THE DY CIT 10(2), MUMBAI V. M/S. GODREJ TEA LTD, MUMBAI

ITA 6424/MUM/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7660 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 28-01-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 19-10-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K R DAS
• Assessee Lawyers: Z MEHTA
• Keywords: Business expenditure; Revenue expenditure; Capital expenditure
• Section: 195; 264; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G : MUMBAI BEFORE SHRI D.K. AGARWAL, (JM) AND SHRI R.K. PAND A ,(AM) SL.NO. ITA NO. APPELLANT RESPONDENT ASSESSMENT YEAR 1. 6424/MUM/2007 DY. COMMISSIONER OF INCOME TAX -10(2), ROOM NO.434, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, NEW MARINE LINES, MUMBAI-400 020. GODREJ TEA LTD. PIROJSHANAGAR, EASTERN EXPRESS HIGHWAY, VIKROLI(E), MUMBAI-400 079. (P.A.NO.AABCT 6106 C) 2003-04 2. 6380/MUM/2007 M/S. GODREJ TEA LTD.(NOW KNOWN AS GODREJ HERSHEY FOODS & BEVERAGES LTD.), C/O. KALYANIWALLA & MISTRY, KALPATARU HERITAGE, 5 TH FLOOR; 127, MAHATMA GANDHI RD.; FORT; MUMBAI-400 023. ADDL. COMMISSIONER OF INCOME TAX ; RANGE 10(2) , AAYAKAR BHAVAN, M. KARVE MARG MUMBAI-20 2003-04 3. 4529/MUM/2008 DY. COMMISSIONER OF INCOME TAX , MUMBAI. GODREJ TEA LTD. MUMBAI. 2004-05 DEPARTMENT BY : SHR I K.R. DAS ASSESSEE BY : SHRI M.M. GOLVALA & SHRI Z. MEHTA O R D E R PER D.K. AGARWAL (JM). CROSS APPEALS BY THE REVENUE AND THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 9.8.2007 PASSED BY THE LD. CI T(A) FOR THE ASSESSMENT YEAR 2003-04. THE REVENUE HAS ALSO PREFERRED APPEAL FOR THE ASSESSMENT YEAR 2004-05 AGAINST THE ORDER DATED 16.4 .2008 PASSED BY THE LD. CIT(A). SINCE FACTS ARE IDENTICAL AND GROUNDS IN THE REVENUES APPEAL ARE COMMON, ALL THESE APPEALS ARE DISP OSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.6424,6380/07 & 4529/08 A.Y: 03-04 & 04-05 2 2. FOR THE SAKE OF BREVITY THE FACTS IN ITA NO.6424/M/07 FOR ASSESSMENT YEAR 2003-04 IN THE APPEAL FILED BY THE REVENUE ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACT URING AND SELLING TEA AND OTHER PRODUCTS. IT FILED RETURN DECLARING A LOSS OF RS.16,12,68,775/-. DURING THE COURSE OF ASSESSMENT IT WAS INTERALIA OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS INCURRE D HEAVY EXPENDITURE ON BRAND PROMOTION AMOUNTING TO R S.6,82,43,142/- OF WHICH 45,70,112/- WAS DEBITED TO THE P&L A/C. FOR T HE YEAR UNDER CONSIDERATION. THE BALANCE EXPENDITURE OF RS.6,36,73,0 30/- HAS BEEN DEFERRED OVER A PERIOD OF 3 YEARS AS DEFERRED