TMI Blog2016 (9) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... 63 of the Act on this count. CSR expenditure - Held that:- CSR activities of the assessee cannot be held to be disallowable. It was not shown before us that the view taken by the Assessing Officer is erroneous in allowing these expenditures. In view of above discussion it is apparent that the order of ld AO is not unsustainable in law, there are judicial precedents where in such claim is allowable in case of assessee, Therefore, and on this count the jurisdiction invoked by ld CIT u/s 263 of the Act is not sustainable. CIT may not agree with the view taken by the ld AO. Anyway, this does not make the order passed by the ld Assessing Officer unsustainable in law as on the issue of deductibility of advertisement and sales promotion expenditure, nothing was brought on record to show that any enduring benefit has resulted in favour of the assessee which makes it capital expenditure and further no contrary decision was pointed out which suggests that CSR expenditure are not deductible u/s 371(1) for the respective assessment year. - Decided in favour of assessee - ITA No.1784/Del/2012 - - - Dated:- 29-7-2016 - SHRI I.C.SUDHIR, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the revenue nature of claim of such expenses and has accepted such claim without verification . 3. That the CIT erred on facts and in law in holding that corporate social responsibility ( CSR ) expenses cannot be allowed business deduction on the ground that such expenses were not incurred wholly and exclusively for business purpose. 3.1 That the CIT erred on facts and in law in failing to appreciate the nature of the CSR expenses and the purpose for/expediency on account of which the same had been incurred by the appellant. 3. Though assessee has raised as many as three grounds but all the grounds are against the order u/s 263 of the Income Tax Act arguing that the LD CIT has erred in assuming jurisdiction u/s 263 of the act as order passed by ld AO is not erroneous. 4. The brief facts of the case is that the assessee is engaged in the business of transmission and distribution of gas and it filed its return of income on 30.10.2007 declaring total income of ₹ 23183063680/-. The assessment was framed u/s 143(3) of the Act on 31.12.2009 determining taxable income of ₹ 26060583882/-. 5. Subsequently, show cause notice u/s 263 dated 04.02.2011 was is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s 263 of the Act at page 236 and 237 of the Paper Book and then took us to reply dated 06.09.2011 submitted before the ld CIT stating that complete details of advertisement and publicity expenditure are available. It was further submitted that CSR expenditure incurred by the assessee are in relation to legal obligation cast upon the assessee because of its status as Navratna Company in pursuance of the guidelines issued by concerned Ministry of Govt. of India and therefore, there is no error in the order of the ld Assessing Officer in allowing those expenditure. Assailing proper inquiry, On the issue of sales advertisement and publicity expenditure he referred to the letter dated 27.05.2011 submitted before the ld CIT submitting that the details were provided to the ld AO on 18.11.2009 and such expenditure were allowed after proper verification by the Assessing Officer. He further stated that such expenditure is not all capital in nature as there is no enduring benefit arising to the assessee. He relied on the decision of the Hon ble Delhi High Court in case of CIT Vs. CITI Financial Consumer Finance Ltd. 2011 TIOL 309 (HC) (Del). He further referred to the letter dated 06.06.2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue No.1, regarding allowance of advertisement and publicity expenditure, has held that advertisement expenditure incurred by the assessee has earned enduring benefit to the business of the assessee and ld AO has not caused proper enquiry to ascertain the revenue nature of the claim of the assessee and without verification has allowed the claim. It is demonstrated that Vide letter dated 10.11.2009 Assessing Officer asked the information vide para no. 12 about the break-up of advertisement and publicity expenditure. Vide letter dated 10.11.2009 assessee has submitted vide Sl No. 13 details of advertisement and publicity expenditure amounting to ₹ 14.65 crores and has also stated the amounts spent towards printing expenses, tender expenses, publicity, public exhibition, photographs, diaries, printing relation expenditure, media related expenditure, other tenders campaign expenditure, advertisement expenditure, sponsorships, corporate films etc. On examination of these details the ld Assessing Officer vide assessment order dated 31.12.2009 allowed them as deductible expenditure as nothing was disallowed. The expenses incurred by the assessee are purely of advertisement and publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the above facts and also the decision of Honourable jurisdictional high court, we hold that order of the ld AO is not erroneous on this count. Therefore, when there is no element of un-sustainability in the order of the ld Assessing Officer in allowing the deduction of advertisement and sales promotion expenditure, we are of the view that ld CIT is no justified in invoking jurisdiction u/s 263 of the Act on this count. 11. Similarly, with respect to CSR expenditure vide Sl. No. 4 of the letter dated 10.11.2009 the details of other expenses wherein these expenses are grouped asking for the purpose and its nature and note on its allowability as revenue expenditure was asked. The same query was replied by para No. 4 of letter dated 10.11.2009 explained. In particular para the CSR expenses of ₹ 8.53 crores was mentioned. Therefore, it is apparent that specific questions on account of the claim of the expenses was raised by the Assessing Officer during assessment proceedings and assessee replied to the queries of the Assessing Officer as desired by him. In view of this it is apparent that there was a specific query on the allowability of this expenditure which was raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isement sales promotion expenditure are of deferred revenue expenditure where in the order u/s 263 , he has take a vi that these are in the nature of capital expenditure. We are of the view that now this issue does not required to be adjudicated in view of the decision of Hon'ble Supreme Court in case of CIT V Amitabh Bacchan [384 ITR 200] that section 263 does not require any specific show cause notice detailing specific grounds on which revision of assessment order is tentatively being proposed affecting initiation of exercise in absence thereof or to require commissioner to confine himself to terms of notice and foreclosing consideration of any other issue or question of fact; Commissioner is free to exercise his jurisdiction on consideration of all relevant facts, provided an opportunity of hearing is afforded to assessee to contest facts on basis of which he had exercised revisional jurisdiction. Therefore, it cannot be said that ld CIT has to restrict on the issues and view expressed in the show cause notices only, if issued. 13. Hon ble Supreme court in case of CIT V Max India Limited has held that 2. At this stage we may clarify that under para 10 of the jud ..... X X X X Extracts X X X X X X X X Extracts X X X X
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