2011 (9) TMI 1005 - AT - Income Tax

Non-allowance of marketing expenditure named as commercial gifts incurred on account of cellular phones/ handsets issued to dealers and employees - Held that - Both the parties agreed that since the issues in question require further investigation of facts which are not emergent from the record it will be desirable that these issues are set aside back to the file of AO to decide the same afresh.

Summary

Issues: Cross appeals for A.Y. 2000-01 and 2001-02 regarding non-allowance of marketing expenditure on cellular phones, depreciation rate, and marketing expenditure treated as products for own use.

Analysis:
1. The Appeals: The cross appeals for the assessment years 2000-01 and 2001-02 were listed for hearing following an order of the Delhi High Court. The issues included the non-allowance of marketing expenditure on cellular phones, depreciation rate, and marketing expenditure treated as products for own use. These issues were raised in the appeals for both years.

2. Further Investigation: Both parties agreed that the issues required further investigation of facts not available in the record. It was decided that the matters should be sent back to the Assessing Officer (AO) for fresh consideration after verifying the relevant facts about the cellular phones and handsets. The AO was instructed to provide the assessee with an opportunity to be heard during the process.

3. Restoration to AO: The Tribunal found merit in sending the issues back to the AO for fresh examination. Ground numbers 3, 4, and 5 for A.Y. 2000-01, and ground number 4 for A.Y. 2001-02 were restored to the AO's file for a decision in accordance with the law. It was clarified that the outcome of the revenue's appeals would not be affected as the CIT(A) had already confirmed the AO's order, and these specific issues were not raised by the department.

4. Result of Appeals: The Tribunal pronounced the result of the cross-appeals for both assessment years. For A.Y. 2000-01, the assessee's appeal was partly allowed for statistical purposes, and the revenue's appeal was dismissed. Similarly, for A.Y. 2001-02, the assessee's appeal was partly allowed for statistical purposes, and the revenue's appeal was dismissed.

5. Conclusion: The judgment concluded by stating the outcomes of the appeals for each assessment year and the decision to send back specific issues to the AO for fresh consideration. The order was pronounced in open court on 22-09-2011, marking the resolution of the cross-appeals regarding the disputed issues related to marketing expenditure and depreciation on cellular phones and handsets.