REVENUE EXPENDITURE. HOWEVER, IN ITS RETURN, THE ASSESSEE COMPANY HAS CLAIMED THE ENTIRE EXPENDITURE INCURRED ON BRAND PROMOTION AS ALLOWABLE EXPENSES. ACCORDINGLY THE ASSESSEE WAS ASKED TO SUBSTANTIATE ITS CLAIM. THE ASSESSEE VIDE ITS LETTER DT. 23.11.2005 SUBMITTED HIS EXP LANATION WHICH IS REPRODUCED AS UNDER : 1. BRAND PROMOTION EXPENSES DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY STARTED MANUFACTURING AND MARKETING TEA UND ER THE BRAND NAME GODREJ. THE COMPANY HAD TO INCUR HUGE EXPENSES FOR SUBSTANTIAL MARKETING AND PROMOTI NG THE BRAND. IT INTRODUCED THREE BRANDS OF TEA, ON E ACH IN THE PREMIUM, POPULAR AND ECONOMY SEGMENT VIZ. GODRE J NOBLE HOUSE, GODREJ CHAI HOUSE AND INAAM CHAI. DURIN G THE YEAR, THE COMPANY INCURRED EXPENSES ALL OVER IN DIA THROUGH VARIOUS MEANS SUCH AS TELEVISION (EXPENSE S WERE INCURRED ON TELEVISION ADVERTISEMENTS AS WELL AS AIR TIME), PRINT MEDIA AND RADIO. IT ALSO INCURRED EXP ENSES ON RENTAL FOR HOARDINGS, LAUNCH CONFERENCE EXPENSES ETC. THESE EXPENSES WERE INCURRED AS ADVERTISEMENT EXPEN SES ITA NO.6424,6380/07 & 4529/08 A.Y: 03-04 & 04-05 3 PURELY TO PROMOTE SALES AND INCREASE BRAND VISIBILI TY AMONG THE CONSUMERS ALL OVER INDIA. THE STATEMENT GIVING DETAILED BREAK-UP OF EXPENSES INCURRED ALONG WITH THE TREATMENT GIVEN BY THE COMPANY IN ITS BOOKS OF ACCOUNTS IS ENCLOSED AT ANNEXURE-I. WE ALSO ENCLOS E AT ANNEXURE 2 VOUCHERS AND SAMPLE BILL IN RESPECT OF ADVERTISEMENT IN VARIOUS NEWSPAPERS PUBLISHED THROUGHOUT INDIA, ADVERTISEMENTS ON VARIOUS CHANNEL S IN DIFFERENT LANGUAGES ALL OVER THE COUNTRY. WE ENCLO SE SAMPLE BILLS FOR AD FILMS, ART WORK CHARGES ETC. AT ANNEXURE 3. THE ASSESSEE FURTHER STATED THAT THE BRAND PROMOTION EXP ENDITURE CONSTITUTES REVENUE EXPENDITURE INCURRED WHOLLY AND EXCL USIVELY FOR THE PURPOSE OF BUSINESS. IT HAS FURTHER STATED THAT IT IS EVIDENT FROM THE DETAILS, AS ALSO FROM THE BILLS THAT THE EXPENDIT URE HAS BEEN INCURRED FOR ADVERTISEMENTS ON SEVERAL TELEVISION CHANNEL S, ADVERTISEMENT FILMS, NEWSPAPER ADVERTISEMENT, BANNERS A ND HOARDING RENT, ETC. IT HAS BEEN CONTENDED THAT BY INCURRING TH E EXPENDITURE, NO ASSET OR ADVANTAGE HAS BEEN BROUGHT INTO EXISTENCE. RE LIANCE WAS PLACED IN EMPIRE JUTE CO. LTD. VS. CIT 124 ITR 1(SC) AND ALEMBIC CHEMICAL WORKS LTD. VS. CIT 177 ITR 377 (SC) TO CONTE ND THAT THE CONCEPT OF ENDURING BENEFIT MUST RESPOND TO THE CHANG ING ECONOMIC REALITIES OF BUSINESS. IT IS STATED THAT WHEN AN EXPEND ITURE IS PART OF THE PROFIT EARNING PROCESS AND IS INCURRED TO