIFICATION AND SINCE NO SUCH VERIFICATION HAS BEEN MADE EITHER BY THE A.O. OR BY THE LD. CIT(A), THE MATTER SHOULD BE RESTORED TO THE FILE O F THE A.O. FOR SUCH VERIFICATION. SINCE THE LD. COUNSEL FOR THE ASSESS EE HAS NO OBJECTION IN THIS REGARD, WE RESTORE THIS ISSUE TO THE FILE OF THE A. O. FOR DECIDING THE SAME AFRESH AFTER VERIFYING THE RELEVANT DETAILS OF THE ASSESSEE IN RESPECT OF SERVICE TAX FOR THE FINANCIAL YEAR 2007-08. GROUND NO. 3 O F ASSESSEES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURP OSE, 14. NOW, WE SHALL TAKE UP THE APPEAL OF THE REVENUE BEING ITA NO. 6014/MUM/12 WHICH INVOLVES A SOLITARY ISSUE RELATIN G TO THE DELETION BY THE LD. CIT(A) OF THE ADDITION OF RS. 75,79,500/- MADE BY THE A.O. TREATING THE EXPENDITURE INCURRED FOR PROTECTING THE OWNERSHIP O F HOARDINGS AS CAPITAL EXPENDITURE. 15. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PE RUSING THE RELEVANT MATERIAL AVAILABLE ON RECORD, IT IS OBSERVED THAT A SIMILAR ISSUE WAS INVOLVED IN ASSESSEES OWN CASE FOR A.Y. 2007-08 AND THE SAME H AS BEEN DECIDED BY THE TRIBUNAL VIDE PARA 13 & 14 OF ITS ORDER DATED 11-10 -2013 WHICH READ AS UNDER:- 13. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE P ARTIES AND HAVE ALSO GONE THROUGH THE RECORD. THE CASE OF THE ASSES SEE IS THAT IT HAD BEEN CONTESTING THE LITIGATION FOR PROTECTING ITS R IGHT TO DISPLAY THE HOARDINGS ON CERTAIN PROMINENT SITES FOR THE PURPOS E OF ITS BUSINESS OF OUTDOOR ADVERTISING. ON THE OTHER HAND THE CASE OF THE REVENUE IS THAT THE SAID EXPENDITURE WAS INCURRED FOR ACQUISITION A ND PROTECTION OF ITA 6094/M/12 & 6014/M/12 9 CAPITAL ASSET, HENCE CAPITAL IN NATURE. IN OUR VIE W, IN CASE OF BUSINESS OF OUTDOOR ADVERTISING, THE EXPENSES INCURRED IN LI TIGATION FOR PROTECTION OF RIGHT TO DISPLAY THE HOARDINGS AT PARTICULAR SIT ES CAN NOT BE SAID STRICTLY TO BE OF CAPITAL IN NATURE. THESE TYPES O F EXPENDITURE ARE SO CLOSELY RELATED TO THE OUTDOOR ADVERTISING BUSINESS OF THE ASSESSEE THAT IT WOULD FALL IN THE DEFINITION OF REVENUE EXPENDIT URE. THE DISPLAYING OF HOARDINGS BEING THE BUSINESS OF THE ASSESSEE, THE E XPENDITURE INCURRED FOR RIGHT TO DISPLAY IS THUS BUSINESS RIGHT OF THE ASSESSEE. THUS THE EXPENDITURE INCURRED FOR PROTECTION OF BUSINESS RIG HTS, IN OUR VIEW, IS REVENUE IN NATURE. HOWEVER, THE EXPENDITURE INCURR ED FOR ACQUISITION OF RIGHT TO DISPLAY WILL FALL IN THE DEFINITION OF CAP ITAL EXPENDITURE. THE HONBLE SUPREME COURT IN THE CASE OF DALMIA JAIN & CO. (SUPRA) HAS HELD THAT IN DECIDING WHETHER A PARTICULAR EXPENDIT URE IS CAPITAL OR REVENUE IN NATURE, WHAT THE COURTS HAVE TO SEE IS W HETHER THE EXPENDITURE IN QUESTION WAS INCURRED TO CREATE ANY NEW ASSET OR WAS INCURRED FOR MAINTAINING THE BUSINESS OF THE COMPAN Y. IF IT IS THE FORMER IT IS THE CAPITAL EXPENDITURE; IF IT IS THE LATTER, IT IS THE REVENUE EXPENDITURE. IT HAS ALSO BEEN SO HELD BY THE HONB LE ALLAHABAD HIGH COURT IN THE CASE OF PLASTIC PRODUCTS LTD. (SUPRA ). IN CIT V/S O.P.N. ARUNACHALA NADAR : (1983) 141 ITR 620, THE HONBLE MADRAS HIGH COURT HAS HELD THAT LEGAL EXPENSES INCURRED BY THE ASSESSEE TO PROTECT THE SOURCE OF HIS INCOME OR THE TITLE TO HIS BUSINE SS OR TO PRESERVE OR MAINTAIN HIS BUSINESS ASSETS TO BE REGARDED AS EXPE NDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF HIS BUSIN ESS AND THEREFORE, ALLOWABLE AS DEDUCTION FOR THE PURPOSE OF COMPUTING THE PROFITS FOR INCOME TAX PURPOSES. HOWEVER, AS HELD BY THE HONB LE SUPREME COURT IN THE CASE OF DALMIA JAIN & CO. (SUPRA) DISTINCT ION IS TO BE MADE AS TO WHETHER THE EXPENDITURE IS FOR CREATING, CURING OR COMPLETING THE ASSESSEES TITLE TO CAPITAL OR FOR PROTECTING THE B USINESS. 14. IN VIEW OF THE LEGAL POSITION AS DISCUSSED ABOV E REGARDING THE MATTER IN DISPUTE, WE RESTORE THE ISSUE TO THE FILE OF A.O. TO MAKE A DISTINCTION AS TO WHICH OF THE EXPENDITURE WAS INCU RRED BY THE ASSESSEE FOR PROTECTION OF ITS RIGHT TO DISPLAY OVER A PROMI NENT OR PARTICULAR SITE AND WHICH OF THE EXPENSES WERE INCURRED FOR ACQUISI TION OF RIGHT TO DISPLAY ON SUCH SITES. THE EXPENDITURE INCURRED FO R PROTECTION OF THE RIGHTS ON THE SITES WHETHER LEASEHOLD OR OWNERSHIP OR OTHERWISE WHICH WERE ALREADY UNDER CONTROL OR POSSESSION OF THE ASS ESSEE WILL BE TREATED AS REVENUE IN NATURE. HOWEVER, THE EXPENDITURE INC URRED FOR GETTING OR ACQUISITION OF RIGHT TO THE SITES, WHICH WERE NOT U NDER POSSESSION OR CONTROL OF THE ASSESSEE BEFORE THE START OF LITIGAT ION, WILL BE TREATED AS CAPITAL EXPENDITURE. THE DISTINCTION IS TO BE MADE BETWEEN PROTECTION OF BUSINESS RIGHTS AND CREATION OF BUSINESS RIGHTS. THE FORMER WILL BE CONSIDERED AS REVENUE EXPENDITURE AND THE LATTER AS CAPITAL EXPENDITURE. NEEDLESS TO SAY THAT THE A.O. WILL GI VE PROPER OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE AND SUBMIT THE NECESSARY DOCUMENTS THEN TO DECIDE THE ISSUE BY WAY OF A SPEA KING ORDER. ITA 6094/M/12 & 6014/M/12 10 16. AS THE ISSUE INVOLVED IN THE YEAR UNDER CONSIDE RATION AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO ARE SIMILAR TO A.Y. 2007-08, WE RESPECTFULLY FOLLOW THE ORDER OF THE TRIBUNAL FOR A.Y. 2007-08 A ND RESTORE THIS ISSUE TO THE FILE OF THE A.O. FOR DECIDING THE SAME AFRESH AS PE R THE SAME DIRECTIONS AS GIVEN BY THE TRIBUNAL IN ITS ORDER FOR A.Y. 2007-08 . THE APPEAL OF THE REVENUE IS ACCORDINGLY TREATED AS ALLOWED FOR STATI STICAL PURPOSE. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE AND T HAT OF THE REVENUE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES AS INDI CATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 10 TH JANUARY, 2014. . ( ) * 10-1-2014 SD/- SD/- (SANJAY GARG) (P.M. JAGTAP ) (- JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; * DATED 10TH JANUARY, 2014 [ .-../ RK , SR. PS , -&./ 0/ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ; () / THE CIT(A)23, MUMBAI. 4. ; / CIT 12, MUMBAI 5. > --@ , @ , / DR, ITAT, MUMBAI C BENCH 6. C / GUARD FILE. / BY ORDER, > - //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI