TMI Blog2015 (7) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... the said persons were not the only parties to whom interest @ 15% were paid by the assessee and therefore it cannot be said that the assessee in any manner tried to pass on benefit to a class of close associates as its cost and deleted the disallowance.CIT(A) has observed that in order to make a disallowance u/s 40A(2)(b) it is necessary that the Assessing Officer should establish that the benefits given to the related parties are more than the fair market value and if the assessee is making payments to other persons @ 15% then there is no special favour which is being given to the related parties and then disallowance is not warranted. Further, the ld CIT(A) has taken note that the Assessing Officer has not been able to establish as to what was the market rate of interest thus, he opines that there is no justification in making a disallowance of ₹ 4,64,757/- u/s 40A(2)(b) and ordered it’s deletion. - Decided against revenue. Addition on account of advertisement and promotion expenses - CIT(A) deleted the addition - Held that:- CIT(A) rightly relied on the decision of case of Adidas (2009 (9) TMI 918 - DELHI HIGH COURT) wherein AO disallowed the advertisement expenses by h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Expenses. 4. The Ld. CIT(A) erred in law and on facts of the case in deleting the disallowance of ₹ 1,33,686/- being 10% of ₹ 13,36,866/- made by the AO on account of Foreign Travel Expenses. 5. The appellant craves to amend, modify, alter, add or forgo any ground of appeal at any time before or during the hearing of this appeal. 3. The grounds raised in the ITA No. 2366/Del/2013 (AY 2009-10) reads as under:- 1. The Ld. CIT(A) erred in law and on facts on account of disallowance of royalty amounting to ₹ 1,37,28,045/-. 2. The Ld. CIT(A) has erred in law and on facts of the case on account of advertisement and promotion expenses amounting to ₹ 13,31,882/-. 3. The Ld. CIT(A) has erred in law on the facts of the case in deleting the addition of ₹ 29,033/- being interest payment. 4. The Ld. CIT(A) has erred in law and on facts of the case in deleting the addition of ₹ 19,11,530/- made by the AO on account of foreign travel expenses. 5. The appellant craves to amend, modify, alter, add or forgo any ground of appeal at any time before or during the hearing of this appeal. 4. The brief facts of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the merger of the company with the assessee. We find that the Ld. CIT(A) has rightly observed that it is settled law that if expenditure brings into existence a capital asset or gives any advantage of enduring nature to an assessee, it can be treated as capital expenditure. Ld. CIT(A) has referred the relevant portion of the judgment of the Hon ble Jurisdictional High Court in the case of CIT vs. Sierra Industrial Enterprises Pvt. Ltd wherein the Hon ble High Court vide its judgment dated 14.7.2010 vide para Nos. 6 7 has dismissed the Revenue s Appeal on the issue involved, which reads as under:- 6. It is a settled law that if expenditure brings into existence a capital asset or gives any advantage of enduring nature to an assessee, it can be treated as capital expenditure. In the present case, both the CIT(A) and ITAT have concluded that royalty payable was in lieu of use of technical information provided by Nike Company for manufacture of products and for use of trademark Nike. According to CIT(A), royalty payable was related to the sales made during a particular year and accordingly the expenditure was of revenue nature. 7. Both the CIT(A) and ITAT have given coge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest paid to such parties, the facts being the same, as in the previous year, the disallowance of interest be deleted as done by the predecessor CIT(A). Ld. CIT(A) has observed that in order to make a disallowance u/s 40A(2)(b) it is necessary that the Assessing Officer should establish that the benefits given to the related parties are more than the fair market value and if the assessee is making payments to other persons @ 15% then there is no special favour which is being given to the related parties and then disallowance is not warranted. Further, the ld CIT(A) has taken note that the Assessing Officer has not been able to establish as to what was the market rate of interest thus, he opines that there is no justification in making a disallowance of ₹ 4,64,757/- u/s 40A(2)(b) and ordered it s deletion. Facts as enumerated above could not be controverted by the Ld DR so as to persuade us to taken a different view and we do not find any infirmity in the order of the Ld. CIT(A), hence, we uphold the same and accordingly the ground no. 3 in asstt. Year 2008-09 and ground no. 2 raised in asstt. Year 2009-10 stands dismissed. 13. With regard to Ground No. 2 in Asstt. Yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the companies invite VIPs and celebrities on various launches and campaigns for better publicity and that such expenses are Revenue in nature . CIT Vs Salora International Ltd. 308 ITR 199 Del 17. In this case the AO disallowed one third of the total advertisement expenses of ₹ 3.08 crores in AY 2001-02 by holding that they have resulted in enduring benefit. The CIT(A) deleted it and the ITA T upheld the decision of the CIT(A). On reference by the Department, the jurisdictional High Court of Delhi dismissed the matter by holding that no question of law arose. 18. We find that the Ld CIT(A) rightly relied on the decision in the case l;aw as afore-stated especially the case of Adidas (Supra) to arrive at the impugned decision, which needs no interference, so the decision of the Ld CIT(A) deleting the ad-hoc disallowance is upheld and accordingly the ground no. 2 in Asstt. Year 2008-09 and ground No. 3 raised in Asstt. Year 2009-10 stands dismissed. 19. Apropos Ground No. 4 which relates to disallowance of ₹ 1,36,686 being 10% of ₹ 13,36,866/- made by the AO on account of Foreign Travel Expenses and disallowance for Asstt. Year 2008-09 and of ..... 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