DCIT, New Delhi v. M/s Jubilant Foodworks Pvt. Ltd., New Delhi

ITA 186/DEL/2011 | 2005-2006
Pronouncement Date: 24-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 18620114 RSA 2011
Assessee PAN AABCD1821C
Bench Delhi
Appeal Number ITA 186/DEL/2011
Duration Of Justice 2 year(s) 9 month(s) 10 day(s)
Appellant DCIT, New Delhi
Respondent M/s Jubilant Foodworks Pvt. Ltd., New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 24-10-2013
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 24-10-2013
Date Of Final Hearing 05-09-2012
Next Hearing Date 05-09-2012
Assessment Year 2005-2006
Appeal Filed On 13-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `D : NEW DELHI) BEFORE SHRI U.B.S. BEDI JUDICIAL MEMBER AND SHRI T.S. KAPOOR ACCOUNTANT MEMBER ITA NOS.183 184 185 & 186/DEL./2011 (ASSESSMENT YEARS : 2003-04 04-05 & 05-06) DCIT CIRCLE 4(1) VS. JUBILANT FOODWORKS PVT. LT D. NEW DELHI. 1517 15 TH FLOOR DEVIKA TOWER 6 NEHRU PLACE NEW DELHI. (PAN/GIR NO.AABCD1821C) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.R. PATNAIK & MS. AKANSHA AGGARWAL ADV. REVENUE BY : SHRI SHUMANA SEN SR.DR ORDER PER U.B.S.BEDI JM : THESE FOUR APPEALS OF THE DEPARTMENT COMPRISE OF - ONE RELATING TO ORDER PASSED IN APPEAL AGAINST THE ORDER U/S 143(3 ) PURSUANT TO ORDER PASSED U/S 263 OF THE I.T. ACT 1961 FOR ASSESSMENT YEAR 2 003-04 AND OTHER THREE I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 2 APPEALS ARE APPEALS AGAINST ORDERS U/S 143(3) PASS ED BY LD. CIT(A)-XIII NEW DELHI FOR ASSESSMENT YEARS 2003-04 & 04-05 & 05 -06 RESPECTIVELY. 2. IN THESE APPEALS SOME OF THE ISSUES INVOLVED AR E COMMON AND THESE WERE HEARD TOGETHER THEREFORE BEING DISPOSED OFF BY A SINGLE ORDER FOR THE SAKE OF CONVENIENCE. I.T.A. NO. 183/DEL/2011 (ASSESSMENT YEAR 2003-04): 3. IN THIS CASE REVENUE HAS RAISED IN ALL SEVEN G ROUNDS WHEREAS GROUND NO.1 AND 7 ARE GENERAL AND EFFECTIVE GROUNDS NO.2-6 .1 READ AS UNDER: 2. THE LD. CIT (A) IGNORED THE FACT THAT THE NATURE OF EXPENSE IS CAPITAL AND THE ASSESSEE WILL GET ENDURING BENEF IT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) HAS BEEN IN DELETING THE ADDITI ON OF RS.1 09 10 366/ MADE BY THE AO BY CAPITALIZING 25% OF ADVERTISEMENT EXPENSES. 3.1. THE LD. CIT(A) IGNORED THE FACT THAT THE ASSE SSEE WILL GET ENDURING BENEFIT BY DISPLAY OF ADVERTISEMENT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) HAS BEEN IN DELETING THE ADDITI ON OF RS.8 44 4721 MADE BY THE AO ON ACCOUNT OF SUNDRY BA LANCES WRITTEN OFF. I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 3 4.1. THE LD. CIT (A) IGNORED THE FACT THAT THE ASS ESSEE COULD NOT FILE ANY DOCUMENTARY EVIDENCES IN SUPPORT OF ITS CLAIM DURING THE COURSE OF ASSESSMENT PROCEE DINGS. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) HAS BEEN IN DELETING THE ADDITI ON OF RS.6 58 349/ MADE BY THE AO ON ACCOUNT OF LATE DEP OSIT OF ESI CONTRIBUTION L.E. EMPLOYEE'S SHARE U/S 2(24)(X) OF THE ACT. 5.1. THE LD. CIT (A) IGNORED THE FACT THAT THE ASS ESSEE COULD NOT FILE ANY DOCUMENTARY EVIDENCES IN SUPPORT OF IT S CLAIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT (A) HAS BEEN IN DELETING THE ADDITI ON OF RS.88 000/ MADE BY THE ASSESSING OFFICER. 6.1 THE LD. CIT (A) IGNORED THE FACT THAT THE ASSESSEE DID NOT FILE ANY DOCUMENTARY EVIDENCES IN SUPPORT OF ITS CLAIM D URING THE COURSE OF ASSESSMENT PROCEEDINGS DESPITE HAVING BE EN PROVIDED WITH DUE OPPORTUNITIES. 