TMI Blog2011 (5) TMI 967X X X X Extracts X X X X X X X X Extracts X X X X ..... here was no delay in submitting the appeal because the CIT(A) s order was received on 11.02.2008 and hence the appeal was preferred in time. No serious objection was raised by the learned Departmental Representative. In the given circumstances, wecondone the delay and admit the appeal filed by the assessee for hearing. 3. The only ground in the Revenue s appeal is against the granting of deduction of the Product development expenses to the tune of ₹ 50,79,976. Briefly stated the facts of this ground are that the assessee was engaged in the business of manufacturing ready to eat cereals. Deduction of ₹ 50.79 lakhs was claimed by the assessee under the head `Product development expenses . On being called upon to justify the ded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal. 6. We have heard the rival submissions and perused the relevant material on record. Section 145A was inserted by the Finance (No.2) Act, 1998 with effect from 1.4.1999. It provides that the valuation of purchase and sale of goods and inventory for the purposes of determining the income chargeable under the head Profits and gains of business or profession shall be in accordance with the method of accounting regularly employed by the assessee and further adjusted to include the amount of any tax, duty, cess etc. paid or incurred by the assessee to bring the goods to the place of its location as on the date of valuation. According to the prescription of this section, which is applicable to the year under consideration, the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustification for such expenses, the assessee furnished details which also included the amounts spent on plastic pallets. The Assessing Officer held a sum of ₹ 28.72 lakhs as capital in nature on which depreciation was allowed at 25% and the addition was made for ₹ 21.54 lakhs. The learned CIT(A), after considering the assessee s contentions, held that the expenditure on purchase of flat plastic and plastic pallets totaling ₹ 14,76,502 was capital and the remaining amount as revenue expenditure. There is no appeal from the side of the Department on the relief allowed by the learned CIT(A) on this issue. The assessee is aggrieved against the sustenance of addition of ₹ 14.76 lakhs 9. After considering the rival subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erturn the impugned order on this issue and direct the granting of deduction on this score. It is however made clear that the depreciation, if any, allowed by the A.O. on treating this amount as capital expenditure, should be disallowed so as to make the deduction not more than the actual expenditure on this score. 10. Grounds No.6 and 7 are against the confirmation of disallowance of ₹ 79,91,304 and ₹ 45,30,019 in respect of advertisement expenses for which the provision was made in the account of M/s.Hindustan Thompson Associates (HTA) and M/s.Group M Media India Private Limited. Briefly stated the facts of these two grounds are that the assessee made a provision for ₹ 79.91 lakhs towards advertisement expenses claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book. This Annexure contains the detail of expenses in respect of which bills were issued on 09.03.2004 and three bills dated 12.03.2004 totaling ₹ 45.29 lakhs. Copies of such bills are available at page 88 onwards of the paper book. On the perusal of such bills it is seen that the advertisements were aired on behalf of the assessee for various dates prior to 31.03.2004. As such we hold that the learned CIT(A) was not justified in not granting deduction to the extent of ₹ 45.29 lakhs. Coming to the second part of disallowance, being a sum of ₹ 79.91 lakhs in respect of which assessee did not furnish any detail before the authorities below, the assessee has now filed additional evidence before us in the shape of the details ..... X X X X Extracts X X X X X X X X Extracts X X X X
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