DCIT, CHENNAI V. Gandhimathi Appliances Ltd., CHENNAI

ITA 944/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68876 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 20-11-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 10-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T N BETGERI
• Assessee Lawyers: R MEENAKSHISUNDARAM
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI. BEFORE DR.O.K. NARAYANAN, VICE-PRESIDENT & SHRI V. DURGA RAO, JUDICIAL MEMBER ITA NO. 944/MDS/2013 ASSESSMENT YEAR 2004-05 THE DEPUTY COMMISSIONER OF INCOME TAX, COMPANY CIRCLE II(2), ROOM NO. 512, FIFTH FLOOR, NEW BLOCK, 121, MAHATMA GANDHI ROAD, CHENNAI 600034. VS. M/S. GANDHIMATHI APPLIANCES LTD., 377, ANNA SALAI, TEYNAMPET, CHENNAI 600 018. [PAN:AAACG2038F] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.N. BETGERI, JCIT RESPONDENT BY : SHRI R. MEENAKSHISUNDARAM, ADVOCATE DATE OF HEARING : 20.11.2013 DATE OF PRONOUNCEMENT : 28.11.2013 O R D E R PER V. DURGA RAO, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) III, CHENN AI DATED 21.01.2013 RELEVANT TO THE ASSESSMENT YEAR 2004-05. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A MANUFACTURER OF KITCHEN AND HOME APPLIANCES, FILED ITS RETURN ON 30 .10.2004 DECLARING I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .944 944944 944/M/ /M/ /M/ /M/13 1313 13 2 LOSS OF ` .9,86,40,700/- FOR THE ASSESSMENT YEAR UNDER CONSID ERATION. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER HAS OBSERVED THAT THE MARKET DEVELOPMENT EXPENDITUR E OF ` .5,96,41,088/- INCURRED BY THE ASSESSEE COMPANY WAS FOR THE PURPOSE OF ACQUIRING NEW MARKET HAVING ENDURING VALUE AND H ELD THAT THE SAME CANNOT BE TREATED AS REVENUE EXPENDITURE AND THE CL AIM MADE BY THE ASSESSEE WAS DISALLOWED. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFOR E THE LD. CIT(APPEALS) AND IT WAS SUBMITTED THAT THE EXPENDIT URE INCURRED BY THE ASSESSEE CAN BE TREATED AS CAPITAL EXPENDITURE ONLY IF IT HAS RESULTED IN ACQUISITION OF ASSETS OR ADVANTAGE OF ENDURING NATU RE. 4. THE LD. CIT(APPEALS), AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE, ALLOWED THE CLAIM OF ` .5,96,41,088/- AND THE RELEVANT PORTION OF HIS ORDER IS EXTRACTED HEREUNDER: 5.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSION OF THE LD. AR. I HAVE ALSO GONE THROUGH THE DECISIONS RELIED ON BY THE LD. AR. I FIND THAT THE VERY SAME ISSUE C AME UP IN THE APPELLANT'S OWN CASE IN ITA NO.413/09-10/A.III DATE D 26.05.2010 FOR THE ASSESSMENT YEAR 2002-03 WHEREIN THE APPEAL WAS ALLOWED BY MY PREDECESSOR RELYING ON THE DECISION OF THE MADRAS H IGH COURT IN THE CASE OF CIT VS. BRILLIANT TUTORIALS PVT. LTD (292 I TR 399). THE REVENUE WENT ON APPEAL AND THE ITAT 'C' BENCH, CHENNAI, IN ITA NO. 1326/MDS/2010 DATED 12.8.2011, HELD IN PARA 9 AND 1 0 THAT THE ISSUE STANDS COVERED IN FAVOUR OF THE APPELLANT BY THE DE CISION OF THE MADRAS I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .944 944944 944/M/ /M/ /M/ /M/13 1313 13 3 HIGH COURT IN THE CASE OF CIT VS. BRILLIANT TUTORIA LS PVT. LTD (292 ITR 398) WHICH IS REPRODUCED AS UNDER: '9. IN REGARD TO THE MERITS OF THE ADDITION IT IS NOTICED THAT THE EXPENDITURE WHICH HAS BEEN CLAIMED IS IN THE NA TURE OF ADVERTISEMENT EXPENDITURE AND SALES PROMOTION EXPEN DITURE. BOTH THE EXPENSES DID NOT IN ANY MANNER GIVE THE AS SESSEE ANY ENDURING BENEFIT. ADVERTISEMENT IS BASICALLY TO BRI NG TO THE ATTENTION OF THE GENERAL PUBLIC OR THE CONSUMERS AB OUT THE PRODUCTS THAT ARE DEALT IN BY THE ASSESSEE. OUT OF SIGHT IS OUT OF MIND. THE ADVERTISEMENT IS BASICALLY TO KEEP THE AS SESSEE'S PRODUCTS IN THE SIGHT OF THE CONSUMERS. THE VALUE O F ADVERTISEMENT IS SHORT-LIVED. IT DOES NOT GIVE ANY ENDURING BENEFIT. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW T HAT THE FINDING OF THE LEARNED CIT(A) ON THIS ISSUE IS ON A RIGHT F OOTING AND DOES NOT CALL FOR ANY INTERFERENCE. 10. IT IS ALSO NOTICED THAT THE LEARNED CIT(A) HAS FOLLOWED THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT I N THE CASE OF CIT V. BRILLIANT TUTORIALS LTD. REPORTED IN 292 ITR 399 WHICH IS ON THE SIMILAR ISSUE. IN THE CIRCUMSTANCES, THE APP EAL FILED BY THE REVENUE IS DISMISSED. ' I FIND THAT THERE IS NO CASE FOR TAKING A DIFFERENT VIEW ON THE SAME ISSUE IN THE PRESENT APPEAL. RESPECTFULLY FOLLOWING THE S AID DECISION, THIS GROUND IS ALLOWED. 5. ON BEING AGGRIEVED, THE REVENUE CARRIED THE MAT TER IN APPEAL BEFORE THE TRIBUNAL. 6. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE LD. CIT(APPEALS) HAS ALLOWED THE CLAIM OF THE ASSESSEE TO THE TUNE OF ` .5,01,84,937/- AND THE ASSESSEE IS REALLY ELIGIBLE FOR ONLY ` .2,20,19,280/- [ ` .5,01,84,937 - ` .2,81,65,657/-] AND I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .944 944944 944/M/ /M/ /M/ /M/13 1313 13 4 THE REMAINING BALANCE OF ` .2,81,65,657/- MAY BE ADDED BACK TO THE INCOME OF THE ASSESSEE. 7. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THA T THE LD. CIT(APPEALS) MAY BE DIRECTED TO VERIFY THE SAME AND DECIDE THE ISSUE ACCORDING TO LAW. 8. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE I SSUE INVOLVED IN THIS APPEAL IS WHETHER THE MARKET DEVELOPMENT EXPENDITUR E INCURRED BY THE ASSESSEE IS REVENUE EXPENDITURE OR CAPITAL EXPENDIT URE. ACCORDING TO THE ASSESSING OFFICER, IT IS REVENUE EXPENDITURE AN D ACCORDING TO THE LD. CIT(APPEALS), IT IS CAPITAL EXPENDITURE. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS ADMITTED THAT THE ASSESSEE IS NOT ENTITLED FOR THE ENTIRE CLAIM ALLOWED BY THE LD. CIT(APPEALS) AND ON LY ENTITLED FOR ` .2,20,19,280/-. IN VIEW OF THE ADMISSION MADE BY TH E LD. COUNSEL FOR THE ASSESSEE, THE ORDER OF THE LD. CIT(APPEALS) IS SET ASIDE AND RELIEF GRANTED TO THE ASSESSEE IS LIMITED TO ` .2,20,19,280/-. IN SO FAR AS ` .2,81,65,657/- IS CONCERNED, WE DIRECT THE ASSESSIN G OFFICER TO ENQUIRE AND VERIFY ALL THE DETAILS AND DECIDE THE I SSUE IN ACCORDANCE WITH LAW KEEPING IN VIEW OF THE DECISION OF THE HON BLE JURISDICTIONAL I.T.A. I.T.A. I.T.A. I.T.A. NO NONO NO. .. .944 944944 944/M/ /M/ /M/ /M/13 1313 13 5 HIGH COURT IN THE CASE OF CIT V. BRILLIANT TUTORIAL S PVT. LTD. (SUPRA). ORDERED ACCORDINGLY. 9. IN THE RESULT, THE REVENUES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THURSDAY, THE 28 TH OF NOVEMBER, 2013 AT CHENNAI. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (V. DURGA RAO) JUDICIAL MEMBER CHENNAI, DATED, THE 28.11.2013 VM/- TO: THE ASSESSEE/A.O./CIT(A)/CIT/D.R.