3.1 THE ASSESSEE IN THIS CASE HAS FILED ITS INCOME TAX RETURN DECLARING TOTAL LOSS OF RS.14 30 97 400/- WHICH WAS SUBSEQUENTLY RE VISED ON SEPTEMBER 29 2004 DECLARING A REVISED LOSS AMOUNTING TO RS.13 20 95 100/-. THE CASE WAS SELECTED FOR SCRUTINY AND AFTER DUE NOTICE TO THE A SSESSEE ASSESSMENT WAS COMPLETED U/S 143(3) AT A TOTAL LOSS OF RS.11 42 01 140/-. I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 4 4. ASSESSEE CHALLENGED THE DELETION OF ADDITION WHI CH RELATES TO DISALLOWANCE OF 25% OF FRANCHISEE FEE BY TREATING I T AS CAPITAL EXPENDITURE IN NATURE BY HOLDING THAT IT GIVES BENEFIT OF ENDURING NATURE AND WHILE DOING SO THE ASSESSING OFFICER HAS RELIED UPON MADRAS HIGH C OURT DECISION IN THE CASE OF CIT VS. SOUTHERN SWITCHGEAR LTD. 148 ITR 2 72 FOR DISALLOWING 20% OF THE FRANCHISEE FEE OF RS.1 55 66 461/- WHICH WOR KS OUT TO RS.38 79 115/-. 5. THE ASSESSEE BEFORE FIRST APPELLATE AUTHORITY HA S FILED ITS ARGUMENTS IN DETAILED SUBMISSIONS SUPPORTED BY FURTHER ARGUMENTS AND CASE LAWS REPORTED IN CIT VS. J.K. SYNTHETICS 309 ITR 371 (DEL.) CIT VS. SHARDA MOTOR INDUSTRIAL LTD. 319 ITR 109 (DEL.) CLIMATE SYSTEM INDIA LTD. VS. CIT 319 ITR 113 CIT VS. CIBA OF INDIA LTD. 69 ITR 692 (SC ) & I.A.E.C. (PUMPS) LTD. 232 ITR 316 (SC) AND ARVIND MILLS 197 ITR 422 (SC) HAS TREATED FOR REVERSAL OF THE IMPUGNED ORDER ON THIS ISSUE. 6. LD. COUNSEL FOR THE ASSESSEE WHILE RELYING UPON THE BASIS AND REASONING AS GIVEN BY THE CIT(A) HAS CONTENDED FOR CONFIRMATION OF THE ORDER OF CIT(A) ON THIS ISSUE. SHE HAS FURTHER SUB MITTED THAT SO FAR AS INITIAL FRANCHISEE FEE OF $ 20 000/- IS CONCERNED SAME HAS ALREADY BEEN CAPITALIZED BY THE ASSESSEE BUT SO FAR AS FRANCHISEE FEE IS CO NCERNED WHICH IS FIXED AT 3% OF THE ENTIRE SALE IS NOTHING BUT REVENUE EXPEND ITURE. SINCE DOMINO PIZZA IS A GLOBAL NAME AND BY PLACING AGREEMENT OF FRANCHISEE DATED 27.3.1995 AND MAKING REFERENCE TO VARIOUS CLAUSES O F THE SAID AGREEMENT LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LIC ENCE GIVEN TO THE ASSESSEE IS WITH RESPECT TO RIGHT TO USE WHICH IS NOT PERMAN ENT ONE. THERE IS ALSO A CONFIDENTIALITY CLAUSE IN THE SAID AGREEMENT TOGETH ER WITH POST TERMINATION COVENANT AND AS PER AGREEMENT EVEN AFTER TERMINATIO N OF AGREEMENT UPTO 2 YEARS ASSESSEE CANNOT USE IT AND EVERYTHING GIVEN IN TERMS OF THE AGREEMENT I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 5 HAS TO BE RETURNED TO THE PERSONS CONCERNED COULD NOT WORK IN SUCH LINE AND MOREOVER BEFORE GIVING SAME FRANCHISEE TO ANY PERSO NS PERMISSION OF THE PRINCIPAL IS NEEDED WHICH IS SPECIALLY INCORPORATED AND IT IS ALSO STIPULATED THAT WHEN THERE IS NO SALE NO FEE IS TO BE PAID. IT IS AN IMPORTANT RIGHT. THE PIZZA DOMINO IS THE FRANCHISOR AND MOREOVER ASSESSE E IS NOT DERIVING ANY ENDURING BENEFIT IN THIS ARRANGEMENT AND SO FAR AS CASE LAWS CITED BY THE ASSESSING OFFICER AND REITERATED BY THE LD. D.R. BE FORE THE BENCH IS CONCERNED SAME IS DISTINGUISHABLE ON FACTS AND ISS UE IN THOSE CASES IS NOT EXACTLY THE SAME. THEREFORE CIT(A) WHICH DISCUSSI NG AND CONSIDERING ALL THESE FACTS HAS RIGHTLY CONCLUDED TO ALLOW THE RELI EF TO THE ASSESSEE. THEREFORE ACTION OF THE CIT(A) NEEDS TO BE CONFIRM ED WHICH MAY BE CONFIRMED. 7. IN ORDER TO COUNTER THE SUBMISSION OF THE LD. C OUNSEL FOR THE ASSESSEE LD. DR SUBMITTED THAT CASE LAWS CITED BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE PRE SENT CASE. BY RELYING UPON VARIOUS CLAUSES OF THE AGREEMENT IT WAS PLEADED FO R SETTING ASIDE THE ORDER OF CIT(A) AND RESTORING THAT OF THE ASSESSING OFFICER. 