TMI Blog2005 (10) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... and (iii) the business expenditure must necessarily emerge from a contractual obligation. Ground No. 2 also contain two sub-parts. The gist of this ground is that the learned CIT(A) erred in confirming arbitrary ad hoc disallowance of Rs. 1 lakh, made by the Assessing Officer, out of miscellaneous expenses. It is also mentioned that the learned CIT(A) erroneous relied on the assessment order that no such expenditure as mentioned in the order, amounting to Rs. 3,49,817, appears in the schedule of miscellaneous expenses. Ground No. 3 also contains two sub-parts. This ground is directed against the finding of the learned CIT(A), in which he upheld disallowance of Rs. 10 lakhs, made by the Assessing Officer, from the dealers' conference expenses, holding the same to be in the nature of entertainment expenses. It is also mentioned that the learned CIT(A) erred in not following the judgment of jurisdictional High Court in the matter in the case of CIT v. Kirloskar Oil Engines Ltd. [1986] 157 ITR 762 (Bom.). 2.1 The assessee took two additional grounds of appeal in the course of hearing before us. The 1st additional ground was taken up by filing a letter dated 4-7-2004. This ground stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payments had crystallized after prolonged discussions between the assessee and the Supreme. Various correspondences between them made in this regard were also furnished to the Assessing Officer. Legal arguments were also made before him J regarding the admissibility of the expenditure. On a combined reading of various submissions, made by the assessee, it was found by the Assessing Officer that, - (i) the assessee had never placed any order for purchase of plastic crates from the Supreme, which, in fact, had been placed by various bottlers in their independent capacity, (ii) the assessee placed advances of Rs. 80 lakhs with the Supreme to help it in its working capital position. The aforesaid advance was placed in two instalments. A sum of Rs. 50 lakhs more was placed as advance in December '93 and another sum of Rs. 30 lakhs was placed in March '94, (iii) there was no subsisting agreement between the assessee and the Supreme to pay any cost or interest if the delivery was not taken in time by the bottlers, (iv) the plastic crates were not purchased by the bottlers and the entire material was retained by the Supreme, and (v) there was no agreement even between the bottlers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994 for the purpose of distribution to the bottlers. The assessee had also advanced Rs. 80 lakhs to the Supreme for manufacture of these crates, by way of deposit for blocking its spare capacity for manufacture of plastic crates for the purpose of sale to various bottlers. The said deposit was covered by Inventory Carrying Cost till that time. On the change of marketing strategy, the bottlers stopped using such crates and as a result thereof, they refused to purchase such crates from the Supreme. The assessee also deferred the usage of such crates. Since the crates were manufactured on the basis of understanding with the assessee, the Supreme tried to recover its inventory carrying cost from the assessee by way of claiming compensation. The assessee had no choice but to compensate the Supreme, failing which there would have been protracted litigation in the matter. There would also have been the loss of a valuable supplier. It was also represented that in January 1995, after long drawn out discussions, it was decided by the assessee that the half-depth crates may be converted into full-depth crates. This work was also entrusted to the Supreme. However, even full-depth crates were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the soft drink could only be sold in bottles and the bottles had to be stored in crates for the purpose of their transportation. Without the storage medium, it would not have been possible to transport the soft drink for distribution purposes. It was pointed out that the Hon'ble Supreme Court of India had examined the scope of g the words "for the purpose of business", finding place in section 37(1) of the Act. The Hon'ble Court held that on a number of occasions that this expression is of wide import and it does not include in its ambit merely day-to-day running expenses but also expenses integrally connected with the business of the assessee. In this connection, reliance was placed on the cases of, - (i) CIT v. Malayalam Plantations Ltd. [1964] 53 ITR 140 (SC); (ii) Sree Meenakshi Mills Ltd. v. CIT [1967] 63 ITR 207 (SC); and (iii) CIT v. Birla Cotton Spg. Wvg. Mills Ltd. [1971] 82 ITR 166 (SC). Further, reliance was placed on the decision of Hon'ble Madras High Court in the case of CIT v. Textool Co. Ltd. [1982] 135 ITR 200. It was also argued that in deciding the issue whether an expenditure is admissible for deduction or not, one has to take into account the question o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ores may be allowed in full. It appears prima facie that either no argument was made in respect of the expenditure of Rs. 9 lakhs provided in case of Neel Kamal or the learned CIT(A) omitted to bring such arguments on record in his order. 