ENABLE AN ASSESSEE TO CARRY ON HIS BUSINESS MORE PROFITABLY AND ADVANTAGEOUSLY, THE EXPENDITURE CAN ONLY BE IN THE REVENUE FIELD. IT FU RTHER CONTENDED THAT EXPENDITURE, EVEN IF IT IS FOR OBTAINING AN ADVANTAG E OF ENDURING ITA NO.6424,6380/07 & 4529/08 A.Y: 03-04 & 04-05 4 BENEFIT, IT IS NEVERTHELESS ON REVENUE ACCOUNT, IF THE A DVANTAGE IS IN THE REVENUE FIELD. THE ASSESSEE COMPANY ALSO CONTENDED TH AT ENTRIES IN THE BOOKS OF ACCOUNTS CANNOT DECIDE THE ALLOWABILITY OR OTHERWISE OF EXPENSES INCURRED AND CITED SEVERAL JUDGMENTS TO SUPPORT I TS CONTENTION. 3. HOWEVER, THE AO OBSERVED THAT THE ASSESSEE IN THE RET URN HAS CLAIMED ENTIRE EXPENDITURE AS REVENUE EXPENDITURE BUT , IN THE BOOKS THE ASSESSEE HAS DEBITED RS.45,70,112/- OUT OF TOTAL EXPE NDITURE OF RS.6,82,43,142/- AND THE BALANCE EXPENDITURE OF RS.6,3 6,73,030/- HAS BEEN DEFERRED IN THE BOOKS OF THE ASSESSEE COMPANY TO B E WRITTEN OFF OVER A PERIOD OF 3 YEARS, THUS THE ASSESSEE CANNOT BLOW H OT AND COLD IN THIS MANNER. THE A.O WAS OF THE VIEW THAT THE EXPEND ITURE SHOULD BE ALLOWED OVER A PERIOD OF 3 YEARS IN THE SAME MANNER A S HAS BEEN TREATED IN THE BOOKS OF ACCOUNT AND ACCORDINGLY HE DISALL OWED RS.6,36,73,030/- AND ADDED TO THE INCOME OF THE ASSESSE E. THE AO AFTER MAKING SOME OTHER DISALLOWANCES COMPLETED THE ASSESSM ENT AT A LOSS OF RS.8,11,17,664/- VIDE ORDER DT.30.12.2005 PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961(THE ACT). ON APPEAL, THE LD. CIT(A) WHILE OBSERVING THAT THE AO HAD NOT DISPUTED THE EXPENDITU RE ON THE GROUND THAT IT HAS NOT ACCRUED DURING THE PREVIOUS YEAR OR THA T IT IS NOT REVENUE IN NATURE AND KEEPING IN VIEW THE RATIO OF DECISIONS INCLUDING THE DECISION IN MADRAS INDUSTRIAL INVESTMENT CORPORAT ION LIMITED VS. ITA NO.6424,6380/07 & 4529/08 A.Y: 03-04 & 04-05 5 CIT (1997)225 ITR 802(SC) HELD THAT IN THE INSTANT CASE THE BRAND PROMOTION EXPENDITURE MAINLY CONSISTS OF EXPENDITURE THROUGH VARIOUS MEDIA SUCH AS T.V. AND FILM, THE EXPENDITURE HAS BEEN INCURRED DURING THE PREVIOUS YEAR AND HOW THIS EXPENDITURE CAN BE SAID TO BE OF ENDURING NATURE HAS NOT BEEN CLARIFIED IN THE ASSESSMENT ORDER, ALLOWED THE CLAIM OF THE ASSESSEE. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE D ELETION OF DISALLOWANCE OUT OF BRAND PROMOTION EXPENSES RS.6,36,73, 030/- . 5. AT THE TIME OF HEARING, THE LD. DR WHILE RELYIN G ON THE ORDER OF THE AO FURTHER SUBMITS THAT THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE IN ITS BOOKS OF ACCOUNTS TREATED T HE SAID EXPENDITURE AS DEFERRED REVENUE EXPENDITURE AND THE ALLOWANCE OF TOTAL AMOUNT DURING THE CURRENT YEAR MIGHT GIVE A D ISTORTED PICTURE OF THE YEAR. HE THEREFORE, SUBMITS THAT THE DISALLOWAN CE MADE BY THE AO BE RESTORED. 6. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE WH ILE RELYING ON THE ORDER OF THE LD. CIT(A) FURTHER SUBMITS THAT I T IS NOT THE CASE OF THE REVENUE THAT THE EXPENSES INCURRED BY THE ASSESSEE ARE NOT REVENUE IN NATURE. THEREFORE, IN VIEW OF THE RATIO OF FOLLOWING DECISIONS WHEREIN IT HAS BEEN HELD THAT MAKING OF AN EN TRY DOES NOT ITA NO.6424,6380/07 & 4529/08 A.Y: 03-04 & 04-05 6 DETERMINE THE ALLOWABILITY OF EXPENDITURE, IF THE EXPENDITURE IS OTHERWISE OF ALLOWABLE IN NATURE AND FURTHER HELD TH AT THE EXPENDITURE INCURRED ON ADVERTISEMENT TO CREATE BRAND IMAGE ARE A LLOWABLE AS REVENUE EXPENDITURE :- 1) CIT VS. BERGER PAINTS(INDIA) LTD.(NO.2)(2002) 254 ITR 503(CAL.), 2) CIT VS. SAKTHI SOYAS LTD.(2006) 283 ITR 194(MAD.), 3) DCIT VS. CORE HEALTHCARE LTD.(2009) 308 ITR 263(GUJ.), 4) CIT VS. BHOR INDUSTRIES LTD.(2003) 264 ITR 180(BOM.), 5) ACIT VS. ASHIMA SYNTEX LTD.(2009) 310 ITR(AT) 1(AHMEDABAD) (SB) AND 6) ACIT VS. GODREJ FOODS LTD. AND VICE VERSA IN ITA NO.232/IND./04 AND C.O. NO.51/IND/04 AND OTHERS DATE D 30.3.2007 FOR ASSESSMENT YEARS 2000-01 TO 2002-03. HE, THEREFORE, SUBMITS THAT THE ORDER PASSED BY THE LD. CIT(A) IN DELETING THE DISALLOWANCE BE UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RI VAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIN D THAT THE FACTS ARE NOT IN DISPUTE INASMUCH AS THE ASSESSEE HAS INCURRED BRA ND PROMOTION EXPENSES RS.6,82,43,142/- AND OUT OF WHICH IT HAS DEBITED RS.45,70,112/- IN THE P&L A/C. AND BALANCE EXPENDITURE OF RS.6,36,73,030/- HAS BEEN TREATED AS DEFERRED REVENUE EXPENDITURE OVER A PERIOD OF THREE YEARS. HOWEVER, IN THE RETURN OF INCOME THE ASSESSEE HAS CLAIMED ENTIRE BRAND PROMOTION EXPENSES AS REVE NUE EXPENDITURE. THE AO IN VIEW OF ENTRIES RECORDED IN TH E BOOKS OF ITA NO.6424,6380/07 & 4529/08 A.Y: 03-04 & 04-05 7 ACCOUNT TREATED BALANCE EXPENDITURE OF RS.6,36,73,030/ - AS DEFERRED REVENUE EXPENDITURE AND DISALLOWED THE SAME WITH THE OBSERVATION THAT THE EXPENSES WOULD BE ALLOWED IN SUBSEQUENT YEARS A S PER BOOKS OF ACCOUNT. ON APPEAL, THE LD. CIT(A) WHILE OBSERVING THAT THE AO HAD NOT DISPUTED THAT THE EXPENSES ARE NOT REVENUE IN NAT URE AND THE EXPENSES HAVE BEEN INCURRED DURING THE YEAR DELETED TH E DISALLOWANCE MADE BY THE AO. HERE IT IS NECESSARY TO TAKE NOTE OF T HE CASES ON THE ISSUE. 8. IN CIT VS. BERGER PAINTS(INDIA) LTD.(NO.2)(CAL.)(SU PRA), IT HAS BEEN HELD(PAGE 504 HEAD NOTE): HELD,(I) THAT IF ACCORDING TO THE REVENUE LAWS THE ASSESSEE IS ENTITLED TO TREAT A SUM AS A REVENUE EXPENDITURE, THEN THAT LEGAL RIGHT OF THE ASSESSEE IS NOT ESTOPPED BY THE TREATMENT GIVEN BY THE ASSESSEE TO IT IN ITS OWN BOOKS OF ACCOUNT. ADVERTISEMENT EXPENSES A RE NORMALLY TO BE TREATED AS REVENUE EXPENDITURE. TH E TRIBUNAL WAS JUSTIFIED IN LAW IN ALLOWING A SUM OF RS.8,29,723/- AS REVENUE EXPENDIUTE.......... 9. IN CIT VS. SAKTHI SOYAS LTD. (SUPRA), IT HAS BEEN HE LD(PAGE 195 HEAD NOTE): ..(II) THAT IN RESPECT OF THE PROJECT LAUNCHING EXPENSES AMOUNTING TO RS.16,41,125/- ALSO THE ASSES SEE HAD SPENT THE MONEY MAINLY FOR ADVERTISEMENT THROUG H VISUAL AND PRINT MEDIA AND ALSO FOR DESIGNING AND P RINTING LEAFLETS, BROCHURES, ETC. AND HENCE THESE EXPENSES WERE ALSO IN THE NATURE OF BUSINESS EXPENDITURE ENTITLED FOR DEDUCTION IN COMPUTING THE ASSESSEES INCOME. ITA NO.6424,6380/07 & 4529/08 A.Y: 03-04 & 04-05 8 10. IN DCIT VS. CORE HEALTHCARE LTD.(SUPRA), IT HAS BEEN OBSERVED AND HELD AT PAGE 269-270 AS UNDER: IN RELATION TO THE FIRST ITEM, NAMELY, ADVERTISEMENT EXPENSES, IT IS NOT IN DISPUTE THAT T HE EXPENDITURE OF RS.70 LAKHS AND ODD WAS INCURRED ON A SPECIAL ADVERTISEMENT CAMPAIGN. HOWEVER, THAT BY IT SELF WOULD NOT BE SUFFICIENT TO DETERMINE AS TO WHETHER THE EXPENDITURE IN QUESTION IS ON REVENUE ACCOUNT OR CA PITAL ACCOUNT. THE APPROACH OF THE COMMISSIONER(APPEALS) THAT THE EXPENDITURE IN QUESTION WAS TREATED AS DEF ERRED REVENUE EXPENDITURE AND HENCE WAS CAPITAL IN NATURE , CANNOT BE TERMED TO BE A CORRECT APPROACH BECAUSE I N SO FAR AS THE INCOME-TAX ACT IS CONCERNED, THERE IS NO SUCH CATEGORY OF DEFERRED REVENUE EXPENDITURE. SIMILARL Y; MAKING OF AN ENTRY OR ABSENCE OF AN ENTRY DOES NOT DETERMINE THE ALLOWABILITY OR OTHERWISE OF THE ITEM OF EXPENDITURE AND THE SAME CANNOT BE CONSIDERED TO BE A FACTOR ADVERSE, IF THE EXPENDITURE IS OTHERWISE OF ALLOWABLE NATURE. EVERY EXPENDITURE INCURRED BY A BUSINESS CONCERN, IF INCURRED FOR THE PURPOSE OF BU SINESS, IS BOUND TO RESULT IN SOME BENEFIT, DIRECT OR INDIR ECT, IMMEDIATE OR AFTER SOMETIME, BUT THE BENEFIT TO THE BUSINESS CANNOT BE TERMED CAPITAL OR REVENUE ONLY O N THE BASIS OF THE PERIOD FOR WHICH THE BENEFIT IS DERIVE D BY THE BUSINESS. ANY BENEFIT RESULTING TO A BUSINESS NEED NOT BE CONFINED TO THE YEAR OF EXPENDITURE AND THIS IS AN ORDINARY INCIDENT OF A RUNNING BUSINESS. IN THE CASE BEFORE THE ALLAHABAD HIGH COURT IN HINDUSTAN COMMERCIAL BANK L TD., IN RE [1952] 21 ITR 353, THE EXPENDITURE ON ADVERTISEMENT HAS BEEN INCURRED AT THE POINT OF TIM E WHEN NEW BRANCHES OF THE BANK HAD TO BE OPENED AND INAUGURATED. IT HAS BEEN HELD BY THE ALLABAHAD HIG H COURT THAT THERE IS NO PROPOSITION THAT THE AMOUNT SPENT IN A SPECIAL CAMPAIGN OF ADVERTISEMENT MUST NECESSA RILY BE CAPITAL EXPENDITURE. THE APEX COURT DECISIONS ON WHICH RELIANCE HAS BEEN PLACED BY THE TRIBUNAL NAMELY, EMPIRE JUTE CO. LTD.,[1980] 124 ITR 1(SC) AND ALEMBIC CHEMICAL WORK S CO. LTD., [1989] 177 ITR 377(SC) SPECIFICALLY LAY D OWN THAT THE NATURE OF ADVANTAGE HAS TO BE CONSIDERED I N A COMMERCIAL SENSE AND THE TEST OF ENDURING BENEFIT I S NOT A CERTAIN OR CONCLUSIVE TEST AND CANNOT BE APPLIED BL INDLY AND MECHANICALLY WITHOUT REGARD TO THE PARTICULAR F ACTS AND CIRCUMSTANCES OF THE GIVEN CASE. THE EXPRESSIO N ASSET OR ADVANTAGE OF AN ENDURING NATURE HAS BEEN ITA NO.6424,6380/07 & 4529/08 A.Y: 03-04 & 04-05 9 EVOLVED TO EMPHASISE THE ELEMENT OF A SUFFICIENT DE GREE OF DURABILITY APPROPRIATE TO THE CONTEXT. THE IDE A OF ONCE FOR ALL PAYMENT AND ENDURING BENEFIT ARE NOT TO BE TREATED AS SOMETHING AKIN TO STATUTORY CONDITIONS. APPLYING THE AFORESAID SETTLED LEGAL POSITION TO T HE FACTS OF THE CASE, IT IS NOT POSSIBLE TO AGREE WITH THE APPELLANT-REVENUE THAT THE ADVERTISEMENT EXPENSES INCURRED BY THE RESPONDENT-ASSESSEE AT THE TIME OF INSTALLATION OF ADDITIONAL MACHINERY IN THE EXISTIN G LINE OF BUSINESS RESULTED IN ANY ENDURING BENEFIT, SO AS T O BE TREATED AS CAPITAL IN NATURE. 11. IN CIT VS. BHOR INDUSTRIES LTD.(SUPRA), IT HAS BEEN OBSERVED AND HELD (PAGE 185): ..APPLYING THE RATIO OF JUDGMENT OF THE SUPREME COURT TO THE FACTS OF THIS CASE, IN THE PRESENT MAT TER, THE VRS EXPENSES WERE INCURRED BY THE COMPANY TO SAVE O N THE EXPENSE. THE EXPENSE WAS NOT REFERABLE TO ANY INCOME-YIELDING ASSET. IT IS WELL SETTLED THAT, OR DINARILY REVENUE EXPENDITURE, WHICH IS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, MUST BE AL LOWED IN ITS ENTIRETY IN THE YEAR IN WHICH IT IS INCURRED AND IT CANNOT BE SPREAD OVER A NUMBER OF YEARS EVEN THOUGH THE ASSESSEE HAS WRITTEN IT OFF IN ITS BOOKS OVER A PERIOD OF YEARS EVENTHOUGH THE ASSESSEE HAS WRITTEN IT OFF IN ITS BOOKS OVER A PERIOD OF YEARS.. 