8. WE HAVE HEARD BOTH THE SIDES CONSIDERED THE MAT ERIAL ON RECORD AS WELL AS RELEVANT PROVISIONS OF LAW AND FIND THAT CI T(A) HAS CONSIDERED EACH AND EVERY ASPECT OF THE MATTER BEFORE ARRIVING AT T HE CONCLUSION AS DRAWN BY HIM. HE HAS ELABORATELY DISCUSSED EACH AND EVERY IS SUE IN AN APPROPRIATE MANNER SPECIFYING ALL THE RELEVANT DETAILS. NEITHE R ANY CONTRARY MATERIAL HAD BEEN PLACED ON RECORD BY THE DEPARTMENT NOR NOTICED BY THIS BENCH WHICH COULD CONVINCE US TO TAKE A DIFFERENT VIEW THAN TAK EN BY LD. CIT(A). AS SUCH WHILE CONCURRING WITH THE FINDING AND CONCLUS ION AS DRAWN BY LD. I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 6 CIT(A) ON THE FIRST LIMB OF THIS ISSUE WE UPHOLD H IS ORDER AND DISMISS THE APPEAL OF THE REVENUE FOR THE FIRST LIMB OF THE ISS UE INVOLVED. 9. THE SECOND LIMB OF THE ISSUE WHICH RELATES TO DE LETING THE ADDITION OF RS.1 09 10 366/- MADE BY THE ASSESSING OFFICER BY C APITALIZING 25% OF ADVERTISEMENT EXPENSES. 10. DURING THE ASSESSMENT YEAR THE ASSESSEE HAS CL AIMED AN EXPENDITURE OF RS.4 36 41 466/- UNDER THE HEAD ADVERTISEMENT A ND PUBLICITY EXPENSES. THE ASSESSEE WAS ASKED BY THE ASSESSING OFFICER AS TO WHY ADVERTISEMENT EXPENSES OF THE ENDURING NATURE MAY NOT BE TREATED AS CAPITAL EXPENDITURE TO WHICH ASSESSEE FILED REPLY WHICH WAS REJECTED BY TH E ASSESSING OFFICER ON THE GROUND THAT THE SAME IS NOT TENABLE BECAUSE - - THE BRAND NAME OF THE ASSESSEE IS WELL KNOWN NAME I N THE INDUSTRY AND MARKET; - THERE IS NO PROPER JUSTIFICATION OF EXPENSES OF MOR E THAN 100% IN COMPARISON TO EXPENSES INCURRED IN THE IMMEDIATE LY PRECEDING YEAR; - THE SALE HAS ALSO DECLINED AS COMPARED TO THE LAST YEAR AND GIVING THE ENDURING NATURE OF BENEFIT DERIVED FROM DISPLAY OF SUCH ADVERTISEMENT ASSESSING OFFICER DISALLOWED 25% OF THE ADVERTISEMENT EXPENSES TREATING IT TO BE OF ENDURIN G NATURE AND THEREBY TREATED THE SAME AS CAPITAL EXPENDITURE. 11. ASSESSEE TOOK UP THE MATTER IN APPEAL AND FILED DETAILED SUBMISSIONS BEFORE CIT(A) WHO INCORPORATED SUCH SUBMISSION IN HIS ORDER FROM PAGE 16 TO FIRST PARAGRAPH OF PAGE 22 AND BY RELYING UPON C ASE LAWS IN THE CASE OF SASSOON J. DAVID AND CO. (P) LTD. VS. CIT 118 ITR 261 (SC) CIT VS. I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 7 SALORA INTERNATIONAL LIMITED 308 ITR 199 (DEL.) AN D SONY INDIA P. LTD. VS. DCIT 315 ITR (AT) 150 (DEL.) HE HAS CONCLUDED TO DELETE THE IMPUGNED THE ADDITION AS PER PARA.7.1 OF HIS ORDER AS UNDER: I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER A ND THE SUBMISSIONS AND DOCUMENTARY EVIDENCES PRODUCED BEFO RE ME BY THE APPELLANT. I HAVE ALSO EXAMINED THE SAMPLE I NVOICES FURNISHED BEFORE ME. AFTER GOING THROUGH THE ARGUME NTS PUT FORWARD BY THE APPELLANT AND PERUSAL OF DOCUMENTS A ND EXAMINING THE NATURE OF ADVERTISEMENT EXPENDITURE A ND ANALYZING THE NATURE OF THE MARKET IN WHICH THE APP ELLANT OPERATES IT IS OBSERVED THAT THE APPELLANT IS IN B USINESS OF MANUFACTURING AND SELLING FOOD PRODUCTS WHICH ESSEN TIALLY IS ADVERTISEMENT DRIVEN. DUE TO CONTINUOUS GROWTH OF I NDIAN ECONOMY AND ECONOMIC LIBERALIZATION LARGE MULTI-NAT IONAL FMCG FOOD AND BEVERAGE COMPANIES ARE SETTING UP TH EIR BUSINESS VENTURES IN INDIA. IN ORDER TO CATER TO THE INCREASED COMPET ITION THE COMPANIES IN THE MARKET INTRODUCE DIFFERENT NEW FOO D PRODUCTS START NEW STORES IN ORDER TO HAVE A WIDER PRESENCE AND START NEW PROMOTION ACTIVITIES. ALL THIS EFFORT OF THE COMPAN IES HAS TO BE SUPPORTED BY EXTENSIVE ADVERTISING AND PROMOTION IN THE MARKET. EVEN IF THE BRAND NAME OF THE COMPANY IS WE LL ESTABLISHED IN THE MARKET THESE COMPANIES FACE STI FF COMPETITION AND HAVE