Vasan Publications Pvt. Ltd., CHENNAI V. ACIT, CHENNAI

MA 248/CHNY/2016

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5692 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 21-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 30-09-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: T BANUSEKAR
• Keywords: Depreciation; Revenue expenditure; Capital expenditure

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER M.P. NO. 248/MDS/2016 [IN I.T.A.NO. 1 1 9 4 /MDS/2015 ] / ASSESSMENT YEAR : 20 0 9 - 1 0 M/S. VASAN PUBLICATIONS PVT. LTD., NO. 757, ANNA SALAI, CHENNAI 600 0 02 . [PAN: A A A C V 2 180M ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , COMPAN Y CIRCLE II I ( 4 ) , C HENNAI . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI T. BANUSEKAR , C.A. / RESPONDENT BY : SHRI A.V. SREEKANTH , J CIT / DATE OF HEARING : 21 . 0 4 .201 7 / DATE OF P RONOUNCEMENT : 11 . 0 7 .201 7 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : BY MEANS OF THIS MISCELLANEOUS PETITION, THE PETITIONER SEEK S TO GET RECALLED THE ORDER PASSED BY THE TRIBUNAL IN I .T.A. NO. 1194 /MDS/201 5 DATED 21 . 06.2016 RELEVANT TO THE ASSESSMENT YEAR 2009 - 10. BY REFERRING TO THE PETITION WITH REGARD TO CONFIRMATION OF DISALLOWANCE OF BRAND REPOSITIONING EXPENDITURE, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE PETITIONER HAS CHANGED THE SIZE OF ITS MAGAZINE ANANDHA VIKADAN FROM A - 8 TO A - 4 SIZE AND THEREFORE, THE ASSESSEE HAS NOT CREATED ANY NEW BRAND. HE M.P . NO . 248 /M/ 16 2 ALSO ARGUED THAT THE REPOSITIONING EXPENDITURE DID NOT RESULT IN ENDURING BENEFIT AND THEREFORE, THE SAME SHOULD HAVE TREATED AS D EFERRED REVENUE EXPENDITURE . IT WAS ALSO CONTENDED THAT THE STATUTORY AUDITORS HAVE CERTIFIED THE EXPENDITURE AS CAPITAL EXPENDITURE WAS CONTRARY TO THE FACTS AND THEREFORE, PRAYED THAT THE TRIBUNAL HAS INADVERTENTLY MADE A DECISION O THE ALLOWABILITY OF B RAND REPOSITIONING EXPENSES AND PRAYED FOR RECALLING THE ORDER OF THE TRIBUNAL AND RECONSIDER THE ISSUE AFRESH. 2 . ON THE OTHER HAND, T HE LD. DR HAS SUBMITTED THAT THERE WAS NO MISTAKE APPARENT IN THE ORDER PASSED BY THE TRIBUNAL. 3. WE HAVE HEARD BOT H THE SIDES, PERUSED THE ORDER PASSED BY THE TRIBUNAL AND ONCE AGAIN CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. ADMITTEDLY, THE TAMIL MAGAZINE ANANDHA VIKADAN IS ONE OF THE OLDEST MAGAZINES PUBLISHING SINCE 1928 AS SUBMITTED BY THE ASSESSEE IN ITS LETTER DATED 02.07.2008. TAKE CUE OF THE LETTER OF THE ASSESSEE , BEING MANY DECADES OLD MAGAZINE IN TAMIL REQUIRES ANY ADVERTISEMENT THROUGH MEDIA. THE ASSESSEE HAS STARTED PUBLISHING THE ANANDHA VIKADAN MAGAZINE IN A - 4 SIZE DURING THE FINANCIAL Y EAR ENDED 31.03.2009 AND LAUNCHED THROUGH MEDIA AS WELL AS OTHER MEANS AND INCURRED VARIOUS EXPENSES. SINCE THE TANGIBLE PRODUCT OF THE ASSESSEE WAS NEW IN THE MARKET, THE ASSESSEE HAS INCURRED HUGE EXPENDITURE TO THE TUNE OF .438.27 LAKHS. NO BUSINESSMAN CAN INCUR SUCH HUGE EXPENDITURE WITHOUT ENDURING BENEFIT. THEREFORE, THE M.P . NO . 248 /M/ 16 3 HEAVY EXPENDITURE INCURRED BY THE ASSESSEE FOR LAUNCHING ITS NEW PRODUCTS IN THE MARKET TO ENJOY ENDURING BENEFIT CANNOT BE TERMED AS REVENUE EXPENDITURE . 