12. IN ACIT VS. GODREJ FOODS LTD. AND VICE VERSA IN ITA NO.232/IND./04 AND C.O. NO.51/IND/04 AND OTHERS(SUPRA ), IT HAS BEEN OBSERVED AND HELD IT IS ALSO SETTLED LAW THAT BOOK ENTRIES ARE NOT DETERMINATIVE FACTOR TO DEAL WITH THE INCOME/EXPEND ITURE WHETHER TAXABLE OR DEDUCTIBLE. THE PROVISIONS OF L AW HAVE TO BE TAKEN INTO CONSIDERATION. THE LD. CIT(A ) HAS CORRECTLY RELIED ON THE DECISIONS OF THE HONBLE SUP REME COURT REFERRED TO ABOVE IN SUPPORT OF HIS FINDINGS. THE ADVERTISEMENT EXPENDITURE AS CLAIMED BY THE ASSESSE E IN THIS CASE IS CLEARLY REVENUE EXPENDITURE IN NATURE. THERE ITA NO.6424,6380/07 & 4529/08 A.Y: 03-04 & 04-05 10 IS NO LAW PROVIDED UNDER THE INCOME TAX ACT TO SAY THAT REVENUE EXPENDITURE IS DEFERRED REVENUE EXPENDITURE . ONE IT IS HELD AS REVENUE EXPENDITURE, IT HAS TO BE ALLOWED IN THE YEAR UNDER CONSIDERATION IN WHICH IT WAS INC URRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. .... 13. IN ACIT VS. ASHIMA SYNTEX LTD.(2009) 310 ITR(AT) 1(AHMEDABAD) (SB) THE SPECIAL BENCH OF THE TRIBUNAL W HILE CONSIDERING THE DECISION OF HONBLE SUPREME COURT IN MAD RAS INDUSTRIAL CORP LTD. VS. CIT (1997) 225 ITR 802 OBSERVED AND HE LD AS UNDER (PAGE-15): .....THIS JUDGMENT RELIED UPON BY THE LD. DEPARTMENTAL REPRESENTATIVE ITSELF CLARIFIES THAT T HOUGH THE TAXPAYER MAY HAVE WRITTEN OFF THE EXPENDITURE I N ITS BOOKS OF ACCOUNT OVER A PERIOD SAY OF FIVE YEARS, I T MUST BE ALLOWED IN ITS ENTIRETY IN THE YEAR IN WHICH IT WAS INCURRED, IF IT IS REVENUE EXPENDITURE, AND IF IT I S WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSES OF BUSINE SS. IN THE CASE UNDER CONSIDERATION, THERE IS NOTHING TO SUGGEST THAT WITH THIS EXPENDITURE, ANY ASSET, TANGIBLE OR INTANGIBLE, HAS BEEN CREATED. THERE IS NO EVIDENCE ON RECORD REGARDING ACCRUAL OF ANY SPECIFIC REVENUE IN THE YEARS UNDER CONSIDERATION OR SUBSEQUENTLY OVER A DE FINED PERIOD WITH THE INCURRING OF THE SAID EXPENDITURE. THE ASSESSING OFFICER HIMSELF ADMITTED THE PORTION OF EXPENDITURE DEBITED IN THE PROFIT AND LOSS ACCOUNT AS REVENUE EXPENDITURE. IN THESE CIRCUMSTANCES, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE FINDIN GS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 14. APPLYING THE RATIO OF AFORESAID SETTLED LEGAL POSI TION TO THE FACTS OF THE PRESENT CASE WE ARE OF THE VIEW THAT MAKING OF AN ENTRY OR ABSENCE OF AN ENTRY DOES NOT DETERMINE THE ALLOWABILIT Y OR OTHERWISE OF THE ITEM OF EXPENDITURE AND THE SAME CAN NOT BE CONSIDE RED TO BE A FACTOR ADVERSE, IF THE EXPENDITURE IS OTHERWISE OF ALLO WABLE NATURE. IT ITA NO.6424,6380/07 & 4529/08 A.Y: 03-04 & 04-05 11 IS NOT THE CASE OF THE REVENUE THAT THE EXPENDITURE IN CURRED BY THE ASSESSEE ON BRAND PROMOTION ARE NOT REVENUE IN NATURE OR HAVE NOT BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. THERE IS NOTHING TO SUGGEST THAT WITH THIS EXPENDITURE , ANY ASSET TANGIBLE OR INTANGIBLE, HAS BEEN CREATED. THERE IS NO LAW UNDER THE ACT TO SAY THAT THE REVENUE EXPENDITURE IS DEFERRED REVE NUE EXPENDITURE. THE A.O HIMSELF ADMITTED THE PORTION OF EXPENDITURE DEBITED IN THE P&L ACCOUNT AS REVENUE EXPENDITURE. THIS BEING SO, WE AR E OF THE VIEW THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON BRAND P ROMOTION ARE ALLOWABLE AS REVENUE EXPENDITURE. ACCORDINGLY, WE AR E INCLINED TO UPHOLD THE FINDING OF THE LD. CIT(A) IN DELETING TH E DISALLOWANCE MADE BY THE AO. THE GROUNDS TAKEN BY THE REVENUE ARE, TH EREFORE, REJECTED. ITA NO.4529/M/08(ASSESSMENT YEAR: 2004-05)(REVENUE S APPEAL): 15. AT THE TIME OF HEARING IT HAS BEEN AGREED BY BOT H THE PARTIES THAT THE FACTS, ISSUE AND THEIR PLEA IN THE PRESENT APP EAL FOR THE ASSESSMENT YEAR 2004-05 ARE THE SAME AS IN THE APPEAL FOR THE ASSESSMENT YEAR 2003-04, THEREFORE, THE ISSUE MAY BE DE CIDED ACCORDINGLY. 16. AFTER HEARING THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD AND IN THE ABSENCE OF ANY OTHER CO NTRARY MATERIAL PLACED ON RECORD BY THE REVENUE WE FOLLOWING OUR FI NDING RECORDED IN ITA NO.6424,6380/07 & 4529/08 A.Y: 03-04 & 04-05 12 PARA 14 OF THIS ORDER HOLD THAT THE EXPENSES INCURRE D BY THE ASSESSEE ON BRAND PROMOTION ARE ALLOWABLE AS REVENUE EXP ENDITURE. WE ORDER ACCORDINGLY. THE GROUNDS TAKEN BY THE REVENU E ARE THEREFORE, REJECTED. ITA NO.6380/M/07(ASSESSMENT YEAR : 2003-04)( ASSE SSEES APPEAL): 17. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE SUBMITS THAT HE MAY BE ALLOWED TO WITHDRAW THE ASSESSEES APPEA L WHICH WAS NOT OBJECTED TO BY THE LD. DR. 18. THAT BEING SO, AND KEEPING IN VIEW THE PETITION FILED BY THE LD. COUNSEL FOR THE ASSESSEE TO SEEK PERMISSION OF THE BENCH TO WITHDRAW THE ASSESSEES APPEAL, THE APPEAL FILED BY THE ASSESSEE IS T REATED AS DISMISSED BEING WITHDRAWN. 19. IN THE RESULT ALL THE APPEALS STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.2.2010. SD/- SD/- ( R.K. PANDA ) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 12.2.2010. JV. ITA NO.6424,6380/07 & 4529/08 A.Y: 03-04 & 04-05 13 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 28.1.2010 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 29.1.2010 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 12.2.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 15.2.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER