ACIT, New Delhi V. M/s Mahashian Di Hatti Pvt. Ltd., New Delhi

ITA 6166/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4961 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2011-2012
• Appeal Filed On: 20-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BENIWAL
• Assessee Lawyers: B K BINDAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES E : DELHI BEFORE SHRI BHAVNESH SAINI, J.M. AND SHRI O.P. KANT, A.M. ITA.NO.7067/DEL./2014 ASSESSMENT YEAR 2010-2011 THE ACIT, CENTRAL CIRCLE-4, (ERSTWHILE CC.25, NEW DELHI), ROOM NO.331, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI. VS., M/S. MAHASHIYAN DI HATTI LTD., 9/44, KIRTI NAGAR INDUSTRIAL AREA, NEW DELHI. PAN AAACM4165F (APPELLANT) (RESPONDENT) ITA.NO.6166/DEL./2015 ASSESSMENT YEAR 2011-2012 THE ACIT, CENTRAL CIRCLE-4, (ERSTWHILE CC.25, NEW DELHI), ROOM NO.331, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI. VS., M/S. MAHASHIYAN DI HATTI LTD., 9/44, KIRTI NAGAR INDUSTRIAL AREA, NEW DELHI. PAN AAACM4165F (APPELLANT) (RESPONDENT) ITA.NO.6167/DEL./2014 ASSESSMENT YEAR 2012-2013 THE ACIT, CENTRAL CIRCLE-4, (ERSTWHILE CC.25, NEW DELHI), ROOM NO.331, ARA CENTRE, JHANDEWALAN EXTN., NEW DELHI. VS., M/S. MAHASHIYAN DI HATTI LTD., 9/44, KIRTI NAGAR INDUSTRIAL AREA, NEW DELHI. PAN AAACM4165F (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI BENIWAL, SR. D.R. FOR ASSESSEE : SHRI B.K. BINDAL, C.A. AND MS. SWEETY KOTHARI, ADVOCATE DATE OF HEARING : 24.08.2017 DATE OF PRONOUNCEMENT : 24.08.2017 2 ITA.NO.7067/D/2014, 6166 & 6167/D/2015 M/S. MAHASHIYAN DI HATTI LTD., NEW DELHI. ORDER PER BHAVNESH SAINI, J.M. ALL THE APPEALS BY REVENUE ARE DIRECTED AGAINST D IFFERENT ORDERS OF THE LD. CIT(A)-I, NEW DELHI, DATED 09 TH OCTOBER, 2014 FOR THE A.Y. 2010-2011, CHALLENGING THE DELETION OF ADDITIO N OF RS.1,87,40,000 ON ACCOUNT OF ADVERTISEMENT EXPENDIT URE, ORDER OF LD. CIT(A)-23, NEW DELHI, DATED 08 TH SEPTEMBER, 2015 FOR THE A.Y. 2011-2012, CHALLENGING THE DELETION OF ADDITION OF RS.2,53,36,000 ON ACCOUNT OF ADVERTISEMENT EXPENSES AND ORDER OF LD. CIT(A)-23, NEW DELHI, DATED 08 TH SEPTEMBER, 2015 FOR A.Y. 2012-2013, CHALLENGING THE DELETION OF ADDITION OF RS.2,54,79,000 ON ACCOU NT OF ADVERTISEMENT EXPENSES. 2. IT IS STATED THAT IN ALL THESE YEARS 20% OF EXP ENSES ON ACCOUNT OF ADVERTISEMENT AND PUBLICITY EXPENSES HAV E BEEN DISALLOWED BY THE A.O. IT WAS SUBMITTED BEFORE THE LD. CIT(A) THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF THE LD. CIT(A) AND ITAT FOR SEVERAL YEARS IN WHICH IDENTICAL EXPEN SES HAVE BEEN DELETED. THESE DISALLOWANCES WERE MADE BY THE A.O. FOR THE REASONS THAT THESE EXPENSES PROMOTED THE CHAIRMAN MAHASHAYA DHARAM PAL 3 ITA.NO.7067/D/2014, 6166 & 6167/D/2015 M/S. MAHASHIYAN DI HATTI LTD., NEW DELHI. GULATI WHO WAS ALSO PROMOTING OTHER BUSINESS CONCER NS AS PARTNER ETC., THEREFORE, THIS EXPENDITURE WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THE LD. CI T(A) FOLLOWING VARIOUS ORDERS OF THE TRIBUNAL FOR PRECEDING ASSESS MENT YEARS DELETED THE ADDITIONS. 