TO CONTINUOUSLY SPEND HUGE AMO UNT ON ADVERTISING THEIR PRODUCTS AND BRANDS. THIS IS ONE OF THE IMPORTANT THINGS TO SURVIVE IN THE STIFF COMPETITIO N AND THE I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 8 APPELLANT IS NOT AN EXCEPTION TO THE ABOVE. FURTHER THE EXPENDITURE MAY VARY FROM YEAR TO YEAR DEPENDING UPON THE NEW COMPETITORS DOCUMENTS INTRODUCED AND THE NEW STORES THAT HAS BEEN STARTED BY THE APPELLANT. THER EFORE IT MAY NOT BE APPROPRIATE TO DIRECTLY LINK THE EXPENDITURE TO LES OR TO COMPARE IT WITH THE LAST YEAR EXPENDITURE. MORE IM PORTANTLY THE NATURE AND QUANTUM OF ADVERTISEMENT EXPENSES TO BE INCURRED BY THE APPELLANT IS A COMMERCIAL DECISION THAT THE APPELLANT IS BEST PLACED TO DETERMINE . THE HON'BLE APEX COURT IN THE CASE OF SASSOON J. DA VID AND CO. (P.) LTD (SUPRA) HAS OBSERVED THAT IT IS FOR THE ASSESSEE TO DECIDE WHETHER ANY EXPENDITURE SHOULD BE INCURRE D IN THE COURSE OF HIS OR ITS BUSINESS. SUCH EXPENDITURE MAY BE INCURRED VOLUNTARILY AND WITHOUT ANY NECESSITY AND IF IT IS INCURRED FOR PROMOTING THE BUSINESS AND TO EARN PRO FITS THE ASSESSEE CAN CLAIM DEDUCTION EVEN IT THERE WAS NO COMPELLING NECESSITY TO INCUR SUCH EXPENDITURE. IN THE CASE OF CIT V. SALORA INTERNATIONAL LIMITED (SUPRA) THE HON'BLE DELHI HI GH COURT DID NOT INTERFERE WITH THE DECISION OF THE TRIBUNAL WHICH HELD THAT THERE WAS A DIRECT NEXUS B ETWEEN THE ADVERTISING EXPENDITURE AND THE BUSINESS OF THE ASSESSEE AND THAT THE ASSESSEE HAD TO INCUR SUCH EXPENDITURE TO MEET THE COMPETITION IN INDIAN MARKET FOR SELLING ITS PR ODUCTS IN INDIA. I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 9 FURTHER IN THE CASE OF BERGER PAINTS (INDIA) LTD. ( 254 ITR 503) THE CALCUTTA HIGH COURT HAS HELD THAT ADVERTIS EMENT EXPENDITURE IS GENERALLY OF REVENUE NATURE SINCE TH E MEMORY OF PURCHASING MARKET IS SHORT AND THE ADVERTISEMENT IS REQUIRED TO BE DONE FROM YEAR TO Y EAR. IN VIEW OF THE ABOVE DISCUSSION AND PLACING RELIANC E ON THE ABOVE REFERRED DECISIONS OF SASSOON J. DAVID AND CO . (P.) LTD. VS. CIT SONY INDIA P. LTD. V. DCIT AND CIT V . SALORA INTERNATIONAL LIMITED & BERGER PAINTS (INDIA) LTD.. 254 ITR 503(CAL) THE ADDITION OF RS.1 09 10 366/- IS H EREBY DELETED. 12. AGGRIEVED BY THIS ORDER OF CIT(A) DEPARTMENT H AS COME UP IN APPEAL AND WHILE RELYING UPON ASSESSING OFFICERS ORDER I T WAS PLEADED FOR SETTING ASIDE THE IMPUGNED ORDER AND RESTORING THAT OF THE ASSESSING OFFICER. IT WAS FURTHER SUBMITTED THAT IT IS A WELL KNOWN BRAND OF DOMINOS PIZZA WHICH IS VERY FAMOUS AND ADVERTISEMENT COULD HARDLY BOOST IT S SALE WHEN ACTUAL SALE HAS DECREASED IN THIS CASE DURING THE YEAR UNDER CO NSIDERATION. THEREFORE THERE WAS NO JUSTIFICATION FOR CIT(A) TO ALLOW THE RELIEF WHEN A.O. HAS ONLY CAPITALIZED 25% IN SUCH EXPENDITURE WHEREAS 75% HAS BEEN ALLOWED TO THE ASSESSEE BECAUSE PART OF IT WAS OF ENDURING NATURE. SO RELYING UPON CIT(A) ORDER AT PAGE 23 PARA. 7.1 AND DECISION OF SUPREME COURT AS IN THE CASE OF SASSON J. DAVID AND CO. P. LTD. VS. CIT(SUPRA) AND 197 ITR 422 (SC) IT WAS PLEADED FOR REVERSAL OF THE IMPUGNED ORDER OF THIS ISSUE. I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 10 13. LD. COUNSEL FOR THE ASSESSEE WHILE RELYING UPON ORDER OF CIT(A) ON THIS ISSUE HAS PLEADED THAT THE ASSESSEE IS IN FOOD INDUSTRY AND THERE IS LOT OF A COMPETITION. SO ADVERTISEMENTS ARE NECESSARY TO RUN THE BUSINESS. ALL DETAILS OF EXPENDITURE HAVE BEEN GIVEN FROM PAGES 1 08-229 OF THE PAPER BOOK FILED WHICH WERE OF DIFFERENT NATURE AND ARE NECESSARY FOR THE PURPOSES OF BUSINESS. THEREFORE DISALLOWANCE AT 25% OF THE ADVERTISEMENT EXPENDITURE AS MADE BY THE ASSESSING OFFICER IS UNW ARRANTED AND UNCALLED FOR. BY FILING CHART OF EXPENDITURE FOR MORE THAN 10 YEARS ASSESSEES LD. COUNSEL PLEADED THAT ONLY TWO YEARS I.E. YEAR UNDE R CONSIDERATION AND ONE SUBSEQUENT YEAR NO DISALLOWANCE HAS BEEN MADE IN A NY OF THE OTHER YEARS. THEREFORE CIT(A) HAS RIGHTLY DELETED DISALLOWANCE OF 25% OF THE EXPENDITURE TREATED AS CAPITAL EXPENDITURE WHEN IT IS SETTLED PRINCIPLE THAT BUSINESSMAN HAS TO CONSIDER AND DECIDE ABOUT MAKING ALL EXPENDITURE IN ORDER TO RUN OR BOOST HIS BUSINESS AND NOT THE ASSE SSING OFFICER. THERE IS NO ENDURING BENEFIT HAVING BEEN PROCURED BY THE ASSESS EE. THEREFORE RELYING UPON THE DECISION IN THE CASE OF CIT VS. MICROMATIC MACHINE TOOLS (P) LTD. 330 ITR 47 (DEL.) CIT VS. SALORA INTERNATIONAL LTD . 308 INCOME TAX RULES 1962 199 (DEL.) CIT VS. BERGER PAINS INDIA LTD. 2 54 ITR 503 (CAL.) AND FINDING CONCLUSION OF THE CIT(A) AS DRAWN BY HIM IN PARA.7.1OF HIS ORDER IT WAS PLEADED FOR CONFIRMATION OF THE SAME. 14. WE HAVE HEARD BOTH THE SIDES CONSIDERED THE MA TERIAL ON RECORD AS WELL AS PRECEDENTS RELIED UPON BY RIVAL SIDES AND F IND THAT CIT(A) WHILE CONSIDERING EACH AND VERY ASPECT OF THE MATTER HAS COME TO A CORRECT CONCLUSION. NEITHER ANY INFIRMITY OR FLAW HAS BEEN FOUND OR OBSERVED IN THE ORDER OF CIT(A) THEREFORE WHILE CONCURRING WITH T HE FINDING OF CIT(A) WE I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 11 UPHOLD HIS ACTION AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE IN THIS REGARD. 15. AS REGARDS NEXT ISSUE IN RELATION TO DELETION O F RS.8 44 472/- BY THE ASSESSING OFFICER ON ACCOUNT OF SUNDRY BALANCE WRIT TEN OFF IS CONCERNED A.O. MADE THE DISALLOWANCE AND BEFORE CIT(A) ASSES SEE SUBMITTED THAT BUSINESS OF THE ASSESSEE IS THAT OF DOMINOS PIZZA AND THEIR SALE FROM RETAIL OUTLET IS THROUGHOUT INDIA. THE SALES ARE AFFECTED BOTH AT THE RETAIL OUTLETS AS WELL AS THROUGH HOME DELIVERY TO THE CUSTOMERS. MO ST OF THE SALES OF THE ASSESSEE ARE AFFECTED THROUGH HOME DELIVERY. THE S ALES OF THE PIZZAS IS PRIMARILY ON CASH BASIS HOWEVER SOME OF THE SALE TO THE CORPORATES MAY BE ON CREDIT BASIS. WHILE CARRYING OUT DAY-TO-DAY TRA NSACTIONS BOTH AT RETAIL OUTLETS AND THROUGH HOME DELIVERY TO THE CUSTOMERS THERE ARE SOME INSTANCES WHERE THE TOTAL SALE REVENUE COULD NOT BE REALISED BY THE ASSESSEE ON ACCOUNT OF A VARIETY OF REASONS. DURING THE YEAR UNDER CON SIDERATION THE ASSESSEE HAD ALREADY ESTABLISHED 81 STORES AND THE TOTAL INV OICES RAISED BY THE ASSESSEE WERE IN EXCESS OF 2.5 MILLION. AS A RESUL T OF THIS CERTAIN AMOUNTS HAD TO BE WRITTEN OFF BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS. WHILE CARRYING OUT DAY-TO-DAY TRANSACTIONS THERE ARE SOM E INSTANCES WHERE THE AMOUNT FOR THE SALE OF PIZZA IS NOT RECOVERED FROM THE CUSTOMER SUCH AS CUSTOMER PAID SHORT SOILED NOTES ARE RECEIVED AND AT TIMES NOT ACCEPTED BY THE BANK PIZZA DELIVERED ON TIME STILL CUSTOMER IN SISTS THAT IT IS LATE AND DOES NOT PAY AT ALL NON APPROVAL BY THE BANK OF THE PAY MENT MADE THROUGH CREDIT CARD DELIVERY PERSONNEL MAY BE ABSCONDING WITH CAS H HE HAS COLLECTED FOR THE DELIVERY SALES HE HAS MADE DURING THE DAY OR WI TH THE AMOUNT OF IMPREST PAID TO HIM IN CASE OF CREDIT SALES TO CORPORATE C USTOMERS SOMETIMES THE AMOUNT PAID IS LESS THAN THE ACTUAL AMOUNT AS PER I NVOICE. THEREFORE IT WAS I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 12 PLEADED FOR DELETION OF THE IMPUGNED ADDITION AND R ELIANCE WAS