Sakal Paper Ltd., Pune V. ACIT, Cir.-6, Pune

ITA 927/PUN/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 49738 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 24-06-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A S SINGH
• Assessee Lawyers: ASHOK KOTHARY
• Keywords: Capital asset; Depreciation; Business expenditure; Revenue expenditure; Capital expenditure
• Section: 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I C SUDHIR, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO. 927/PN/08 (ASSTT. YEARS: 2003-04) SAKAL PAPERS LTD., .. APPELLANT 595 BUDHWAR PETH, PUNE 411 002 PAN AACCS7605Q VS. ASSTT. COMMISSIONER OF I.T. .. RE SPONDENT CIR.6, PUNE APPELLANT BY: SHRI ASHOK KOTHARY RESPONDENT BY: SHRI A.S. SINGH ORDER PER I C SUDHIR, J.M THE ASSESSEE HAS QUESTIONED THE FIRST APPELLATE OR DER ON THE FOLLOWING GROUNDS: ON THE FACTS AND THE CIRCUMSTANCES, THE LD AO AND CIT (A) ERRED IN:: 1. IN TREATING THE SOFTWARE EXPENDITURE INCURRED RS 2,92,37,387/- AS CAPITAL EXPENDITURE. THE ACQUISITION BEING ONLY LICENSE TO USE NOT FOR PURCHASE OF SOFTWARE AND IN THE NATURE OF REVENUE EXPENDITURE I NCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS, IT IS PRAYED THAT THE EXPENSES BE ALLOWED IN FULL. 2. IN DISALLOWING ON EXPENDITURE OF RS 13,83,403/- BEING LEGAL EXPENDITURE ON THE GROUND THAT IT IS NOT WHOLLY AND EXCLUSIVELY FOR TH E PURPOSE OF BUSINESS. THE EXPENSES BEING WHOLLY AND EXCLUSIVELY FOR BUSINESS THE SAME MAY BE ALLOWED AS BUSINESS EXPENSES. 2. WE HAVE HEARD AND CONSIDERED THE ARGUMENTS ADVAN CED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL A VAILABLE ON RECORD AND THE DECISIONS RELIED UPON. GROUND NO.1: 3. THE RELEVANT FACTS ARE THAT THE ASSESSEE COMPANY CLAIMED EXPENDITURE OF RS 2,92,37,387/- INCURRED ON PURCHASE OF SOFTWARE. THE ENTIRE EXPENDITURE WAS DEBITED TO THE PROFIT & LOSS ACCOUNT AND CLAIMED AS REVENUE EXPENDITURE. IN SUPPORT OF ITS CLAIM, THE ASSESSEE SUBMITTED BEFORE THE AO THAT THE ASSESSEE HAD ITA NO 927/PN/08 SAKAL PAPERS LT D. PUNE 2 UPGRADED ITS ACCOUNTING AND FINANCIAL SOFTWARE BY I NTRODUCING SAP BASED ACCOUNTING SYSTEM. THE AO HELD THAT DEPRECIATION RA TE FOR COMPUTERS INCLUDING COMPUTER SOFTWARE WAS 60%. THE AMENDMENT IN THE REL EVANT RULE 5 WAS BROUGHT WITH EFFECT FROM AY 2003-04. AS PER NOTE 7, COMPUT ER SOFTWARE MEANT ANY COMPUTER PROGRAMME RECORDED ON ANY DISK, TAPE, PERF ORATED MEDIA OR OTHER INFORMATION STORAGE DEVICE. THE AO NOTED FURTHER TH AT BEFORE THE AY 2003-04, ONLY COMPUTERS WERE ENTITLED FOR DEPRECIATION AT TH E RATE OF 60%. THERE WAS, THEREFORE, NO AMBIGUITY REGARDING DEPRECIATION ALLO WABLE ON COMPUTER SOFTWARE FROM