The ACIT, Central Circle-1(3), Ahmedabad V. The Lok Prakashan Ltd., Ahmedabad

ITA 61/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89219 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 15-04-2015
• Assessment Year: 2000-2001
• Appeal Filed On: 09-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Keywords: Capital asset; Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH AHMEDABAD , BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER. ITA. NOS. 60 & 61/AHD/2012 (ASSESSMENT YEARS:1999-2000 & 2000-01) ACIT, CENTRAL CIRCLE-1(3), ROOM NO.304, 3 RD FLOOR, AAYKAR BHAVAN, ASHRAM ROAD, AHMEDABAD APPELL ANT VS. LOK PRAKASHAN LTD. GUJARAT SAMACHAR BHAVAN, KHANPUR, AHMEDABAD-380001 RESPONDENT PAN: AAACL2742F / BY REVENUE : SHRI ROOPCHAND, SR.D.R. / BY ASSESSEE : SHRI S. N. SOPARKAR, A.R. /DATE OF HEARING :15.04.2015 !' /DATE OF PRONOUNCEMENT : 22.04.2015 I.T.A. NOS. 60 & 61/AHD/2012 FOR A.Y. 1999-2000 & 2000-01 (ACIT VS. LOK PRAKASHAN LTD.) PAGE 2 ORDER PER SHAILENDRA KUMAR YADAV, J.M: BOTH THESE APPEALS PERTAIN TO SAME ASSESSEE FILED B Y REVENUE ARE ARISING OUT FORM THE CONSOLIDATED ORDER OF CIT(A)- III, AHMEDABAD, DATED 20.10.2011 FOR THE ASSESSMENT YEARS 1999-2000 & 2000-01. SO, THEY ARE BEING DISPOSED O F BY WAY OF THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN ITA NO. 60/AHD/2012 FOR A.Y. 1999-00, REVENUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS: 1. THE LD. CIT(A) HAS ERRED IN LAW AND IN FACTS IN DELETING THE DISALLOWANCE OF BUSINESS DEVELOPMENT EXPENDITUR E OF RS.76,31,803/- AS THE SAME HAS BEEN ALLOWED IN A.Y. 2007-08 BY FOLLOWING THE DECISION OF THE HONB LE ITAT, AHMEDABAD DATED 19.11.2010 FOR A.YR. 2004- 05. 3. THE BRIEF FACTS OF THE CASE ARE THAT IN ASSESSME NT ORDER PASSED U/S.143(3), ASSESSING OFFICER DISALLOWED CER TAIN EXPENSES INCLUDING BUSINESS DEVELOPMENT EXPENDITURE . AGAINST THIS DISALLOWANCE, ASSESSEE PREFERRED APPEA L BEFORE THE CIT(A) WHO DELETED THE DISALLOWANCE MADE BY ASSESSI NG OFFICER. REVENUE CARRIED THE MATTER BEFORE TRIBUNAL, WHEREIN ITAT VIDE ITS ORDER DATED 17.07.2009 FOR A.Y. 1999-2000 & 200 0-01 SET ASIDE THE ISSUE OF DISALLOWANCE TO THE FILE OF ASSE SSING OFFICER. I.T.A. NOS. 60 & 61/AHD/2012 FOR A.Y. 1999-2000 & 2000-01 (ACIT VS. LOK PRAKASHAN LTD.) PAGE 3 IN SETTING ASIDE PROCEEDING, ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF BUSINESS DEVELOPMENT EXPENSES. 3.1. MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, WHEREIN IT WAS SUBMITTED ON BEHALF OF ASSESSEE THAT ISSUE OF DISALLOWANCE OF BUSINESS DEVELOPMENT EXPENDITURE HA S BEEN ALLOWED BY ITAT IN A.YS. 2001-02 TO 04-05 VIDE ITS ORDER DATED 19/11/2010 AND IN THIS BACKGROUND, REQUESTED TO ALL OW THE SAME. SINCE, ITAT HAS ALLOWED THE BUSINESS DEVELOP MENT EXPENSES, SO, CIT(A) ALLOWED THE SAME IN A.Y. 2001- 02 & 2004- 05. 3.2 SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF RE VENUE INTER ALIA SUBMITTED THAT CIT(A) WAS NOT JUSTIFIED IN ALLOWING THE DEVELOPMENT EXPENDITURE. ACCORDINGLY, ORDER OF CIT(A) ON THE ISSUE BE SET ASIDE AND THAT OF ASSESSING OFFICE R BE RESTORED. ON OTHER HAND, LEARNED AUTHORIZED REPRESENTATIVE SU BMITTED THAT ORDER OF CIT(A) SHOULD BE UPHELD IN LIGHT OF D ECISION OF ITAT IN ASSESSEES OWN CASE FOR A.Y. 2001-02 TO 200 4-05. 3.3 AFTER GOING THROUGH RIVAL SUBMISSIONS AND MATER IAL ON RECORD, WE FIND THAT ITAT HAS ALLOWED THE SIMILAR I SSUE IN ASSESSEES OWN CASE FOR A.Y. 2001-02 TO 2004-05 IN FAVOUR OF ASSESSEE BY OBSERVING AS UNDER: 80. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE ASSESSEE HAS CLA IMED DEDUCTION OF BUSINESS DEVELOPMENT EXPENDITURE OF I.T.A. NOS. 60 & 61/AHD/2012 FOR A.Y. 1999-2000 & 2000-01 (ACIT VS. LOK PRAKASHAN LTD.) PAGE 4 RS.19,06,22,532/-. THE LEARNED ASSESSING OFFICER DISALLOWED THE ABOVE CLAIM IN THE COURSE OF THE ASS ESSMENT. ON APPEAL, LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) CONFIRMED THE ACTION OF THE LEARNED ASSESSING OFFIC ER FOR THE YEAR UNDER CONSIDERATION BY OBSERVING THAT THE EXPE NDITURE WAS INCURRED FOR PROTECTING REPUTATION OF THE COMPA NY AND THEREFORE, WAS CAPITAL IN NATURE AND NOT ALLOWABLE AND HE DERIVED SUPPORT FROM THE DECISION OF THE HON'BLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. SIR HOMI M. MEHTA (1943) 11 ITR 142 FOR HIS ABOVE CONCLUSION. WE FIND THAT T HE FACTS OF THE CASE ARE IDENTICAL TO THE FACTS OF THE CASE INVOLVED IN REVENUES APPEAL IN GROUND NO. 2 FOR ASSESSMENT YEA R 2001-02 GROUND NO.3 FOR THE ASSESSMENT YEAR 2002-03 , GROUND NO.2 FOR THE ASSESSMENT YEAR 2003-04. IT IS OBSERVED THAT SIMILAR EXPENDITURE WAS ALSO DISALLOW ED BY THE LEARNED ASSESSING OFFICER FOR ASSESSMENT YEAR 2 001-02, 2002-03 AND 2003-04 WHICH WERE DELETED BY THE LEARN ED COMMISSIONER OF INCOME TAX (APPEALS). HOWEVER, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FOR TH E ASSESSMENT YEAR 2004-05 TOOK A DIFFERENT STAND AND THE CONFIRMED THE DISALLOWANCE. WE DEALT WITH THE NATU RE OF EXPENDITURE INVOLVED UNDER THIS HEAD IN DETAIL IN T HIS ORDER AT PARA11 WHERE REVENUE IS IN APPEAL BEFORE US. WE FOUND THAT THE EXPENDITURE WAS REVENUE IN NATURE, HAD A C LOSE NEXUS WITH THE BUSINESS OF THE ASSESSEE AND NO MATE RIAL WAS BROUGHT BEFORE US TO SHOW THAT THE EXPENDITURE WAS INCURRED FOR ANY CONSIDERATION OTHER THAN BUSINESS BY THE ASSESSEE. SIMILAR TO THE FACTS INVOLVED IN THE THRE E YEARS MENTIONED ABOVE, IN THE YEAR UNDER CONSIDERATION AL SO WE FIND THAT GENUINENESS OF THE EXPENDITURE IS NOT IN DOUBT, NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT TH E EXPENDITURE WAS INCURRED NOT OUT OF COMMERCIAL EXPE DIENCY AND NO MATERIAL COULD BE BROUGHT ON RECORD TO SHOW THAT ANY CAPITAL ASSET WAS ACQUIRED BY THE ASSESSEE BY I NCURRING THE EXPENDITURE IN QUESTION. THUS, IN OUR CONSIDERE D VIEW THE EXPENDITURE IN QUESTION IS ALLOWABLE AS BUSINES S EXPENDITURE TO THE ASSESSEE. COMING