PLACED IN THE CASE OF CIT VS. GLOBAL CAPITAL LTD. 306 ITR 332 CIT VS. AUTOMATION LTD. 292 ITR 345 (DEL. AND CIT VS. MORTGAN SECURITIES & CREDITS P. LTD. 292 ITR 339 (DEL.). CIT(A) WHILE CONSIDERING AND ACCEP TING THE PLEA OF THE ASSESSEE HAS CONCLUDED TO DELETE THE IMPUGNED ADDIT ION AS PER PARA.6.1 OF HIS ORDER WHICH READS AS UNDER: 6.1 I HAVE CAREFULLY GONE THROUGH THE ORDER OF THE ASSESSING OFFICER AND THE DETAILED SUBMISSIONS MADE BY THE APPELLANT. I HAVE ALSO GONE THROUGH THE BUSINESS MODEL OF THE APPELLANT AND THE NATURE OF ACTIVITIES PERFORMED BY IT. EXAMINING THE VARIOUS INSTANCES LEADING TO SUCH WRITING OFF OF BALANCES AND BAD DEBTS AS SUBMI TTED BY THE APPELLANT AND TAKING INTO ACCOUNT THE NATURE OF BUS INESS CARRIED ON BY THE APPELLANT I AM OF THE VIEW THAT SUCH LOSSES AR E INEVITABLE IN THE LINE OF BUSINESS CARRIED ON BY THE APPELLANT THROU GH A NUMBER OF OUTLETS ANDS CONSIDERING THE VOLUME OF TRANSACTIONS . RELIANCE IS ALSO PLACED ON THE DECISIONS CITED BY THE APPELLANT WHIC H CLEARLY LAY DOWN THE PROPOSITION THAT THE DECISION TO TREAT A DEBT A S BAD DEBT IS A COMMERCIAL OR BUSINESS DECISION AND ONCE THE ASSESS EE RECORD THE DEBT AS BAD IN HIS BOOKS OF ACCOUNT THE SAME IS AN ALLO WABLE EXPENDITURE. THE WRITING OFF HAS NO DOUBT TO BE BONA FIDE. THE BONA FIDE OF THE APPELLANT IS PRIME FACIE EVIDENT IN THE FACTS OF TH E CASE. FURTHER IT IS NOT POSSIBLE FOR THE APPELLANT TO KEEP DETAILS OF E ACH AND EVERY CUSTOMERS. IN VIEW OF THE ABOVE DISCUSSIONS THE DISALLOWANCE OF RS.8 44 462/- MADE BY ASSESSING OFFICER ON THIS ACC OUNT IS DELETED. I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 13 16. AGGRIEVED BY THIS ORDER OF DELETION OF IMPUGNED ADDITION MADE BY THE CIT(A) DEPARTMENT HAS COME UP IN APPEAL AND WHILE RELYING UPON ASSESSING OFFICERS ORDER LD.DR PLEADED FOR REVERS AL OF THE ORDER OF THE CIT(A) AND RESTORING THAT OF THE ASSESSING OFFICER BY TAKING STRONG PLEA THAT NO DOCUMENTARY EVIDENCE WAS FURNISHED DESPITE OPPOR TUNITY TO SUBSTANTIATE THE CLAIM. AS THE ASSESSEE HAS FAILED TO PRODUCE N ECESSARY MATERIAL TO SUPPORT HIS PLEA IN APPEAL ALSO BUT CIT(A) WITHOUT GIVING ANY BASIS HAS JUST GIVEN THE RELIEF OF IMPUGNED ADDITION. IT WAS THUS PLEADED FOR REVERSAL OF THE ORDER OF THE CIT(A) AND RESTORING THAT OF THE ASSES SING OFFICER. 17. LD. COUNSEL FOR THE ASSESSEE WHILE RELYING UPON CIT(A)S ORDER HAS SUBMITTED THAT JUST AND APPROPRIATE CONCLUSIONS HAS BEEN DRAWN BY THE CIT(A) IN THE LIGHT OF MATERIAL AVAILABLE ON RECORD AND WHILE RELYING UPON CASE LAWS CITED AS REPORTED IN TRF LTD. VS. CIT 3 23 ITR 397 (SC) DCIT VS. KAMA JEWELRY PVT. LTD. (ITA NO.6960/MUM./2008 ( TRIB.) AND DCIT VS. GANGES LINES INDIA PVT. LTD. ITAT(MUM.) IT WAS PL EADED FOR CONFIRMATION OF THE IMPUGNED ORDER. 18. WE HAVE HEARD BOTH THE SIDES CONSIDERED THE MA TERIAL ON RECORD AND FIND THAT SUNDRY BALANCES WRITTEN OFF ARE RELATABLE TO BUSINESS NEED AND CIT(A) WHILE CONSIDERING THE ENTIRETY OF FACTS CIR CUMSTANCES AND MATERIAL ON RECORD HAS JUSTIFIABLY ALLOWED THE RELIEF TO THE ASSESSEE. SINCE NO CONTRARY MATERIAL OR EVIDENCE HAS BEEN FURNISHED NO R ANY INFIRMITY OR FLAW HAS BEEN POINTED OUT OR NOTICED THEREFORE WHILE C ONCURRING WITH THE I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 14 CONCLUSION WE UPHOLD THE DECISION OF CIT(A) IN THI S REGARD BY CONFIRMING HIS ACTION AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 19. THE NEXT GROUND RELATES TO ASSESSEE CLAIM FOR D EDUCTION OF RS.8 53 071/- U/S 36(1)(VA) OF THE ACT FOR EMPLOYEE S CONTRIBUTION TO ESI. THE