THE YEAR UNDER CONSIDERATION. THE ASSESSEE WAS ALLOWED DEPRECIATION AT THE RATE OF 60% AS PER PROVISIONS OF SECTION 32 OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 4. THE LD CIT(A) HAS UPHELD THE ACTION OF THE AO IN NOT ACCEPTING THE CLAIMED EXPENDITURE AS REVENUE IN NATURE, BUT HE HAS DENIED THE DEPRECIATION ALLOWED BY THE AO ON THE BASIS THAT SOFTWARE IN QUESTION WAS R EADY FOR THE USE OF THE ASSESSEE ON 2.3.2004 ONLY. THIS ACTION OF THE LED C IT (A) HAS BEEN QUESTIONED BEFORE US IN THE PRESENT GROUND. 5. REITERATING THE SUBMISSIONS MADE BEFORE THE AUTH ORITIES BELOW, THE LD AR SUBMITTED THAT BY INTRODUCING SAP BASED ACCOUNTING SYSTEM DURING THE PREVIOUS YEAR, THE ASSESSEE HAD UPGRADED ITS ACCOUNTING AND FINANCIAL SOFTWARE. THE UP- GRADATION REQUIRED INTRODUCTION OF LICENSED SOFTWAR E ALONG WITH PURCHASE OF NECESSARY HARDWARE NEEDED FOR THE PURPOSE. IT IS VE RY CLEAR FROM THE BILLS PRODUCED FOR SOFTWARE THAT THE ACQUISITION IS ONLY A LICENSE TO USE THE SOFTWARE AND NOT FOR COMPLETE PURCHASE AS OWNER OF THE SOFTW ARE. NO RIGHT IS GRANTED TO THE ASSESSEE TO UTILIZE COPYRIGHT OF COMPUTER PROGR AMMES AND COURTS HAVE HELD THAT RIGHT TO USE OF A COPYRIGHT IS TOTALLY DIFFERE NT FROM RIGHT TO USE SOFTWARE PROGRAMME. THE LD. AR SUBMITTED THAT ACQUISITION CO ST OF LICENSE TO USE THE SOFTWARE IS IN THE NATURE OF REVENUE EXPENSES AND I S ACCORDINGLY CHARGED TO THE PROFIT & LOSS ACCOUNT BY THE COMPANY. HE SUBMITTED FURTHER THAT THE COST OF THE ADDITIONAL HARDWARE PURCHASED IN ADDITION TO HARDWA RE THAT WERE ALREADY IN USE ITA NO 927/PN/08 SAKAL PAPERS LT D. PUNE 3 IN THE OLD SYSTEM AND NOW SHIFTED TO THE NEW SYSTEM , FOR RUNNING THE NEW SOFTWARE, WAS CAPITALIZED BY THE COMPANY UNDER THE CATEGORY COMPUTERS. ONLY THE SOFTWARE PURCHASED WAS CHARGED TO THE REVENUE, AS WAS DECIDED BY VARIOUS COURTS. 6. THE LD AR SUBMITTED FURTHER THAT BEFORE AMENDMEN T TO RULE 5, APPENDIX 1 WITH EFFECT FROM AY 2003-04, HE INTERPRETED AS JU STIFICATION ENOUGH FOR CAPITALIZATION OF SOFTWARE, IT IS NECESSARY IN THE FIRST PLACE TO CONFIRM WHETHER THE SOFTWARE PURCHASED IS PART OF THE COMPUTER WITHOUT WHICH THE COMPUTER WILL NOT BE OPERATIONAL. IN THE CASE OF THE ASSESSEE, THE PU RCHASE WAS NOT OF SOFTWARE EMBEDDED COMPUTERS SO AS TO TAKE THE ENTIRE PURCHAS E WITHIN CAPITAL ALONG WITH THE SOFTWARE, BUT THE PURCHASES WERE HARDWARE PURCH ASES AND THEN PAYMENT FOR LICENSE TO USE THE SOFTWARE. THE LD. AR ALSO REFERR ED TO THE ACCOUNTING STANDARD 26 ON INTANGIBLE ASSETS ISSUED BY THE INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA MADE MANDATORY TO ASSESSEE COMPANY. APPENDIX A TO A CCOUNTING STANDARD 26 RELATING TO