TO THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CITA VS. S IR HOMI M. MEHTA (SUPRA) RELIED UPON BY THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) WE FIND THAT THE SAME IS I.T.A. NOS. 60 & 61/AHD/2012 FOR A.Y. 1999-2000 & 2000-01 (ACIT VS. LOK PRAKASHAN LTD.) PAGE 5 DISTINGUISHABLE ON FACTS AND IS NOT APPLICABLE TO T HE FACTS OF THE PRESENT CASE. IN THE CASE BEFORE THE HON'BLE BO MBAY HIGH COURT, THE ASSESSEE WAS A MANAGING DIRECTOR OF A COMPANY AND THE ASSESSEE GIFTED RS.3,00,000/- TO TH E SAID COMPANY AND CLAIMED THE SAME AS BUSINESS EXPENDITUR E. ON THE ABOVE FACTS THE HON'BLE HIGH COURT FOUND THA T THE EXPENDITURE WAS INCURRED PARTLY TO EARN INCOME WHIC H IS CHARGEABLE UNDER THE HEAD OTHER SOURCES (U/S.12 OF THE INCOME TAX ACT, 1922), PARTLY FOR THE PROTECTION OF THE INCOME OF THE OTHER SHAREHOLDER IN THE COMPANY, AND PARTLY FOR THE PROTECTION OF THE ASSESSEES BUSINESS REPUT ATION. THUS, IT WAS FOUND BY THE HON'BLE HIGH COURT THAT EXPENDITURE WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. IN CONTRAST TO THE ABOVE FACT S, IN THE INSTANT CASE IT IS OBSERVED THAT THE EXPENDITURE IN QUESTION WAS NOT INCURRED FOR EARNING ANY INCOME WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCE S OR WITH A VIEW TO PROTECT THE INCOME OF ANY OTHER PERS ON OR TO PROTECT THE BUSINESS REPUTATION OF ANY OTHER PERSON . THE EXPENDITURE WAS FOUND TO BE INCURRED FOR INCREASING AND MAINTAINING THE SUBSCRIBE BASE FOR THE BUSINESS OF THE ASSESSEE COMPANY. IN THE ABOVE CIRCUMSTANCES, IN OU R CONSIDERED VIEW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING THE DISAL LOWANCE FOR THE YEAR UNDER CONSIDERATION ALONE AFTER DELETI NG SIMILAR DISALLOWANCE IN EARLIER THREE ASSESSMENT YEARS. WE THEREFORE, DELETE THE DISALLOWANCE OF RS.19,06,22,5 32/- FOR THE YEAR UNDER CONSIDERATION ALSO AND ALLOW THE GRO UND OF APPEAL OF THE ASSESSEE. 3.4 NOTHING CONTRARY WAS BROUGHT TO OUR KNOWLEDGE. FACTS BEING SIMILAR, SO FOLLOWING SAME REASONING, WE ARE NOT INCLINED TO INTERFERE IN THE FINDING OF CIT(A) WHO HAS DECID ED ISSUE IN FAVOUR OF ASSESSEE. SAME IS UPHELD. 4. SIMILAR ISSUE AROSE IN A.Y. 2000-01. FACTS BEIN G SIMILAR SO FOLLOWING SAME REASONING THIS ISSUE OF ALLOWABIL ITY OF I.T.A. NOS. 60 & 61/AHD/2012 FOR A.Y. 1999-2000 & 2000-01 (ACIT VS. LOK PRAKASHAN LTD.) PAGE 6 BUSINESS DEVELOPMENT EXPENDITURE OF RS.78,79,847/-/ - IS ALLOWED IN FAVOUR OF ASSESSEE. WE UPHOLD THE SAME. 5. AS A RESULT, BOTH APPEALS FILED BY REVENUE ARE D ISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 22 ND DAY OF APRIL, 2015. SD/- SD/- (ANIL CHATURVEDI) (SHAILENDRA KUMAR Y ADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD: DATED 22/04/2015 TRUE COPY S.K.SINHA # # # # %& %& %& %& '&' '&' '&' '&' / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. ,, - / CONCERNED CIT 4. -- / CIT (A) 5. &12 %, , / DR, ITAT, AHMEDABAD 6. 256 78 / GUARD FILE. BY ORDER / # , 9/ , , ;