TMI Blog2021 (11) TMI 493X X X X Extracts X X X X X X X X Extracts X X X X ..... f Hon‟ble Supreme Court in Empire Jute Mills [ 1980 (5) TMI 1 - SUPREME COURT] . Hence, we have no hesitation to hold that in these circumstances and examining the present issue on the anvil of Hon‟ble Supreme Court decisions as above, the expenditure incurred on brokerage is to be allowed in full in the impugned assessment year, as deferral of the same over a number of years for income tax purposes is not sustainable - Decided in favour of assessee. - I.T.A. Nos. 5380 & 5381/Mum/2019 - - - Dated:- 27-9-2021 - Shri Shamim Yahya, AM And Shri Amarjit Singh, JM For the Revenue : Shri Brajendra Kumar (DR) For the Assessee : Shri Fenil Bhatt (AR) ORDER PER AMARJIT SINGH, JM: The revenue has filed the above mentioned appeals against the different order passed by the Commissioner of Income Tax (Appeals) -12, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Ys.2014-15 2015-16. ITA. NO.5380/Mum/2019 2. The revenue has filed the present appeal against the order dated 23.04.2019 passed by the CIT(A)-12, Mumbai [hereinafter referred to as the CIT(A) ] relevant to the A.Y. 2014-15. 3. The revenue has raised the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue has filed the present appeal before us. ISSUE Nos. 1 to 3 5. All the issues are in connection with the deletion of addition of ₹ 16,50,40,070/- made on account of deferred brokerage expenditure. However, the Ld. Representative of the Department has claimed that the CIT(A) has wrongly deleted the addition, therefore, the finding of the CIT(A) is not justifiable, hence, is liable to be set aside. It is specifically argued that the CIT(A) has wrongly relied upon the order passed by the Hon ble Apex Court in the case of Taparia Tools Ltd. Vs. JCIT reported in 372 ITR 605 (SC) wherein the claim was belonging to more than one year. However, on the other hand, the Ld. Representative of the assessee has strongly relied upon the order passed by CIT(A) in question and also argued that the issues have been decided by Hon ble ITAT in the assessee s own case in his favour in ITA. No.5379/Mum/2019 for the A.Y.2013-14 dated 13.07.2021. Before going further, we deem it necessary to advert the finding of the CIT(A) on these issues: - 3.2 1 have considered the facts of the case, the assessment order and the written submission of the appellant as well as case laws cited. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he liability had arisen in the assessment year in question, it was even quantified and discharged as well in the very accounting year and hence the deduction should be allowed. 3.5 The assessee has relied on the above mentioned decision of the Hon'ble Supreme Court in support of its contention that the entire amount of brokerage and stamp duty expenses incurred during the year with regard to the 'Mutual Fund Schemes represents an allowable expenditure. On careful examination of the facts of the case and the decision of the Hon‟ble Supreme Court relied on by assessee, it is seen that the said decision is squarely applicable to the facts of the assessee's case. As already mentioned, the brokerage in the case of the assessee represented revenue expenses and the liability for the same had arisen during the previous year itself. Hence, the ratio of the decision of the Hon'ble Supreme Court needs to applied to the assessee, case and it has to be held that the said expenditure is required to be treated as an allowable expenditure for the present assessment year itself. If the assessee claims the expenditure incurred, the Department cannot deny the same and the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion is business expenditure incurred wholly for the purpose of the business of the assessee. It is also undisputed that the expenditure is incurred in the nature of brokerage expenditure incurred for obtaining the investments in mutual funds and in no manner, any portion of the expenditure will revert back to the assessee. In these facts, the AO‟s case is that the said expenditure has been incurred in connection with the investment, in mutual fund which yield income over a period of time. So, when the income arising from expenditure is spread over a period of time, the said expenditure should also be allowed over a period of time to match the income. Although, not specifically mentioned this argument has its origin in the judgment of the Hon‟ble Supreme court in Madras Industrial Investment Corporation 225 ITR 802. In that case, the Supreme Court had referred to this matching concept‟. It was held that ordinarily revenue expenditure incurred wholly or exclusively for the purpose of business, can be applied in the year in which it is incurred. However, the facts may justify spreading the expenditure and claiming it over a period of ensuing years, where allowing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement and conduct of the assessee's business to be carried on more effectively or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. 13. Furthermore, in the case of Taparia Tools(supra) Hon‟ble Supreme Court held that there is no concept of deferred revenue expenditure in the I.T. Act, except under specified sections where amortization is specifically provided such as in section 35D. As regards the ground of the revenue that assessee has claimed the expenditure in profit and loss account, we find that entries in books of account are not determinative of the true nature and substance of the transaction. For this proposition, we draw support from Hon‟ble Supreme Court decision in the case of Tuticorin Alkali Chemicals 141 CTR SC 387 Furthermore, as noted above Hon‟ble Delhi High Court in the case of City Financial Consumer Fin. Ltd.(supra) has dealt with an analogical issue and the exposition is as under:- I. Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of -Assessment years 2001-02 and 2002-03 - Expendit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture can be allowed to be spread over, that too ,when the assessee chooses to do so. Hence, the assessee's claim was to be allowed in full in the year in question. II. Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of -Assessment years 2001-02 and 2002-03 - Where assessee had been financing hire-purchase of vehicles and homes, etc., and period of such financing ranged from less than one year to 5 years, on such transactions Direct selling expenses, stamping fee and commission paid to selling agents were to be allowed in year in which transactions took place [In favour of assessee] The assessee had been financing hire-purchase of vehicles and homes, etc., and the period of such financing ranged from less than one year to 5 years. Holding that on such transactions, direct selling expenses, stamping fee and commission paid to selling agents could not be treated as expenses relating to the year in which the transaction took place as the period of financing was normally more than one year, the Assessing Officer took the view that these expenses could not be termed as having the chargeability in the year which they were incurred. He took the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e no hesitation to hold that in these circumstances and examining the present issue on the anvil of Hon‟ble Supreme Court decisions as above, the expenditure incurred on brokerage is to be allowed in full in the impugned assessment year, as deferral of the same over a number of years for income tax purposes is not sustainable. Accordingly, we uphold the Ld.CIT(A)‟s order. 7. Since the issue has duly been considered by Hon ble ITAT in the assessee s own case in ITA. No.5379/Mum/2019 for the A.Y.2013-14 dated 13.07.2021 and the issue has duly been covered, therefore, it is quite clear that the CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly, we affirm the finding of the CIT(A) on this issue and decide these issues in favour of the assessee against the revenue. ITA. No.5381/Mum/2019 8. The facts of the present case are quite similar to the facts as discussed above while deciding the appeal bearing ITA. No.5380/Mum/2019, therefore, there is no need to repeat the same. However, the figure is different. The finding given above while deciding the ITA. No.5380/Mum ..... X X X X Extracts X X X X X X X X Extracts X X X X
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