INTANGIBLE ASSETS IN PARA 10 STATES T HAT THE COST OF SOFTWARE ACQUIRED FOR INTERNAL USE SHOULD BE RECOGNIZED AS AN ASSET I F IT MEETS THE RECOGNITION CRITERIA PRESCRIBED IN PARAGRAPHS 20 AND 21 OF THE STATEMENT. THE LEARNED AR PLACED RELIANCE ON THE FOLLOWING DECISIONS: (I) AMWAY INDIA ENTERPRISES V. DCIT (2008) 4 DTR (D EL) (SB) (TRIB) 1; (II) CIT V SOUTHERN ROADWAYS LTD. (2007) 288 ITR 15 (MAD) (III) CIT V SUNDARAM CLAYTON LTD. (2010) 321 ITR 6 9 (MAD) 7. THE LD. DR, ON THE OTHER HAND, TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW WITH THE SUBMISSION THAT THE NATURE OF THE EX PENDITURE AS TO WHETHER CAPITAL OR REVENUE DEPENDS UPON FACTS OF EACH CASE. 8. CONSIDERING THE ABOVE SUBMISSIONS AND HAVING GON E THROUGH THE DECISIONS RELIED UPON, WE FIND THAT THE ISSUE AS TO WHETHER THE CLAIMED EXPENDITURE ON SOFTWARE IS REVENUE OR CAPITAL IN NA TURE CERTAINLY DEPENDS UPON FACTS AND CIRCUMSTANCES OF EACH CASE. THE SPECIAL B ENCH OF THE TRIBUNAL IN THE CASE OF AMWAY INDIA ENTERPRISES V DCIT (SUPRA) HAVE DISCUSSED THE ISSUE IN DETAIL. THE SPECIAL BENCH HAS OPINED THAT THE QUEST ION WHETHER THE EXPENDITURE ITA NO 927/PN/08 SAKAL PAPERS LT D. PUNE 4 IS IN CAPITAL OR REVENUE FIELD CANNOT BE DECIDED ON THE BASIS OF OWNERSHIP BASE ALONE AND THE FUNDAMENTAL TEST BECOMES MORE IMPORTA NT AND RELEVANT. THE GENERAL MODE IS TO ACQUIRE COMPUTER SOFTWARE AS OWN ER, BUT THAT BY ITSELF WILL NOT BE SUFFICIENT TO CONCLUDE THAT THE SAID EXPENDITURE IS REVENUE EXPENDITURE, IF ON AN APPLICATION OF THE FUNDAMENTAL TEST, IT IS FOUND THAT THE EXPENDITURE OPERATES TO CONFER BENEFIT IN THE CAPITAL FIELD. WHERE THE LIFE OF THE COMPUTER SOFTWARE IS SHORTER (SAY LESS THAN TWO YEARS), IT MAY BE TREATE D AS REVENUE EXPENDITURE. HOWEVER THAT BY ITSELF WILL NOT MAKE THE EXPENDITUR E INCURRED ON SOFTWARE AS CAPITAL IN NATURE AND THE FUNDAMENTAL TEST ALSO NEE DS TO BE SATISFIED. THE SPECIAL BENCH HELD FURTHER THAT WHAT IS MATERIAL TO CONSIDE R IS THE NATURE OF THE ADVANTAGE IN A COMMERCIAL SENSE. IF THE ADVANTAGE C ONSISTS MERELY NOT FACILITATING ASSESSEES TRADING OPERATIONS OR ENABL ING THE MANAGEMENT AND CONDUCT OF THE ASSESSEES BUSINESS TO BE CARRIED ON MORE EFFICIENTLY OR MORE PROFITABLY WHILE LEAVING FIXED CAPITAL UNTOUCHED TH E EXPENDITURE WOULD BE ON REVENUE ACCOUNT, EVEN THOUGH THE ADVANTAGE MAY ENDU RE FOR AN INDEFINITE FUTURE. THE NEXT FACTOR TO BE CONSIDERED IS THE DEGREE OF O RGANIZATIONAL CHANGES. THE MORE RADICAL CHANGES, THE MORE LIKELY THE EXPENDITU RE WILL BE CAPITAL AND THE CHANGES ARE LIKELY TO BE MOST RADICAL WHEN OPERATIO NS PREVIOUSLY CARRIED ON MANUALLY ARE COMPUTERIZED. UPGRADING THE SOFTWARE W ILL NOT NECESSARILY CAUSE THE EXPENDITURE IN QUESTION TO BE CAPITAL. THIS CRI TERIA NEEDS TO BE APPLIED TO DETERMINE THE EXACT NATURE OF EXPENDITURE INCURRED BY THE ASSESSEE FOR ACQUIRING DIFFERENT SOFTWARE INDEPENDENTLY, HELD THE SPECIAL BENCH. 