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2015 (5) TMI 749 - ITAT MUMBAI

2015 (5) TMI 749 - ITAT MUMBAI - TMI - Promotion expenses - revenue v/s capital expenditure - Held that:- Claim of expense as revenue has been rejected, but the AO and CIT(A) have held the acquisition of furniture and fixture as capital in nature. But at the same time, even if to be treated as capital asset, the proof of acquiring the same had to be brought on record, which the AR submitted that the assessee is unable to so. In such a case, when we do not find anything on record, as a proof of a .....

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preciate that the AR accepted that no details could be placed before revenue authorities and no details can be placed now before us to justify its claim. In these circumstances, we are left with no alternative, but to sustain the orders of the revenue authorities & consequentially reject the ground as raised by the assessee.- Decided against assessee.

Disallowance of holding expense - reimbursement made to its C & F agents at Delhi, Gujarat & Kolkat - Held that:- The expense could not .....

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reconsideration - Decided in favour of assessee for statistical purposes - ITA No. : 2238/Mum/2013 - Dated:- 4-3-2015 - Shri B R Baskaran And Shri Vivek Varma JJ. For the Appellant : Shri Haresh G Buch For the Respondent : Shri Pavan Kumar Beerla ORDER Per Vivek Varma, JM: The appeal is filed by the assessee against the order of CIT(A) 1 2, Mumbai, dated 14.01.2013, wherein the following grounds have been taken: GROUND I 1 The Hon'ble Commissioner of Income Tax Appeals -18 [CIT(A)'] err .....

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ming the action of the AO in disallowing depreciation of ₹ 13,20,213/- on the ground that the assets worth ₹ 69,34,558/- 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 ₹ 13,20,213/- be allowed. GROUND III 1 .....

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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 are coterminus to that of the AO and therefore, had no jurisdiction to review the order of the AO. 4. The Appellant therefore prays that the order of the CIT(A), in s .....

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sition of any capital asset and that it would not amount to an acquisition of an advantage of an enduring nature. 3. The Appellant therefore prays that the said amount of ₹ 1,71,56,104/- be allowed as business expenditure. WITHOUT PREJUDICE TO GROUND IV & V GROUND VI 1. On the facts and circumstances of the case and in law the CIT(A) erred in not allowing depreciation u/s. 32(1) of the Act on the alleged capital expenditure of ₹ 1,71,56,104/-. 2. He failed to appreciate and ought .....

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8377; 18,34,560/- to tax as out of book sales. 2. He failed to appreciate and ought to have held that the AG, before making such addition to the total income of the Appellant, ought to have first rejected the books of accounts in terms of section 145(3) of the Act. 3. The Appellant therefore prays that the addition made by the AG be held as bad in law and to be quashed. WITHOUT PREJUDICE TO GROUND VII GROUND VIII 1. The CIT(A) failed to appreciate and ought to have held that due to discontinuanc .....

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eave 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 cl .....

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t the claim of expense as revenue has been rejected, but the AO and CIT(A) have held the acquisition of furniture and fixture as capital in nature. But at the same time, even if to be treated as capital asset, the proof of acquiring the same had to be brought on record, which the AR submitted that the assessee is unable to so. 9. In such a case, when we do not find anything on record, as a proof of acquisition of the furniture and fixtures, we cannot even direct the AO to allow depreciation ther .....

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details can be provided even today with regard to amounts written off. 14. The DR submitted that there was no infirmity in the order of the revenue authorities. 15. On going through the submissions, we appreciate that the AR accepted that no details could be placed before revenue authorities and no details can be placed now before us to justify its claim. In these circumstances, we are left with no alternative, but to sustain the orders of the revenue authorities & consequentially reject th .....

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were expense claimed as reimbursement made to its C & F agents at Delhi, Gujarat & Kolkata. 19. On further details, it was noticed that the assessee had paid commission to take C & F agents, but on the expense of ₹ 1,71,56,104/-, the assessee did not deduct TAS. The AO, therefore, importing the provisions of section 40(a)(ia) disallowed the expense of ₹ 1,71,56,104/.-. 20. The CIT(A) on the contrary held the expense of ₹ 1,71,56,104/- as capital in nature and disal .....

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hich implies that the AO accepts the expense to be a revenue expense. On the other hand, the CIT(A) holds that ₹ 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 .....

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providing cellular mobile services under its own selfgenerated brand "Spice since 1997. The assessee s business was undoubtedly highly competitive and it had to provide services in a competitive environment. This was also not in dispute that the assessee had incurred expenditures towards advertisement and sales promotion in the course of carrying on its business activities. The Assessing Officer had allowed 90 per cent of the expenses as revenue expenditure and allocated 10 per cent towards .....

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advertisement could not be considered as capital asset acquired by the assessee. Similarly, putting hoardings and neon signs could also not be considered on capital field. These expenditures did not create any capital asset for the assessee. Even there was no benefit of an enduring nature so as to treat the expenses as capital expenditure. Though by incurring expenditures on advertisement and sales promotion, the assessee had not acquired any fixed capital asset, yet these expenditures were incu .....

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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 t .....

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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 assessment year 2005-06. There is no change in circumstances for changing the treatment of expenditure from capital to revenue. During the assessment year 2005-06 the Assessing Officer had concluded that the assessee company cannot be allowed to change the accounting treatment of particular item without any basis 8. .....

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n holding it to be expenditure of revenue in nature. 10. The order of the CIT(A) has been upheld by the Tribunal and in arriving at the conclusion that the expenditure was of revenue nature, the Tribunal has followed the judgment of the Punjab and Haryana High Court in the case of CIT v. Liberty Group Marketing Division [2009] 315 ITR 125 /[2008] 173 Taxman 439 We have gone through the said judgment rendered by the Punjab and Haryana High Court. The Court dealt with the same issue, viz., expendi .....

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he enduring benefit of the business, which is attributable to the capital. The glow sign board is not an asset of permanent nature. It has a short life. The materials used in the glow sign boards decay with the effect of weather. Therefore, it requires frequent replacement. The Tribunal has also recorded a finding that the assessee has to incur expenditure on glow sign boards regularly in almost each year. This fact itself shows that the advantage accrued from the use of the glow sign boards is .....

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he 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 exp .....

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