4. THE LD. COUNSEL FOR T HE ASSESSEE HAS STRONGLY CONTENDED THAT AT PARA NO. 3.7 OF PAGE 7/PARA NO. 39 OF PAGE 8 OF THE ORDER OF THE TRIBUNAL, IT WAS STATED THAT THE STATUTORY AUDITORS HAVE CERTIFIED THE EXPENDITURE AS CAPITAL EXPENDITURE WHICH IS CONTRARY TO FACTS. IN THE ASSESS MENT ORDER AT PAGE 4, IT HAS BEEN RECORDED BY THE ASSESSING OFFICER THAT AT (1) VIDE LETTER DATED 02.07.2008, THE ASSESSEE STATED THAT IT WAS AS CAPITAL NATURE . IF THIS FINDING OF THE ASSESSING OFFICER IS WRONG, WHAT PREVENTED THE ASSESSEE TO FILE THE SA ID LETTER DATED 02.07.2008 BEFORE THE TRIBUNAL AND CLAIM THAT THE FINDING GIVEN BY THE ASSESSING OFFICER IS NOT CORRECT. ON PERUSAL OF THE AUDITOR S REPORT [TO THE MEMBERS OF M/S. VASAN PUBLICATIONS PRIVATE LIMITED] FILED IN THE PAPER BOOK PAGE 16 - 39, AT P ARA (D), IT IS CLEARLY MENTIONED IN THAT REPORT THAT ACCOUNTING OF BRAND REPOSITIONING EXPENDITURE AS AN ASSET AND MOREOVER, AT PAGE 36 OF THE PAPER BOOK I.E., PARA 22 OF THE AUDITOR S REPORT, THE ASSESSEE HAS MENTIONED THAT DURING THE YEAR THE COMPANY HAS CAPITALISED BRAN D REPOSITIONING EXPENDITURE OF .4,38,27,220/ - AS AN ASSET AND AMORTISED ONE THIRD THEREOF AMOUNT ING TO .1,46,07,612/ - AS AN EXPENDITURE FOR THE YEAR AND CARRIED FORWARD BALANCE AMOUNT OF .2,92,19,608/ - FOR AMORTISATION IN FUTURE. THE ACCOUNTING OF THE SAME IS NOT M.P . NO . 248 /M/ 16 4 ACCORDANCE WITH AS - 2 6 . IF IT IS SO, HOW THE ASSESSEE IS NOW CLAIMING THE SAID EXPENDITURE AS REVENUE EXPENDITURE. THE ASSESSMENT ORDER IS THE BASE FOR ADJUDICATING ANY ISSUE BY THE HIGHER FORUM . WITHOUT COGENT EVIDENCE, THE ASSESSEE CANNOT CONTEND BEFORE THE HIGHER FORUM THA T THE FACT AVAILABLE ON RECORD IS CONTRARY. IN VIEW OF THE ABOVE, THE GROUND RAISED IN THE PETITION ER IS DISMISSED. 5. WITH REGARD TO NEXT GROUND RAISED IN THE PETITION IN RESPECT OF DISALLOWANCE UNDER SECTION 40A(2)(B) OF THE ACT, IT WAS THE SUBMISSION OF THE PETITIONER THAT THE ADVERTISEMENT COMMISSION AND PRINTING CHARGES PAID BY THE ASSESSEE WERE NOT AT EXCESSIVE RATES AND TOOK SUPPORT FROM THE CASE LAW PLACED IN THE PAPER BOOK S.NO. 8 TO 12/13. WHILE ADJUDICATING THE ISSUE, BY REPRODUCING THE RATES QUOTED BY THE ASSESSEE S SISTER CONCERN AND OTHER COMPARABLE CONCERNS IN THE TRIBUNAL ORDER, AS GIVEN IN THE ASSESSMENT ORDER , THE ASSESSING OFFICER HAS GIVEN A CLEAR FINDINGS AFTER VERIFICATION OF THE INVOICE THAT THERE WAS HUGE DIFFERENCE BETWEEN THE SIS TER CONCERN AND ALSO OTHER COMPARABLE CONCERNS TOWARDS COMMISSION PAID. WITH REGARD TO SCANNING AND PRINTING CHARGES ALSO, BY REPRODUCING THE RATES QUOTED BY THE ASSESSEE S SISTER CONCERN AND OTHER COMPARABLES, THE ASSESSING OFFICER HAS GIVEN THE FINDINGS IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS PAID EXCESSIVE RATES TO ITS SISTER CONCERN. THE ABOVE FINDINGS OF THE ASSESSING OFFICER ARE NOT ON PRESUMPTION, BUT BASED ON THE INVOICES/BILLS/VOUCHERS M.P . NO . 248 /M/ 16 5 PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER . THEREFORE, THE SUBMISSIONS OF THE PETITIONER THAT MERELY BASED ON SUSPICION, THE ASSESSING OFFICER HAS MADE THE DISALLOWANCES IS NOT CORRECT. 6. THE PETITIONER HAS NOT GIVEN ANY VALID REASON FOR INCURRING EXCESS EXPENDITURE EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CIT(A) OR BEFORE THE TRIBUNAL DURING THE COURSE OF APPEAL PROCEEDINGS OR DURING THE COURSE OF HEARING OF THE MISCELLANEOUS PETITION. WITHOUT ANY VALID REASON/ PROPER EXPLANATION, SIMPLY FROM THE VIEW POINT OF BUSINESSMAN, THE PETI TIONER HAS INCURRED EXCESS EXPENDITURE CANNOT BE A GROUND TO RECALL THE ORDER OF THE TRIBUNAL. IN THE ABSENCE OF ANY VALID REASON FOR INCURRING EXCESS EXPENDITURE OVER AND ABOVE OTHER COMPARABLES, NO CASE LAW CAN COME TO RESCUE OF THE PETITIONER. ACCORDING LY, THE GROUND RAISED BY THE PETITIONER IS DISMISSED. 7 . IN THE RESULT, THE M.P. FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 11 TH JU LY , 201 7 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 11 . 0 7 .201 7 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.