9. IN THE PRESENT CASE BEFORE US, THE NOTABLE MATER IAL FACTS ARE THAT (I) THE LICENSE TO USE THE SOFTWARE IN QUESTION WAS TAKEN F OR A PERIOD OF 25 YEARS, (II) THE SOFTWARE WOULD HAVE GIVEN AND HAS GIVEN FUTURE ECON OMIC BENEFIT WHICH ARE DEFINITELY ATTRIBUTABLE TO THE ASSET AND THE COST O F THE ASSET COULD BE RELIABLY MEASURED. THE FACT THAT THE LICENSE WAS TAKEN FOR A PERIOD OF 25 YEARS ITSELF IS SUFFICIENT TO SHOW THAT FUTURE BENEFITS ATTRIBUTABL E TO THE SOFTWARE LICENSE HAD NOT BEEN CORRECTLY TAKEN INTO ACCOUNT BY THE MANAGEMENT . THE RATIO LAID DOWN IN THE ITA NO 927/PN/08 SAKAL PAPERS LT D. PUNE 5 DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN TH E CASE OF AMWAY INDIA ENTERPRISES V DCIT (SUPRA), IN THE FACTS AND CIRCUM STANCES OF THE PRESENT CASE, RATHER SUPPORTS THE ACTION OF THE REVENUE. WE ALSO FIND THAT WHILE TREATING THE CLAIMED EXPENDITURE AS CAPITAL IN NATURE, THE LD CI T (A) HAS PLACED RELIANCE ON THE DECISION OF PUNE BENCH OF THE TRIBUNAL IN THE C ASE OF SUDARSHAN CHEMICAL INDUSTRIES LTD. V ACIT 108 TTJ (PUNE) 28, ALMOST ON SIMILAR FACTS AND ON IDENTICAL ISSUE AS TO WHETHER THE LICENSE FEES PAID ON ACCOUNT OF USER OF COMPUTER SOFTWARE PROGRAMME WAS CAPITAL EXPENDITURE AS LAID DOWN IN SECTION 32(1)(II) OF THE ACT. IN THAT CASE ALSO, A LICENSE AGREEMENT DATED 4.3.1999 WAS ENTERED WITH THE SAME COMPANY (SAP) WITH WHICH THE ASSESSEE HAD ENTERED INTO THE AGREEMENT FOR INSTALLATION OF R-3 SOFTWARE FOR 25 YEARS, WHICH WAS CLAIMED AS REVENUE EXPENDITURE. THE AO IN THAT CASE TREATED TH E ERP PACKAGE AS A CAPITAL ASSET UNDER THE CATEGORY OF INTANGIBLE ASSETS IN TH E FORM OF LICENSE AND ALLOWED DEPRECIATION AT THE RATE OF 25%. THE LD CIT (A) UPH ELD THE ACTION OF THE AO. THE TRIBUNAL, AFTER DISCUSSING SEVERAL CASES CITED BEFO RE IT AND THE ARGUMENTS ADVANCED BY THE PARTIES, CAME TO THE ABOVE CONCLUSI ON THAT THE EXPENDITURE WAS CAPITAL IN NATURE. WE THUS DO NOT FIND REASON TO IN TERFERE WITH THE CONCLUSION OF THE LD CIT(A) THAT THE CLAIMED EXPENDITURE IN QUEST ION IS CAPITAL IN NATURE, AS THE SAME IS WELL SUPPORTED BY THE ABOVE REFERRED DECISI ON OF THE PUNE BENCH OF THE TRIBUNAL AND OF THE SPECIAL BENCH OF THE TRIBUNAL. THE FACTS ARE DIFFERENT IN THE CASE OF CIT V SOUTHERN ROADWAYS LTD. (SUPRA), AND CIT V. SUNDARAM CLAYTON LTD (SUPRA) RELIED UPON BY THE LD. AR AND THE DECIS IONS ARE NOT HELPFUL TO THE ASSESSEE. IN THE CASE OF CIT V SOUTHERN ROADWAYS LT D (SUPRA), UP-GRADATION OF COMPUTER WAS MADE BY CHANGING CERTAIN PARTS THEREBY ENHANCING THE CONFIGURATION OF THE COMPUTER FOR IMPROVING THEIR E FFICIENCY, BUT WITHOUT MAKING ANY STRUCTURAL ALTERATION. THE HONBLE MADRAS HIGH COURT HELD THAT THE EXPENDITURE INCURRED BY THE ASSESSEE HAD, THEREFORE , TO BE TREATED AS REVENUE EXPENDITURE. LIKEWISE IN THE CASE OF CIT V SUNDARAM CLAYTON LTD (SUPRA), THE EXPENDITURE WAS INCURRED ON SOFTWARE FOR UPGRADING COMPUTERS. THE HONBLE ITA NO 927/PN/08 SAKAL PAPERS LT D. PUNE 6 MADRAS HIGH COURT, AFTER DISCUSSING THE CASE OF THE ASSESSEE AND REASONS, CAME TO THE CONCLUSION THAT THE EXPENDITURE INCURRE D WAS REVENUE IN NATURE. IN BOTH OF THE CITED DECISIONS, NO SIMILAR FACT WAS TH ERE AS IN THE PRESENT CASE BEFORE US THAT THERE WAS AN AGREEMENT WITH THE COMP ANY OF THE SOFTWARE FOR INSTALLATION OF THE SOFTWARE FOR 25 YEARS. WE, THUS , FIND THAT THE ABOVE CITED DECISIONS OF THE HONBLE MADRAS HIGH COURT HAVING D ISTINGUISHABLE FACTS ARE NOT RELEVANT AND THUS ARE NOT APPLICABLE IN THE PRESENT CASE. GROUND NO. 1 IS ACCORDINGLY REJECTED. GROUND NO. 2: 10. THE RELEVANT FACTS ARE THAT THE ASSESSEE CLAIME D RS 13,83,403/- AS LEGAL EXPENDITURE INCURRED IN CONNECTION WITH THE DISPUTE WITH THE WIFE AND DAUGHTER OF THE FOUNDER OF THE COMPANY DR N B PARULEKAR IN THE HONBLE SUPREME COURT AGAINST THE ALLOTMENT OF SHARES TO SOMEONE-ELSE. TH E AO DENIED THE CLAIMED EXPENDITURE AFTER DISCUSSING THE NATURE OF DISPUTE WHICH AS PER HIM PERTAINED TO ALLOTMENT OF SHARES TO ONE GROUP TO HOLD THAT THE E XPENDITURE WAS INCURRED TO SETTLE THE DISPUTE BETWEEN TWO GROUPS OF SHAREHOLDE RS. IN THIS REGARD, THE AO RELIED UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF UDAIPUR MINERAL 269 TR 263 (RAJ.). IT WAS HELD BY THE HONB LE RAJASTHAN HIGH COURT IN THE CASE THAT THE EXPENDITURE WAS NOT ALLOWABLE SIN CE IT WAS NOT INCURRED IN THE NORMAL COURSE OF BUSINESS OR TO PROTECT ITS BUSINES S BY THE ASSESSEE. THE LD CIT(A) HAS UPHELD THE SAME. IN THIS REGARD, THE LD CIT (A) HAS ALSO FOLLOWED HIS PREDECESSORS FIRST APPELLATE ORDER FOR THE ASSESSM ENT YEAR 2004-05 AND 2005-06 ON THE ISSUE. 11. IN SUPPORT OF THE GROUND, THE LD. AR HAS BASICA LLY REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. FIRS T OF ALL, HE SUBMITTED THAT AS THE ASSESSEE COMPANY WAS ALSO MADE RESPONDENT IN TH E MATTER, IT WAS NECESSARY FOR THE ASSESSEE COMPANY TO DEFEND ITS DE CISION TAKEN IN THE NORMAL COURSE OF BUSINESS AND TO PROTECT ITS BUSINESS. HE REFERRED TO THE FOLLOWING ITA NO 927/PN/08 SAKAL PAPERS LT D. PUNE 7 REASONS FOR DEFENDING ITSELF IN HONBLE SUPREME COU RT, ALSO MENTIONED BY THE LD CIT(A): 1. NOT TO DISTURB THE SITUATION WHERE THE COMPANY WOULD HAVE TAKEN SEVERAL DECISIONS, WHICH COURSE WOULD BE HARMFUL TO THE COMPANY 2. NOT TO MAKE THE COMPANY DYSFUNCTIONAL 3. NOT TO AFFECT THE INTEREST OF THE EMPLOYEES, CUS TOMERS AND CREDITORS. 