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TMI Blog2015 (5) TMI 749X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,558/- were not purchased during the year and thereby wrongly claiming depreciation thereon. 2. The CIT(A) failed to appreciate the fact that the assets were put to use; during the year under consideration even though the payments for the same were made in the subsequent year. 3. The Appellant prays that the depreciation of the Rs. 13,20,213/- be allowed. GROUND III 1. The CIT(A) erred in confirming the action of the AO in treating the written off amount of unreconciled balances of Rs. Rs. 1,44.298/- as capital in nature. 2. The Appellant therefore prays that the said write off of Rs. 1,44,298/- representing unreconciled balances be allowed as deduction as claimed by the Appellant. GROUND IV 1. The CIT(A) erred in directing the AO to treat the amount of Rs. 1,71,56,104/- incurred on neon sign boards and hoardings as capital expenditure and adding it back to the taxable income of the Appellant on the ground that they had the capacity to give advertisement for more than a period of 2-3 years. 2. He failed to appreciate that the AO had applied his mind and exhausted his powers by examining in detail the nature of the expense. 3. He further failed to appreciate that his powers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the assumption that such stock was sold out of books'. 3. The Appellant therefore prays that the AG be directed to delete the addition of Rs. 18,34,560/- and allow the write off of the stock of Rs. 11,76,000/-. GROUND IX The Appellant craves leave to add to, amend and/or alter all or any of the above grounds of appeal". 2. At the time of hearing, the AR submitted that Ground no. I along with its sub-grounds are not pressed. The DR did not object. 3. Since ground is not pressed, it is rejected. 4. Ground no. I along with sub-grounds are therefore rejected. 5. Ground no. II is alternative to ground no. I, wherein the revenue authorities on the one hand held the expenditure to be capital in nature and on the other hand disallowed the claim of depreciation on the furniture and fixtures purchased by the assessee. Initially, the assessee had claimed the expenditure as revenue. 6. At the time of hearing, the AR submitted that the assessee is not in a position to produce any evidence with regard to acquisition of the materials to prove that the expense was revenue in nature. 7. The DR submitted that there was no infirmity in the orders of the revenue authorities. 8. We have pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pense of Rs. 1,71,56,104/.-. 20. The CIT(A) on the contrary held the expense of Rs. 1,71,56,104/- as capital in nature and disallowed the same. 21. Against this disallowance and treatment given by the CIT(A) assessee is before the ITAT. 22. Before us, the AR reiterated its submissions made before the revenue authorities and also submitted that the CIT(A) treaded on a non issue. 23. The DR on the other hand supported the order of the CIT(A). 24. We have heard the arguments and have pursued the orders of the revenue authorities. It is seen that the AO has disallowed the impugned amount on account of non deduction of TAS, which implies that the AO accepts the expense to be a revenue expense. On the other hand, the CIT(A) holds that Rs. 1,71,56,104/- incurred for putting up banners, neon lights and sign boards, as capital expense. 25. In these circumstances, first we have to ascertain as to what should be the treatment of expense, i.e. revenue or capital. The AR has pointed out that putting up of neon sign boards, banners, hoardings etc. entirely depend on the scheme approved by the parent company, i.e. if the assessee now Proctor & Gamble India Ltd. wants to change its decor of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee for smooth functioning and carrying on its business effectively, proficiently and profitably. The order of the Commissioner (Appeals) was, thus, to be upheld". 27. The AR also placed reliance on the decision of CIT vs Orient Ceramics & Industries Ltd. reported in 358 ITR 49, wherein Hon'ble Delhi High Court held, "7 Coming to the expenditure on glow sign boards incurred by the assessee, the issue was as to whether the said expenditure is revenue or capital in nature. The plea of the assessee was that these glow sign boards are of perishable nature, which the assessee had displayed at the various outlets of its dealers and therefore, the entire amount should be treated as revenue expenditure and was allowable under section 37 of the Act as business expenditure. The Assessing Officer, however, did not accept the submission of the assessee holding as under : "4.3 Glow Sign Boards are made of materials like steel/aluminum frames and plastic sheets and display the information for long periods subject to minor repairs. Considering the useful life of the boards, assesseecompany was rightly treating the expenditure as capital expenditure in the earlier years i.e., prior to ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n boards did not bring into existence any asset or advantage for the enduring benefit of the business. The assessee has spent the expenditure on the glow sign boards with an object to facilitate the business operation and not with an object to acquire asset of enduring nature. Therefore, the said expenditure was of revenue nature and the Tribunal has rightly treated the same as of revenue nature". This case followed the ratio laid down by Hon'ble P&H High Court in the case of CIT vs. Liberty Group Marketing Division, reported in 315 ITR 125. This order was followed by Hon'ble Delhi High Court in the case of CIT vs. Pepsico India Holdings (P) Ltd. The AR also pointed out that in the case of CIT vs. Geoffrey Manners and Co. Ltd., reported in 315 ITR 134, Hon'ble Bombay High Court has followed the decision taken in the case of Liberty Group (supra). 28. Placing reliance on the above cited decisions, the expense could not be held to be capital in nature, as no enduring benefit could be attained. We therefore, accept that the expense shall be revenue in nature. 29. As a result, grounds no. IV & V are allowed, as we accept the expense to be revenue in nature. We therefore, restore the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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