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TMI Blog2017 (3) TMI 1335X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the F.Y. 2003-04 and the remaining 3 WEGs were put to use during the F.Y. 2004-05. 5. Taking a leaf out of the assessment for A.Ys. 2005-06, 2006-07 & 2007-08 and deriving support from the order of the First Appellate Authority for A.Y. 2005-06. The A.O. disallowed Rs. 12,53,376/-. 6. Assessee carried the matter before the ld. CIT(A) but without any success as the ld. CIT(A) followed the order of his predecessor. 7. Before us, the ld. counsel for the assessee stated that the issue has been decided by the Tribunal in favour of the assessee and against the revenue in the earlier assessment years. 8. After perusing the order of the Tribunal, we find force in the contention of the ld. counsel. The Co-ordinate Bench in ITA Nos. 1015 & 1129/Ahd/2011 and 250/Ahd/2012 for assessment years 2004-05, 2006-07 & 2007-08 had considered a similar issue qua ground no. 1 of that appeal. The relevant findings read as under:- Ground no. 1 relates to the claim of depreciation of Rs. 313.34 lacs on Wind Energy Generators. 5. This issue has been considered by the A.O at para 4 of his assessment order wherein he has followed the findings given in the assessment order for A.Y. 05-06 and followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income from lease has been considered by Assessee as income It is an undisputed fact that the AO has considered the lease entered by the Assessee to be a Finance lease to arrive at the conclusion that the assessee is not entitled to depreciation. We find that the issue of depreciation on leased assets has been decided by Honourable Apex Court in the case of ICDS Ltd (supra). One of the question before the Hon. Supreme Court was "whether the Assessee is entitled to depreciation vehicles finance by it which is neither owned nor used by the Assessee by virtue of the business" the Hon. Supreme Court held as under: " The provision on depreciation in the Income-tax Act, 1961, reads that the asset must be "owned, wholly or partly, by the assessee and used for the purposes of the business". Therefore, it imposes a twin requirement of "ownership" and "usage for business" for a successful claim under section 32 of the Act. The section requires that the assessee must use the asset for the "purpose, of business". It does not mandate usage of the asset by the assessee itself. As long as the asset is utilized for the purpose of business of the assessee, the requirement of section 32 will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;ble Delhi Court took the view that SLB transactions are genuine and cannot be considered to be sham. 29. On appreciation of the records, as produced before us, the decision of Hon'ble Delhi High Court in the case of Cosmo Films Ltd. (supra) has arguments of the assessee on the impugned issue, thereby, impliedly, reversed the ratio in the decisions of MidEast (supra) and Induslnd (supra). We find that tests laid down in MidEast case was primarily to ascertain the genuineness of the transaction entered by the assessee with its lessee, which was done by the CIT(A) in each case. 31. In any case, the issue of SLB transaction and in particular the issue of ownership of asset, also has been laid to rest by the Hon'ble Apex Court in the case of ICDS Ltd. Vs CIT, in CA No. 3286 to 3290 of 2008, wherein the question that was sought to be answered was whether the appellant (assessee) is the owner of the vehicles which are leased out by it to its customers". The Hon. supreme Court of India, concluded, extracted from para 28, "From a perusal of the lease agreement and other related factors, as discussed above, we are satisfied of the assessee's ownership of the trucks in question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was made under protest. It would not be out of place that vide an additional ground the assessee has also challenged the suo moto disallowance made by it. 12. The A.O. was of the firm belief that the disallowance has to be made as per the provisions of Section 14A r.w.r 8D. After considering the relevant figures for the year under consideration, the A.O. worked out the disallowance u/s. 14A r.w.r 8D as under:- (A) Interest Expenses Rs. 44,19,96,16,765/- (B) Average Value of Investment Rs. 5,62,1,942,148/- (C) Average Assets Rs. 914,17,53,21,422/- Amount to be disallowed = (A*B)/C= 0.5% of Average Value of Investment = 27,18,16,229 + 2,81,09,711 = Rs. 29,99,25,940/- Less: Disallowed in Computation = Rs. 63,84,525/- Further Disallowance u/s. 14A = Rs. 29,35,41,415/- 13. Aggrieved by this, the assessee carried the matter before the ld. CIT(A) but could not succeed. 14. Before us, the ld. counsel for the assessee vehemently stated that the A.O. has computed the disallowance which is mainly on account of interest expenses. It is the say of the ld. counsel that the assessee was having sufficient own funds for making tax free investment, therefore, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 & 1219/Ahd/2011 and 250/Ahd/2012. The relevant findings of the Coordinate Bench reads as under:- 24. Ground no. 3 relates to the addition made towards Gain on securitization amortized as per RBI guidelines. 25. The A.O has considered this issue at para 7 on page 14 of his order wherein the Officer made the following observations:- 7.1 On perusal of the significant accounting policies to the financial statement, it is seen that the note on 'securitization1 (Para 4.4) reads as under: The bank enters into purchase/ sale of corporate and retail loans through direct assignment/ special purpose vehicle (SPV). In most case, post securitization, the bank continues to service the loans transferred to the assignee/ SPV. The bank also provides credit enhancement in the form of cash collaterals and/ or by subordination of cash flows to Senior Pass Through Certificate (PTC) holders. In respect of credit enhancements provided or recourse obligations (projected delinquencies, future servicing etc.) accepted by the Bank, appropriate provision/ disclosure is made at the time of sale in accordance with AS-29- provisions, contingent liabilities and contingent assets. Gains on securitiz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iterated what has been stated during the course of assessment proceedings. It was strongly contended that what is relevant for Income Tax is real income. It was further brought to the notice of the First Appellate Authority that RBI guidelines are expressly made mandatory for all banks. After considering the facts and the submissions, the ld. CIT(A) was of the opinion since the assessee has sold these impugned assets, therefore, the assessee has no liability whatsoever on these transactions afterwards. Since there is no uncertainty to the income on these transactions there is no question of postponing the income. The ld. CIT(A) confirmed the addition made by the A.O. Before us, the ld. counsel for the assessee once again stated that being a bank it has to mandatorily follow the guidelines issued by the RBI. It is the say of the ld. counsel that it is not the case of the revenue authorities that the assessee has not followed the guidelines of the RBI. Therefore, the action of the A.O and also of the ld. CIT(A) are against the facts of the case. Per contra, the ld. D.R. strongly relied upon the order of the revenue authorities. 