3.6 The learned CIT(A) considered the facts of the case and various arguments advanced by the assessee. It was pointed out by him that it was not the assessee's case that it was liable to make payments for purchase of the crates. In fact, the assessee had never placed any order for purchase of crates with the Supreme. These crates were to be purchased by the bottlers, who were also responsible for payment of their respective purchase considerations. Coming to the argument regarding the liability arising on account of change in the marketing strategy, the learned CIT(A) pointed out that the assessee had submitted a letter dated 16-3-1999 to the Assessing Officer in the course of assessment proceedings, informing, inter alia, that the loss of conversion of hall-depth crates into full-depth crates would not be material in nature. In such scenario, even if it is assumed that loss to the Supreme had occurred due to the decision of the assessee and, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of full-depth crates was also deferred and ultimately scrapped. The assessee paid a sum of Rs. 1.45 crores to the Supreme. Neither the aforesaid facts, nor the payment were doubted either by the Assessing Officer or by the CIT(A). The Supreme was not in any way connected with the assessee except that the two had long standing business relationship. Since the use of half-depth crates was abandoned at the instance of the assessee, the bottlers were not willing to lift half-depth crates or pay inventory carrying cost to the Supreme. Therefore, in order to protect the business interest, the assessee decided to pay the impugned amount. 4.2 The learned counsel referred to the observations of learned CIT(A) on page 2 of his order, to the effect that representation was made by the assessee before him that it had to pay a sum of Rs. 1.38 crores to the Supreme as inventory carrying cost. In this connection, the learned counsel drew our attention to pages 48 to 60 of the paper book filed by the revenue, in which various documents in relation to the impugned matter were placed. Page 48 consists of letter dated 16-3-1994 from the assessee to the Supreme, in which, inter alia, mentioned tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out to USD 300/crate. Page 55, is a letter dated 29-7-1996 from the Supreme to the assessee that as on 31-12-1995, the amount receivable from the assessee towards inventory carrying cost of half-depth and full-depth crates was Rs. 1.40 crores and as against this, it was holding an amount of Rs. 80 lakhs which will be refunded on the receipt of Rs. 1.40 crores. It may be mentioned here that this letter also clarifies that the liability, if any, in respect of the Supreme was not paid during the relevant previous year but was provided in the books of account. Page 58 is a Debit Note dated 31-12-1996, raising the demand of Rs. 69 lakhs, being settlement of compensation against the order of cancellation of 2.80 lakh half-depth crates. Page 59 is again a Debit Note dated 31-12-1996, raising a demand of Rs. 69 lakhs regarding settlement of carrying cost of full-depth crates. In this Debit Note, the number of crates is not mentioned, as was done in the earlier Debit Note regarding half-depth crates. Both these Debit Notes were dated 31-12-1996, from which it transpires that the liability of Rs. 1.38 crores, if payable, crystalised on 31-12-1996. Page 60 is a letter dated 24-1-1999 from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned counsel drew the attention of the observations of the Court on page 309 to the effect that unless it has been shown that the transaction is in question was a sham one or unless the value shown was not the value recorded in the books of account or unless, it was not a bona fide transaction, it is not open to the taxing authorities to disregard the figure of transaction shown in the books of account of the assessee. The learned counsel argued that one of the three conditions mentioned by the Hon'ble Court should be satisfied before the figures of transactions recorded in the books of account are to disregard by the revenue. We have considered the facts of that case. We find that the ratio of that case is not applicable on the facts and in the circumstances of the instant case. The reason being that in that case, a transaction of purchase of sugar was taken up by the assessee with M/s. "S" Farms, pursuant to which sugar was purchased. In the instant case, the assessee had no agreement to buy any goods from the Supreme. The value of the transaction of purchase of goods from the Supreme was not required to be recorded and consequently was not recorded; and in fact could not ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year of difficulty, the assessee reduced the commission receivable from it and also paid certain amounts towards the expenses of the company for two years. The expenditure was incurred voluntarily but on the ground of commercial expediency with a view to preserve the source of income. In the instant case, the Supreme was not the source of income of the assessee, while the bottlers may be the source of its income. There was no tripartite agreement or even a bilateral agreement or understanding between the assessee on one hand and the bottlers on the other that in case of any default committed by them in lifting the bottles, the assessee would pay either inventory carrying charges or damages to the Supreme. However, the question would remain whether, in view of business association of the assessee's bottlers with the Supreme, the damages paid by the assessee to it would still be an admissible expenditure on the ground of business expediency. 4.7 The learned counsel of the assessee had also relied on the decision of Hon'ble Supreme Court in the case of Sassoon J. David Co. (P.) Ltd. v. CIT [1979] 118 ITR 261. In that case, in a scheme of takeover of the assessee-company, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imbursed a sum of Rs. 65,000 to the Bank, which was claimed as deduction. The Assessing Officer disallowed this amount. The CIT(A) and the Tribunal allowed the deduction. The Hon'ble Court pointed out that the department had not challenged the finding given by the CIT(A) that it was common knowledge that the soft drinks did not taste good unless they were chilled and, therefore, it was in the interest of the assessee to ensure that chilled soft drinks were supplied to the clients. The Hon'ble Court held that the expenditure was incurred in the course of carrying on the business and, therefore, it was deductible as held by the Tribunal. However, the matter was remanded to the Tribunal to determine that part of the expenditure which related to the relevant previous year and allow that amount. The facts of this case are quite similar to the facts of the instant case except that in that case, the assessee had formal understanding with the Bank to reimburse any loss occasioned to it on account of nonpayment of loan taken by the dealers for purchase of coolers. However, there is no formal understanding in the instant case that the assessee would pay any amount to the Supreme if the deale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. If it is former, the expenditure is deductible, otherwise not. The assessee had also relied on the decision of Hon'ble Supreme Court in the case of Sree Meenakshi Mills Ltd. v. CIT [1967] 63 ITR 207. In that case, the expenditure was incurred in a civil proceedings challenging the measures, which imposed restriction on the carrying on of the business by the assessee by way of distributing yarn to weavers outside the factory. The assessee lost in the civil proceedings. However, the Hon'ble Court pointed out that for an expenditure to be deductible under section 10(2)(15) of the 1922 Act, it is not necessary that the prime motive should be to earn income directly from the expenditure. What is required to be seen is whether it can be said that the expenditure was incurred reasonably and only to promote the interest of the business. The assessee had also relied on the decision of Hon'ble Supreme Court in the case of CIT v. Birla Cotton Spg. Wvg. Mills Ltd. [1971] 82 ITR 166. In that case also, the expenditure was incurred for engaging eminent lawyers and conducting proceedings before investigation commission for its case relating to assessment years 1941-42 to 1947-48. It was fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in that case, the assessee was neither owning any horse nor any jockey and its business was to help race meetings on a commercial basis. Even then, the Hon'ble Court held that the amount was deductible as it was incurred qua-trader in the business of Turf Club. The question to be decided by us also is whether the expenditure was incurred by the assessee quatrader in the course of its business. The assessee had also relied on the decision of Madras High Court in the case of CIT v. Textool Co. Ltd. [1982] 135 ITR 2001. In that case, certain amounts were written off as the assessee was not able to fully utilize its quota of imports granted by Indian Cotton Mills Federation. The amount was claimed as business loss. The Tribunal found that the loss was in the course of business. The Hon'bie Court held that the loss was allowable as it was incurred in the course of business. We find that the facts of that case are not in pari materia with the facts of the instant case inasmuch as in this case the expenditure was not incurred for purchase or sale of raw material or goods of the assessee. 4.12 In connection with the words "wholly and exclusively for the purpose of business", the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of business. The fact that it also benefited to a third party may not be relevant in deciding the matter. The argument, which was sought to be advanced on the basis of that case was that some benefit might have ennured to the bottlers, that by itself, will not be a basis for disallowance of this expenditure, if it is incurred as a matter of business expediency. Thus, the question again goes back to the issue whether the impugned expenditure incurred by the assessee was in the capacity of a trader and for furthering the interest of the business. The assessee had also relied on the decision of Hon'ble Bombay High Court in the case of Bralco Metal Industries (P.) Ltd. v. CIT [1994] 206 ITR 477. In that case, the expenditure was incurred on foreign tour of Managing Director for purchase of plant and machinery, required for running the business, already in existence. The Hon'ble Court pointed out that it was not the case of the revenue that the expenditure was personal expenditure of the assessee. If the tour was undertaken with a view to decide whether a particular machinery was suitable for the business, it will not converted the expenditure on foreign tour into an expend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... phics and trade marks of the assessee. The Supreme was required to indemnify and hold the assessee, its subsidiaries and their respective officers, directors, agents and employees harmless against all claims, against breach of warranties and allegations that the products were defective or against infringement of any intellectual property of any third party. The Supreme was not vested with any interest or right in the intellectual property of the assessee which were to remain vested exclusively in it. The assessee was not required to purchase any product of the Supreme and the Supreme's agreements for sale with authorized purchasers were to constitute and remain independent sale agreements. In respect of sales, agreements with the authorized purchasers, the Supreme agreed to advise the assessee on coming into existence of the agreement, and the rights and obligations between the Supreme and authorized purchasers. However, the assessee was not under any obligation to the Supreme for breach of any sub-sale agreement by the authorized purchaser and such agreements were not to effect in any manner the rights and obligations of the assessee and the supplier under this agreement. The date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o letters of the Supreme, one holding the bottlers liable for interest and the other holding the assessee liable for inventory carrying cost and interest thereon. There was also contradiction between the assessee's letter dated 16-3-1994 written to the Supreme regarding deposits of Rs. 80 lakhs and the Supreme's letters dated 9-1-1996 making claim of damages and interest. The learned DR also referred to pages 58 and 59, which are debit note Nos. 312 and 313 dated 31-12-1996 from the Supreme. The first debit note has quantified the compensation against the cancelled order in respect of 2,80,000 half-depth bottles, at the rate of approximately Rs. 24.64 per crate, at Rs. 69 lakhs. The second debit note, of the same date, is rather bland in the sense that though it speaks of the liability in respect of full-depth crates carrying cost of Rs. 69 lakhs, it does not mention in any manner whatsoever, the basis on which the liability has been worked out. 5.3 The learned DR referred to pages 61 to 65 of the paper book and in particular referred to pages discussed in this sub-paragraph. A reference was made to page 80, which is a part of letter-dated 14-3-1999 written by the assessee to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e previous year, the Supreme had merely made a claim of the liability of Rs. 1.40 crores. As per own representation of the assessee before the Assessing Officer, till January 1995, no liability was envisaged by the assessee and in any case, the liability, if any, was insignificant in monetary terms. 5.4 The learned DR referred to the discussion on page 5 and onward of the order, in which the assessee's written submissions dated 14-3-1999 in regard to the impugned liability, were summarized. It was pointed out that the Supreme had manufactured half-depth crates on the assessee's representation on behalf of the bottlers and such crates were ready for delivery in June 1994. As a result of delay in purchasing the crates, a sum of Rs. 70 lakhs was due from the assessee as inventory carrying cost. The assessee had given advances to the extent of Rs. 80 lakhs up to 16-3-1994 for blocking the spare capacity for manufacturing of the crates. The learned DR pointed out that for any expense to be admissible under section 37, the liability ought to have incurred or paid in the relevant previous year. The assessee had debited a sum of Rs. 1.45 crores in the profit and loss account by way of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son in the course of business, clear evidence has to be brought on record to show the accrual or the payment of the liability by way of bills, etc., and the proof of payment. Such was not the case here. Against this, the case of the learned counsel in the rejoinder was that the aforesaid case supports the assessee's case because the amount was disallowed on the basis that the details for payment made towards the equipment hire charges could not be produced. In this connection, he referred to the findings of the Hon'ble Court on pages 38 to the effect that the Assessing Officer can only decide whether the expenditure is real, it relates to business fully. The Assessing Officer will be well within his jurisdiction to disallow the expenditure in excess of reasonable limits. However, this jurisdiction should be exercised judicially, i.e., he must act according to reason and justice and not according to his private opinion, law and not according to humour or fancy. The mere fact that the assessee had made payment that fact by itself would not be sufficient to claim deduction. The reasonableness should be judged on the point of view of the businessman. However, where an element of extra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court in the case of CIT v. Hindustan Motors Ltd. [1968] 68 ITR 301. In the context of expenditure incurred by the assessee by way of contribution for repair of the road, the Hon'ble High Court held that the expenditure was allowable under section 10(2)(xv) of the 1952 Act. The learned DR pointed out that the expenditure was incurred for carrying on the assessee's business efficiently, and that is why the expenditure was allowed to be deducted on computation of income. Therefore, what is required to be seen for allowance of an expenditure is whether the assessee had any direct concern or purpose in incurring the expenditure. If answer to the aforesaid question is yes, the expenditure is allowable, otherwise not. 5.9 The learned DR also relied on the decision of Hon'ble Supreme Court in the case of CIT v. Chandulal Keshavlal Co. [1960] 38 ITR 601. He pointed out towards the Court's observation that if the expenditure has been incurred to foster the business of another, the same will not be deductible. 5.10 In a nutshell, the case of the learned DR was that the assessee had no liability to pay damages to the Supreme. The liability, if any, was that of the bottlers. In any cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e kind of arrangement with the Supreme for supply of crates to its bottlers. This method was found expedient for achieving uniformity in the crates for the purpose of their identification as well as the use of trade marks. There was no understanding that the assessee will either buy crates or will be responsible in any manner to the Supreme in respect of manufacture and sale of crates directly to the bottlers. However, in order to boost the working capital of the expenditure cannot be deducted in computing the income of the assessee. 6. In the rejoinder, the learned counsel of the assessee referred to certain papers filed by the assessee regarding the meaning of the words "inventory bearing cost". He pointed out that a concept of exist regarding inventory carrying cost and the assessee's claim of expenditure is also based upon this concept. It was pointed out that the existence of claim was not doubted, and if that was the case, the Assessing Officer should have summoned the Supreme to put the issue beyond the pale of doubt. It was conceded that the assessee had no written agreement with the Supreme, and the agreement referred to by the learned DR did not pertain to the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of crates on the other side. The assessee decided to change over to full-depth crates as against half-depth crates as used earlier. Therefore, the bottlers did not lift requisite numbers of crates of half-depth, leading to accumulation of inventory. It is also the claim of the assessee that it again reversed its decision of using full-depth crates and reverted to half-depth crates, which led to accumulation of inventory of full-depth crates with the Supreme. There were certain discussions between the assessee and the Supreme regarding compensation for loss arising to the Supreme on account of inventory carriage. Finally, the matter seems to have settled, when the assessee accepted the liability of two amounts as per consecutively numbered debit notes of Rs. 69 lakhs each. The first debit note quantifies the inventory piled up with the Supreme while the second debit note make no mention whatsoever about the number of crates in the inventory. It also appears that the assessee did not make any verification with the Supreme regarding actual state of affairs about the inventory carriage insofar as the full-depth crates are concerned. However, the assessee agreed to pay both these amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's own perception, the Supreme was not sufficiently strong in financial terms to meet its own working capital requirements. In such a case, it would be fallacious to presume even for the assessee that the Supreme would have abandoned manufacturing of crates for the bottlers of the assessee and gone over to other manufacturers, who are competitors of the assessee. To put it on other words, in this case, the commercial expediency in this case was a two way traffic. The assessee may be desiring to have exclusive manufacturer for its bottlers, but it is equally true that, looking to its financial weakness, the Supreme would and could not have broken up its business relations with the bottlers of a large company like Coco Cola, or the assessee who has a large number of bottlers located all over India. Therefore, the argument of commercial expediency has to be examined in a proper perspective. We have seen that the Supreme was not a source of income to the assessee. The source of income of the assessee are bottlers, who use crate for transporting the goods. Under the principle of commercial expediency, any incidental benefit accruing to the bottlers may not be a ground for disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The aforesaid crates had been lifted by the bottlers and were to be collected from them for the purpose of export sales. There is no evidence about number of such crates manufactured, lifted by the bottlers and not paid for, and the inventory with the Supreme. The debit note is also bland in the sense that it does not provide the number of crates manufactured by the Supreme. The narration is - "being the settlement of carrying cost for full-depth crates - Rs. 69 lakhs". There is not even a whisper about the number of crates manufactured by it. The assessee has provided this amount without verification of any fact regarding manufacture of such crates, number of such crates manufactured by the Supreme and the inventory. It is not clear what happened to the proposal of export of these crates. In such circumstances, it will be contrary to reason to hold that the impugned provision for payment was also made as a matter of commercial expediency, because sufficient facts do not exist on record the basis of computation of compensation payable by the assessee. Therefore, we are of the view that even principle of commercial expediency does not warrant deduction of impugned amount of Rs. 69 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 7 of the paper book filed by the department, which is profit and loss account of the assessee for the year ended on 31-3-1996. In this account, a sum of about Rs. 103 crores is debited under the head "Manufacturing, selling and administrative expenses". Schedule 13 on page 21 of the paper book, contains the break-up of the aforesaid expenses. In this schedule, a sum of Rs. 1,19,68,934 is debited under the head "Other administrative expenses". Paragraph 30 of assessee's letter dated 17-12-1998, addressed to the Assessing Officer, on pages 61 to 65 of the paper book of the department states that the details of other administrative expenses incurred by the assessee-company during the year are vide statement attached herewith. However, accompaniments to the letter are not enclosed in the paper book of the department. The case of the learned counsel of the assessee was that the books of account have been audited and various details called for were supplied to the Assessing Officer. However, thereafter he left the matter to the Bench for decision. 8.4 The learned DR referred to page 71 of assessee's paper book, which gives the details of miscellaneous expenses of Rs. 13,51,543 und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penditure in the immediately preceding assessment year. In regard to canteen expenses, it was pointed out that the factory is located at a distance of 35 kilometers from the city and it is meant to provide tea and snacks to the employees. It was further pointed out that in the immediately preceding assessment year, 7.5 per cent of such expenditure was considered as entertainment expenditure. No argument was made before him regarding the expenditure of Rs. 40,920. The learned CIT(A) considered these matters. He ordered that only 7.5 per cent of the canteen expenses may be treated as entertainment expenditure. In the earlier appellate order for assessment year 1995-96, the learned CIT(A) had confirmed the action of the Assessing Officer in treating the 10 per cent of the expenditure incurred on dealers' conference as entertainment expenditure. However, according to the learned CIT(A), that did not amount to saying that he had restricted that disallowance to 10 per cent of the expenditure. Considering the facts in the immediately preceding year and on perusal of vouchers, he indicated that most of the expenditure had been incurred in entertaining the dealers in five star hotels. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. 9.4 The result of the aforesaid discussion is that ground No. 3 of the appeal is partly allowed. 10.1 With regard to the two additional grounds, relating to, (i) deduction of a sum of Rs. 4,10,61,718, being the expenditure on advertising and marketing, and (ii) deduction of a sum of Rs. 3,37,00,617, being the expenditure on service charges, it is observed that the aforesaid expenditure along with the expenditure of assessment year 1997-98 was claimed in that year. Both these matters have been considered in detail in our order for assessment year 1997-98. On the basis of the discussion there, it transpires that the amounts of expenditure under both the heads are likely to undergo changes on full verification of the details of the expenditure furnished by the assessee. In regard to service charges, it is clear that a sum of Rs. 9.09 crores was claimed in that year on the basis of invoice No. 004. This expenditure pertains to the period 1-1-1996 to 31-3-1996 and, thus, the expenditure pertains to assessment year 1996-97. Certain expenditure on advertisement, the details of which were furnished in Annexure-C of the assessee's letter to the Assessing Officer may also be pertainin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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