ASSESSING OFFICER DISALLOWED AN AMOUNT OF RS.6 58 349/- AS THIS AMOUNT WAS DEPOSITED AFTER THE DUE DATE. 20. ASSESSEE TOOK UP THE MATTER IN APPEAL AND IT WA S SUBMITTED IN THE APPEAL PROCEEDINGS THAT EMPLOYEES SHARE OF CONTRIB UTION TOWARDS ESI WHICH WAS NOT DEPOSITED BY THE DUE DATE HAS BEEN DEPOSITE D DURING THE YEAR ITSELF OR BEFORE FILING OF THE RETURN. HENCE THE DEDUCTI ON OF SUCH PAYMENT NEEDED TO BE ALLOWED TO THE ASSESSEE IN THE RELEVANT ASSES SMENT YEAR. RELYING UPON DELHI HIGH COURT IN THE CIT VS. AIMIL LTD. 321 ITR 508 (DEL.) AND CIT VS. ALOM EXTRUSIONS LTD. 319 ITR 306 (SC) ASSESS EE SUBMITTED THAT THE HONBLE JURISDICTIONAL HIGH COURT HAS CONSIDERED TH IS POINT AND HAS DECIDED THE SAME IN FAVOUR OF THE ASSESSEE. SO RELYING UP ON THIS JURISDICTIONAL HIGH COURT ORDER IT WAS SUBMITTED THAT THIS PAYMENT WAS THOUGH MADE AFTER THE DUE DATE BUT BEFORE FILING OF THE RETURN. THEREFO RE IT IS ALLOWABLE EXPENDITURE. 21. CIT(A) WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE HAS CONCLUDED TO DELETE THE IMPUGNED ADDITION MADE IN T HIS REGARD. AGAINST SUCH ORDER OF CIT(A) DEPARTMENT HAS COME UP IN APP EAL AND WHILE RELYING UPON ASSESSING OFFICERS ORDER IT WAS URGED FOR RE STORING THAT OF THE ORDER OF ASSESSING OFFICER WHEREAS LD. COUNSEL FOR THE ASSE SSEE RELIED UPON I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 15 CIT(A)S ORDER IN THIS REGARD TO PLEAD FOR CONFIRMA TION OF THE IMPUGNED ORDER. 22. AFTER HEARING BOTH THE SIDES AND CONSIDERING TH E MATERIAL ON RECORD WE FIND THAT CIT(A) HAS CONCLUDED TO DELETE THE IMP UGNED ADDITION AS PER PARA.8.1 OF HIS ORDER AS UNDER: ON PERUSAL OF THE TAX AUDIT REPORT SUBMITTED THE A PPELLANT IT WAS FOUND THAT HE ENTIRE AMOUNT OF EMPLOYEES CONTRIBUTI ON TO THE ESI WAS DEPOSITED BY THE APPELLANT BEFORE THE DUE DATE OF F ILING OF THE RETURN UNDER THE ACT. THE DECISION IN THE ABOVE CASE OF A IMIL (SUPRA) MAKES IT CLEAR THAT THE EMPLOYEE CONTRIBUTION TO ES I IF DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN UNDER THE A CT MUST BE ALLOWED U/S 36(1)(VA) IRRESPECTIVE OF WHETHER IT WAS PAID B EFORE OR AFTER THE DUE DATE IN THE RESPECTIVE STATUES. ACCORDINGLY T HE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS DIRECTED TO BE DEL ETED. 23. NO CONTRARY MATERIAL HAS BEEN PLACED ON RECORD NOR ANY INFIRMITY OR FLAW HAS BEEN POINTED OR NOTICED. SINCE DATE OF P AYMENTS ARE PART OF AUDITED ACCOUNTS WHICH CLEARLY INDICATE THAT PAYMEN TS OF ESI CONTRIBUTION HAVE BEEN MADE BEFORE THE DUE DATE OF FILING OF THE RETURN THEREFORE IN OUR CONSIDERED VIEW ACTION OF THE CIT(A) NEEDS CONFIRM ATION WHICH IS CONFIRMED AND APPEAL OF THE REVENUE ON THIS GROUND IS DISMISSED. 24. NEXT ISSUE RELATES TO DELETION OF DISALLOWANCE OF THE DONATION OF RS.88 000/- MADE TO CRY. ASSESSEE CLAIMED A DEDUCT ION OF RS.88 000/- ON ACCOUNT OF DONATION MADE TO CRY. SINCE ASSESSEE W AS NOT ABLE TO PRODUCE I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 16 THE DONATION RECEIPT THE ASSESSING OFFICER DISALLO WED A SUM OF RS.88 000/- IN RESPECT OF DONATION. 25. ASSESSEE TOOK UP THE MATTER IN APPEAL AND SUBMI TTED THAT THE AMOUNT OF RS.88 000/- WAS CONTRIBUTED BY THE ASSESSEE TOWA RDS THE DONATION TO CRY AND CRY IS A RECOGNIZED INSTITUTION AND DONATION MA DE TO IT IS ALLOWABLE AS DEDUCTION U/S 35AC OF THE ACT BUT THE ASSESSING OF FICER DISALLOWED THE SAID DEDUCTION AS AT THE TIME OF ASSESSMENT THE ASSESSEE WAS NOT ABLE TO PRODUCE THE EVIDENCE OF THE RECEIPT OF THE DONATION AT THAT POINT OF TIME. THE ASSESSEE HAS REQUESTED THE CRY AND HAS GOT THE RECE IPT NOW WHICH WAS PRODUCED. THEREFORE PLEADED THAT DEDUCTION SHOULD BE ALLOWED AND CIT(A) ALLOWED THE RELIEF ACCORDINGLY. 