27. Having heard the rival submissions, we have carefu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2003-04 and pointed out that an identical issue has been decided by the Tribunal in favour of the assessee and against the revenue. 25. We find force in the contention of the ld. counsel. An identical issue was considered by the Tribunal at Para 30 of its order and the same reads as under:- Ground no. 3 is with respect to disallowance of Rs. 8.6 Crore write off in respect of investment. 30. During the course of assessment proceedings, AO noticed that investments worth Rs. 8.64 Crores have been written off and has been claimed as bad debts written off. On perusing the submissions made by the Assessee, AO noticed that Assessee in addition to sanctioning loan had also invested in non convertible debentures of the company. On account of the failure of the borrower to repay the loan, the loan had turned bad and accordingly, the Assessee had written off the loans along with the investment. AO was of the view that the allowability of writing off of debts under Section 36(1)(vii) cannot be equated with writing off of investments and therefore the investments cannot be written off as bad debts. He was further of the view that profit or loss from investment have to be computed as provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l on record. CIT(A) while deleting the addition has noted that giving of loans whether in the form of loan or non convertible debentures is the part of the business and relying on the decision of Supreme Court in the case of Kedarnath Jute Manufacturing Company Limited vs. CIT 82 ITR 363 held it to be covered under section 36(1)(vii). He also relied on the Board Circular. Before us, the Revenue could not controvert the findings of CIT(A) by bringing any contrary material on record. In view of the aforesaid facts we find no infirmity in the order of CIT(A) and thus this ground of the Revenue is dismissed. 26. Respectfully following the findings of the Co-ordinate Bench, we set aside the findings of the ld. CIT(A) and direct the A.O. to delete the impugned disallowance of Rs. 16,02,273/-. Ground no. 4 is allowed. 27. Ground no. 5 relates to the disallowance of expenditure on advertisement and publicity to change the Bank's name from UTI Bank to Axis Bank. 28. On perusal of the Annual Accounts of the assessee read with the directors report, the A.O. was of the opinion that significant amount of expenditure was incurred by the assessee for the new brand. The assessee was asked to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT(A) but without any success. 32. Before us, the ld. counsel for the assessee vehemently stated that the lower authorities have grossly erred in appreciating the facts in true perspective. It is the say of the ld. counsel that the assessee has changed its name from UTI Bank to Axis Bank and no new identity has come into existence, the assessee was into banking business since past many years. Though in the name of UTI Bank but since the name has been changed to Axis Bank, The assessee has incurred routine advertisement expenditure/expenditure on signboard etc. which are of revenue in nature and should be allowed accordingly. Per contra, the ld D.R. supported the findings of the revenue authorities. It is the say of the ld. D.R. that the assessee has built a new identity and incurred heavy expenditure which will have enduring benefit and, therefore, the same cannot be considered as revenue expenditure. 33. We have given a thoughtful consideration to the orders of the authorities below and have carefully considered the facts in issue. It is true that the impugned expenditure was incurred only once and for all and by bringing public awareness to the change in the name of the ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably white leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is therefore not certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case. 35. Applying the aforesaid principle to the facts of this case, it clearly emerges that the expenditure on publicity and advertisement is to be treated as revenue in nature allowable fully in the year in which it was incurred. Concededly, there is no advantage which has accrued to the assessee in the capital field. 36. In our considered opinion an advertisement expense of the nature in question here cannot compulsorily be made to be treated by the assessee as a long-term capital expenditure. On the other hand advertisement expenses are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jute Co. Ltd. [1980] 124 ITR 1 (SC) and Alembic Chemical Works Co. Ltd. [1989] 177 ITR 377 (SC) specifically lay down that the nature of advantage has to be considered in a commercial sense and the test of enduring benefit is not a certain or conclusive test and cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case. The expression "asset or advantage of an enduring nature" has been evolved to emphasise the element of a sufficient degree of durability appropriate to the context. The idea of once for all payment and enduring benefit are not to be treated as something akin to statutory conditions. 16. Applying the aforesaid settled legal position to the facts of the case, it is not possible to agree with the appellant-Revenue that the advertisement expenses incurred by the respondent-assessee at the time of installation of additional machinery in the existing line of business resulted in any enduring benefit, so as to be treated as capital in nature. 39. Considering the facts in issue before us in the light of the aforementioned decision of the Hon'ble Jurisdictional High Court it is indeed a special advertisement campai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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