2.1. LEARNED COUNSEL FOR THE ASSESSEE, AT THE OUTS ET, SUBMITTED THAT NOW THE ISSUE IS SETTLED BY THE HONBLE DELHI HIGH COURT IN GROUP CASES VIDE JUDGMENT DATED 23 RD NOVEMBER, 2015 THROUGH WHICH HONBLE DELHI HIGH COURT DECIDED VARIOUS APPEALS AN D QUESTION NO.4 WAS FRAMED AS UNDER : 4. WHETHER THE ITAT WAS CORRECT IN ITS CONCLUSION WIT H RESPECT TO DISALLOWANCE OF ADVERTISEMENT EXPENDITURE. 2.2. HE HAS SUBMITTED THAT THE DEPARTMENTAL APPEAL S HAVE BEEN DISMISSED BY THE HONBLE DELHI HIGH COURT. THE FINDINGS OF THE HONBLE HIGH COURT IN PARAS 18 AND 19 OF THE JUDGME NT DATED 23.11.2015 ARE REPRODUCED AS UNDER : 18. QUESTION NO. 4 CONCERNS ADVERTISEMENT EXPENDITURE. THE AO DISALLOWED THE SAID EXPENSES ON THE GROUND THAT THE ASSESSEE HAD BEEN UNABLE TO PROVE THAT IT WAS TOWARDS THE PROMOTION O F THE PRODUCTS IN THE 4 ITA.NO.7067/D/2014, 6166 & 6167/D/2015 M/S. MAHASHIYAN DI HATTI LTD., NEW DELHI. MARKET PLACE AND THAT IT WAS ALLOWABLE AS A LEGITIM ATE BUSINESS DEDUCTION. THE AO DISALLOWED 20% OF THE TOTAL EXPENDI TURE IN EACH YEAR SINCE ACCORDING TO THE AO, EXPENDITURE WAS INCURRED TO PROMOTE MAHASHAYA DHARAM PAL GULATI, THE CMD OF MDH. 19. MDH DEALS PRIMARILY IN HOUSEHOLD PRODUCTS. THE CONTE NTION OF MDH THAT MR. DHARAM PAL GULATI IS A PIONEER OF PACK AGED SPICES IN INDIA AND HAS BUILT THE BUSINESS BY HIS VISION AND HARD WO RK FOR OVER SIX DECADES HAS BEEN UNABLE TO BE CONTRADICTED BY THE RE VENUE. IT IS ENTIRELY UP TO THE ASSESSEE AS TO HOW IT PROMOTES ITS PRODUCT S. THE COURT FINDS NO BASIS FOR THE AO TO HAVE CONCLUDED THAT THE EXPENSES ON ADVERTISEMENT WAS NOT FOR BUSINESS PURPOSES AND FOR DISALLOWING 20 % OF IT. THE ITAT RIGHTLY UPHELD THE ORDER OF THE CIT(A) DELETING THE SAID DISALLOWANCE. QUESTION (4) IS ANSWERED IN FAVOUR OF THE ASSESSEE A ND AGAINST THE REVENUE. 2.3. HE HAS, THEREFORE, SUBMITTED THAT THE ISSUE I S COVERED IN FAVOUR OF THE ASSESSEE. 3. THE LD. D.R. ALSO STATED THAT THE ISSUE IS COVE RED BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT A BOVE IN THE CASE OF THE ASSESSEE. 5 ITA.NO.7067/D/2014, 6166 & 6167/D/2015 M/S. MAHASHIYAN DI HATTI LTD., NEW DELHI. 4. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF SUBMISSIONS OF THE PARTIES, IT IS CLEAR THAT THE LD . CIT(A) DELETED THE ADDITIONS ON ACCOUNT OF DISALLOWANCE OF ADVERTISING AND PUBLICITY EXPENSES BY FOLLOWING VARIOUS ORDERS OF THE TRIBUNA L FOR SEVERAL PRECEDING ASSESSMENT YEARS. THE MATTER WENT UP-TO H ONBLE DELHI HIGH COURT AND THE DEPARTMENTAL APPEALS HAVE BEEN D ISMISSED BY THE HONBLE HIGH COURT VIDE ITS JUDGMENT DATED 23.1 1.2015 (SUPRA). THE ISSUE IS, THEREFORE, COVERED IN FAVOUR OF THE A SSESSEE BY THE JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT A ND THE TRIBUNAL. THE DEPARTMENTAL APPEALS HAVE NO MERIT AND THE SAME ARE ACCORDINGLY, DISMISSED. 5. IN THE RESULT, DEPARTMENTAL APPEALS ARE DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (O.P. KANT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DELHI, DATED 24 TH AUGUST, 2017 VBP/- 6 ITA.NO.7067/D/2014, 6166 & 6167/D/2015 M/S. MAHASHIYAN DI HATTI LTD., NEW DELHI. COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A) CONCERNED 4. CIT CONCERNED 5. D.R. ITAT E BENCH AT DELHI 6. GUARD FILE // ASST. REGISTRAR // ITAT : DELHI BENCHES : DELHI.