TMI Blog2005 (12) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... red in passing orders, which are bad in the facts of the case and in law. 2. That on the facts and circumstances of the case and in law, the learned CIT (A) erred in upholding disallowances made by the learned AO of the following expenditures: (a) Advertisement and publicity Rs. 5,28,565 (b) Foreign tours and travelling Rs. 2,79,447 (c) Exhibition expenses. Rs. 10,41,542" 2. Briefly, the facts are that the appellant continues to derive income from manufacture and sale of rotational plastics moulding machinery and maintained its accounts on mercantile basis. The appellant had incurred expenses on advertisement, foreign tours and travelling and exhibition expenses in the earlier years, i.e., financial years 1995-96 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncluded assessment would not be revoked without actually reopening the assessment. This principle was laid down by the Karnataka High Court in the case of CIT vs. sridev Enterprises (1991) 97 CTR (Kar) 80 : (1991) 192 ITR 165 (Kar). The AO ought to have allowed the expenditure in the year under consideration as well. It is also contended that the expenditure incurred is not capital in nature. This expenditure was incurred by the appellant-company for the purpose of its business. The benefit of expenditure incurred was not confined to one year only in which such expenditure was incurred. The benefit in fact was continuing in the year under consideration as well. Since the assessee thought that the benefit of the expenditure would continue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oresaid judgment of the Supreme Court is fully distinguishable as in that case the assessee carried on business of manufacture and sale of Biri and followed mercantile system of accounting by two notifications. published in D.P. Gazette in December, 1957. very payment of sales-tax and central sales-tax on sale of Biri, subject to certain conditions. The claim of the appellant that it was not liable to pay any sales-tax from 14th Dec., 1957. was not accepted and held that it was liable to make additional payment of Rs. 1,96.359. This liability was agitated by the assessee without any success. The assessee paid sum of Rs. 1,91.887 out of the aforesaid liability of Rs. 1,96.359 for asst. yr. 1968-69 and claimed the same as deduction in the rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsistency the claim of the assessee cannot be allowed in the year under consideration. In asst. yr. 1996-97 the assessee has not maintained any stock register and its accounts were rejected by making ad hoc addition thereto. The learned CIT(A) has already recorded a finding that the assessee has accepted the rejection of accounts and the matter has rested there itself. Its return for asst. yr. 1997-98 was processed under s. 143(1)(a) as per summary scheme and there was no application of mind so as to say that the claim was considered. Even otherwise res judicata and estoppels are not applicable in income-tax proceedings. Furthermore judgment in the case of CIT vs. Sridev Enterprises of Hon'ble Karnataka High Court does not apply to the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the liability has been incurred in the accounting year, but the liability is a continuing liability which stretches over a period of 12 years. It is, therefore, a liability spread over a period of 2 years. Ordinarily, revenue expenditure which is incurred wholly and exclusively for the purpose of business must be allowed in its entirety in the year in which it is incurred. It cannot be spread over a number of years even if the assessee has written it off in his books over a period of years. However, as the facts may justify an assessee who has incurred expenditure in a particular year to spread and claim it over a period of ensuing years. In fact, allowing the entire expenditure in one year might give a very distorted picture of the prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure on advertisement and publicity, foreign tours and travels and exhibition expenses. There is also no material before us to show that the liability on this account is a continuing liability and benefit thereof is available over a period of three years. If the assessee's claim is that the entire expenditure incurred by him in asst. yrs. 1996-97 and 1997-98 was a revenue expenditure and the same was incurred wholly and exclusively for the purpose of business, the same could have been claimed and allowed to it in those years itself. However, the assessee appears to have not claimed the entire amount of such expenditure as deduction in the returns filed for those years nor the issue of spread over came for consideration of the AO at the t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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