12. THE LD. DR, ON THE OTHER HAND, TRIED TO JUSTIFY THE ORDERS OF THE AUTHORITIES BELOW ON THE ISSUE. 13. CONSIDERING THE ABOVE SUBMISSION, WE ARE OF THE VIEW THAT THE ASSESSEE COMPANY WAS A PARTY IN THE MATTER PENDING BEFORE TH E HONBLE SUPREME COURT, BUT THE DISPUTE WAS BASICALLY BETWEEN WIFE AND DAUG HTER OF THE FOUNDER OF THE COMPANY DR N V PARULEKAR ON THE QUESTION OF ALLOTME NT OF SHARES TO SOME OTHER GROUP. THUS, IT CANNOT BE SAID THAT THE EXPENDITURE INCURRED WAS BUSINESS EXPENDITURE, ESPECIALLY IN VIEW OF THE DECISION OF THE HONBLE SUPREME COURT IN THE MATTER WHEREBY COMPENSATION/DAMAGE OF RS 3 CROR ES WAS DIRECTED TO BE PAID TO PARULEKARS, WHICH WAS NOT WHOLLY AND EXCLUS IVELY FOR THE PURPOSE OF THE BUSINESS OF THE ASSESSEE, BUT IT WAS PENAL IN NATUR E. THE HONBLE SUPREME COURT IN ORDER TO PROTECT THE BUSINESS INTERESTS OF THE C OMPANY ORDERED THE ASSESSEE TO PAY COMPENSATION INSTEAD OF DISTURBING THE MANAGEME NT AND SHAREHOLDING PATTERN THEREBY AVOIDING DISTURBANCE IN THE FUNCTIO NING OF THE COMPANY. THE DECISION IN THE CASE OF SHREE MEENAKSHI MILLS LTD. V. CIT 63 ITR 207 (SC) AND CIT V BENETT COLEMAN & CO LTD 116 ITR 297 (BOM) RE LIED UPON BY THE LD AR, ARE HAVING DISTINGUISHABLE FACTS AND THUS ARE NOT H ELPFUL TO THE ASSESSEE. IN THE CASE OF SHREE MEENAKSHI MILLS LTD. V. CIT (SUPRA), THE ASSESSEE HAD TO INCUR LEGAL EXPENDITURE AGAINST THE ORDER PROHIBITING DEL IVERY OF YARN TO OUTSIDER FOR WAVING. LIKEWISE IN THE CASE OF CIT V BENETT COLEMA N & CO. LTD. (SUPRA), THE EXPENDITURE ON LITIGATION INCURRED WAS HELD BONA FI DE TO PROMOTE THE INTEREST OF BUSINESS. IN THESE CIRCUMSTANCES, WE DO NOT FIND AN Y REASON TO INTERFERE WITH THE FIRST APPELLATE ORDER ON THIS ISSUE, AS THE ASSESSE E HAS FAILED TO ESTABLISH THAT THE ITA NO 927/PN/08 SAKAL PAPERS LT D. PUNE 8 CLAIMED EXPENDITURE WAS INCURRED FOR PROMOTING BUSI NESS INTERESTS OF THE ASSESSEE. THE SAME IS UPHELD. THE GROUND IS ACCORDI NGLY REJECTED. 14. CONSEQUENTLY, THE APPEAL IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY OF APRIL, 2011. SD/- SD/- (D KARUNAKARA RAO) (I.C. SUDHIR) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE: DATED: 21 ST XZ APRIL, 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. SAKAL PAPERS LTD, PUNE 2. ACIT, CIR. 6, PUNE 3. THE CIT(A)-II, PUNE 4. THE CIT-II PUNE 5. THE D.R, A BENCH, PUNE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE