TMI Blog2012 (3) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... AN, ACCOUNTANT MEMBER Appellant by : Sh.Ajay Vohra, Adv. Sh.Rohit Garg, C.A. Respondent by : Sh.Rohit Garg, D.R. ORDER PER DIVA SINGH, J.M. The present appeal has been moved by the Revenue against the order dt. 28.7.2011 of CIT(A)-XII, New Delhi wherein the sole issue agitated by the Revenue reads as under:- The Ld.CIT(A) erred in law and on the facts of the case in deleting the addition of ₹ 1,57,98,353/- being 25% of advertising and marketing expenses, made by A.O. treating them in the nature of brand building 2. The assessee has filed its Cross Objection stating that the alternate ground raised by the assessee had not been decided. 3. The relevant facts found recorded at pages 1 and 2 of the assessment order, show that the assessee had claimed an expenditure of ₹ 6,31,93,412/- on account of advertisement expenses. The A.O. required the assessee to furnish the details of such expenses and also to explain as to why they should not be disallowed as they appeared to be confer a benefit of enduring nature. The assessee s reply dated 29.12.2010 extracted in the assessment order is reproduced hereunder. In this connection, it is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s year relevant to the A.Y. under consideration, the appellant has incurred an aggregate expenditure of ₹ 6,31,93,412/- on account of advertisement and marketing expenses. The broad details of advertisement and marketing expenses incurred by the appellant during the P.Y. are as under. 1. Exp. On customer incentive schemes ₹ 2,64,64,187/- 2. Advt. through hoardings/banners/flex etc. Rs. 70,02,700/- 3. Advt. through newspapers/magazines/radio T.V. etc. Rs. 2,86,24,038/- 4. Payment to Ad Agencies ₹ 11,02,487/- ₹ 6,31,93,412/- 5.1. Referring to the material available on record he observed that the assessee submitted details vide letter dt. 22.11.2010 and 10.12.2010 and yet again in response to order sheet entry dt. 24.12.2010 assessee s reply dt. 29.12.2010 was also before the A.O. From the extracted portion thereof it is seen that the assessee contended that the word spice has been substituted for hot spot as the name of the company w.e.f. 9.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.10.2009 with the following observations It is not in dispute that the assessee is in the business of providing cellular mobile services under its own self generated brand Spice since 1997. The assessee s business of roviding cellular mobile services is undoubtedly a highly competitive business, and assessee has to provide services in a competent environment. This is also not in dispute that the assessee has incurred expenditure towards advertisement and sales promotion in course of carrying on its business activities. The A.O. has allowed 90 per cent of the expenses as revenue expenditure and allocated 10 per cent towards capital by observing that 10 per cent of expenses have been incurred towards brand building. The A.O. has not been able to justify as to how the 10 per cent of the total advertisement and sales promotion expenses can be allocated towards capital expenditure when the assessee has not acquired any brand from any outside party. The expenditure on advertisement and sales promotion constituted expenditure incurred on press advertisement, hoardings, neon signs, brochures, etc. The press advertisements could not be considered as capital asset acquired by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi Bench Allied Domeeq Spirits Wine India P.Ltd. vs ITO in ITA 540 511/Del/2009; Delhi bench DCIT vs Bacardi Martini India Ltd. in ITA no. 2933/Del/2010; Delhi bench Samsung India Electronics Ltd. vs JCIT in ITA 319/Del/2010 Delhi High Court in CIT vs. Salora International Ltd. 308 ITR 199 Delhi High Court in CIT vs Casio India Ltd. 335 ITR 196 Delhi High Court in CIT vs. Citi Financial Consumer Fin.Ltd. 335 ITR 29 8. We have heard the rival submissions and perused the material available on record. On a careful consideration of the peculiar facts and circumstances of the case and legal decision on the issue involved, we are of the view that there is no infirmity in the order of the CIT(A). A perusal of the assessment order shows that no basis for concluding that 25% of the expenditure on account of advertisement and marketing expenses should be disallowed has been set out which is a fact which prevailed with the CIT(A) to upset the finding in the assessment order as having based on no facts the admitted position is that this was the first year of operation of the assessee wherein w.e.f. 9.4.2009 the assessee substituted the word hot spot for the word spice . As s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on the revenue account in which case the test of enduring benefit would break down fully supports the view taken. Similarly the Jurisdictional High Court in CIT vs Casio India Ltd. 335 ITR 196 referred to a bunch of appeals with the lead case being ITA 1820/2010 entitled CIT vs. City Finance Consumers Finance Ltd. 335 ITR 29 Delhi had held that expenditure on advertising and sales promotion is to be treated as business expenditure u/s 37 of the Act. The Jurisdictional High Court therein considering the appeal of the Revenue in regard to the claim of the assessee before the A.O. pertaining to an expenditure of ₹ 4.18 lakhs for advertising and sales promotion wherein the A.O. had relied upon the judgement of Apex Court in Madras Industrial Investment Corporation vs CIT 225 ITR 802 (SC) upheld the order of the Tribunal which had confirmed the order of the CIT(A) who had held that there is no concept for deferred revenue expenditure in the Income Tax Act, 1961. Similar view was taken by the Jurisdictional High Court in CIT vs Pepsi Co India Cooldrinks Ltd. In ITA 319/2010 rendered on 30.3.2011 a copy of which is placed at pages 155 to 172. Accordingly for the reasons given here ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
