TMI Blog2008 (4) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, 527 and 528 of 2007, filed by the Revenue, in which the common questions of facts and law are involved, pertaining to different assessment years of one group of the assessee. In ITR No. 2 of 2000, which is arising from the decision of the Income Tax Appellate Tribunal (Delhi Bench 'A' New Delhi) (hereinafter referred to as 'the Tribunal') in case of the assessee for the assessment year 1988-89, the following substantial question of law has been referred for opinion of this Court : "Whether on the facts and in the circumstances of the case, the Tribunal was justified in confirming the orders of CIT (A) that expenses of Rs.1,86,406/- and Rs. 1,79,833/- debited to Publicity and Advertisement account were of revenue nature." 2. In all the 10 appeals, filed by the revenue, which are arising from the orders of the Tribunal, pertaining to the different assessment years, the Revenue has raised the following substantial question of law for determination of this Court : "Whether the ITAT was right in law in confirming the order of CIT (A) that the expenses incurred on Glow Sign Boards were of revenue nature?" 3. In three appeals i.e. ITAs No. 200 of 2005, 159 and 160 of 2006 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ations : "4.3 I have carefully considered the arguments for the appellant and find force in these. In the Himachal Pradesh High Court judgment relied upon for the appellant, it has indeed been held that the expenditure on advertisement and publicity cannot be treated as capital expenditure. The appellant's reliance on the order of the learned CIT (A), Chandigarh in the case of the Atlas Cycle Inds. Ltd. is also valid as the Revenue apparently accepted the findings of the learned CIT (A), Chandigarh in that case to the effect that expenditure on Glow-signs was of a revenue nature. It is also true that the Supreme Court of India has repeatedly held that where two opinions are possible on an issue the view in favour of the assessee should prevail. The expenditure in question was clearly in the nature of advertisement and publicity. Thus, even if the Bombay High court view is against the appellant, the issue will have to be decided in favour of the appellant in view of the Himachal Pradesh High Court judgment particularly since there is no judgment on this issue of the jurisdictional High Court i.e. Punjab and Haryana High Court or the Supreme Court of India. Considering these fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard, learned counsel placed reliance upon the decision of the Bombay High Court in the case of M/s Patel International Film Ltd., (supra). 8. On the other hand, learned counsel for the assessee contended that the benefit accrued to the assessee from the expenditure incurred is not of enduring nature. The expenditure on Glow Sign Boards merely facilitate the business operation of the assessee. The said expenditure is not a long period expenditure and the Glow Sign Boards are destroyed or damaged every year and the assessee has to spend on such Glow Sign Boards on each year. Therefore, the expenditure incurred on the Glow Sign Boards is not for the enduring advantage of the business. Learned counsel referred to the finding of the Tribunal, where it has been held that the expenditure incurred by the assessee on Glow Sign Boards is being incurred regularly in almost each year. This finding in itself shows that the Glow Sign Boards, on which the expenditure had been incurred every year, were not of permanent nature. Therefore, the expenditure incurred by the assessee is not for acquiring an asset of permanent nature. Learned counsel submitted that the decision of the Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly. The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure. It was further held that the expressions 'enduring benefit' or 'of a permanent character' were introduced to make it clear that the asset or the right acquired must have enough durability to justify its being treated as a capital asset. 11. In Bombay Steam Navigation Co. (1953) Private Ltd. v. Commissioner of Income Tax, Bombay , (1965) 56 ITR 52, it was observed that if the expenditure is so related to the carrying on or conduct of the business that it may be regarded as an integral part of the profit-earning process, then such expenditure is to be taken as revenue expenses. In Lakshmiji Sugar Mills Co. P. Ltd. v. Commissioner of Income Tax, New Delhi, (1971) 82 ITR 376, it was held that if the expenditure is made not for the purpose of bringing into existence any asset or advantage but for running the business or working it with a view to produce the profit, it is a revenue expenditure. It was held that the criteria has to be applied from the business point of view and on a fair appreciation of the whole situation. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to facilitate the business operation and not with an object to acquire asset of enduring nature. Therefore, the said expenditure was of revenue nature and the Tribunal has rightly treated the same as of revenue nature. 13. In the assessment year 1988-89, the assessee had spent an amount of Rs. 98,000/- on production of a TV film for advertising the products manufactured by it. The said expenditure was disallowed by the Assessing Officer being not of revenue nature, by placing reliance upon the decision of the Bombay High Court in the case of M/s Patel International Film Ltd., (supra). The CIT (A) allowed the said expenditure by considering the same as an expenditure of advertisement and publicity in view of subsection (3) of Section 37 of the Act, while relying upon the decision of the Himachal Pradesh High Court in the case of Mohan Meakin Breweries Ltd. (supra), where it was held that the expenditure on advertisement and publicity cannot be treated as capital expenditure. The decision of the CIT (A) was affirmed by the Tribunal on the same reasoning. In our view, the expenditure on production of a TV film was rightly ordered to be deducted on account of advertisement ..... X X X X Extracts X X X X X X X X Extracts X X X X
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