26. BUT IT IS THE STRONG CONTENTION OF THE LD. DR IN APPEAL BEFORE THIS BENCH THAT IF ANY RECEIPT WAS OBTAINED AND FILED B EFORE CIT(A) HE HAS NOT FOLLOWED THE PROCEDURE AS LAID DOWN UNDER RULE 46A OF THE I.T. RULES 1962 AND WITHOUT ASSOCIATING ASSESSING OFFICER WITH THE APPEAL PROCEEDINGS OR SEEKING REMAND REPORT FORM HIM THE DELETION OF THE ADDITION COULD NOT BE ORDERED. IT WAS THUS URGED FOR REVERSAL OF THE ORD ER OR IN ALTERNATIVE MATTER SHOULD BE SET ASIDE ON THE FILE OF THE ASSESSING OF FICER FOR RE-CONSIDERATION OF THE ISSUE. WHEREAS LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON ORDER OF CIT(A) AND PLEADED FOR HIS CONFIRMATION. 27. WE HAVE HEARD BOTH THE SIDES CONSIDERED THE MA TERIAL ON RECORD AND FIND THAT THE BASIS AND REASONING AS GIVEN BY THE A SSESSING OFFICER IN MAKING ADDITION ARE DIFFERENT THAN WHAT WAS SUBMITTED BEFO RE CIT(A) IN APPEAL PROCEEDINGS. MOREOVER THE RECEIPT STATED TO HAVE BEEN PRODUCED BEFORE I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 17 CIT(A) HAS NOT BEEN GOT VERIFIED BY THE ASSESSING O FFICER NOR HE WAS ASSOCIATED WITH APPEAL PROCEEDINGS THEREFORE IN T HE INTEREST OF JUSTICE AND TO HAVE FAIR PLAY IN THE MATTER WE SET ASIDE THE ORDE R OF CIT(A) IN THIS REGARD AND RESTORE THE MATTER BACK ON THE FILE OF THE ASSE SSING OFFICER FOR RE- CONSIDERATION OF THE MATTER AFRESH. WE HOLD AND DI RECT ACCORDINGLY. 27.1 AS A RESULT THE APPEAL OF THE REVENUE GETS AC CEPTED PARTLY FOR STATISTICAL PURPOSE. I.T. A. NO.185/DEL./2011 28. THE ISSUES RAISED IN THIS APPEAL RELATE TO ADV ERTISEMENT EXPENDITURE AND SUNDRY BALANCE WRITTEN OFF. 29. IT IS COMBINED REQUEST OF BOTH THE SIDES THAT D ECISION MAY BE TAKEN ON THESE ISSUES IN LINE WITH THE DECISION TO BE TAKEN IN ITA NO.183/DEL./2011. THEREFORE WHILE FOLLOWING OUR ORDER IN ITA 183/DEL ./2011 AS CONTAINED IN EARLIER PART OF THE ORDER WE UPHOLD THE ORDER OF C IT(A) ON BOTH THE ISSUES IN THIS APPEAL. AS SUCH THE ORDER OF CIT(A) ON THIS I SSUE IS UPHELD AND THE APPEAL OF THE REVENUE IS DISMISSED. 29.1 AS A RESULT THE APPEAL OF THE REVENUE IS DISM ISSED. ITA NO.186/DEL./2011 30. IN THIS APPEAL FOR ASSESSMENT YEAR 2005-06 FIR ST TWO ISSUES INVOLVED ARE IN RELATING TO FRANCHISEES FEE AND OTHER IN RE LATION TO SUNDRY BALANCE WRITTEN OFF. I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 18 31. IT IS COMMON GROUND OF BOTH THE SIDES THAT THES E ISSUES HAVE ALREADY BEEN DEALT IN ASSESSMENT YEAR 2003-04. SO THE DEC ISION TO BE TAKEN IN THE ABOVE APPEAL MAY BE FOLLOWED HERE. 32. SINCE BOTH THE ISSUES INVOLVED IN THIS APPEAL H AVE BEEN DEALT BY US IN EARLIER PART OF THE ORDER WHILE DEALING WITH ITA NO .183/DEL./2011 FOR ASSESSMENT YEAR 2003-04 EXCEPT DIFFERENCE IN AMOU NT OF DISALLOWANCES OTHER FACTS ARE SAME AND ISSUES ARE IDENTICAL. THE REFORE FOLLOWING OUR DECISION FOR ASSESSMENT YEAR 2003-04 IN RESPECT OF BOTH THE ISSUES WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPE AL OF THE REVENUE. 33. THERE IS ANOTHER ISSUE WHICH IS CONTAINED IN G ROUND NO.4 RELATES TO RESTRICTING THE ADDITION OF RS.9 06 977 TO RS.3 19 680/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PRIOR PERIOD EXPENS ES THEREBY GIVING RELIEF OF RS.5 80 207. 34. THE ASSESSEES CLAIM IN RESPECT OF EXPENSES OF RS.9 06 977/- WAS DISALLOWED BY THE ASSESSING OFFICER AS PRIOR PERIOD EXPENSES ON THE GROUND THAT SUCH EXPENSES DID NOT PERTAIN TO THE RELEVANT PERIOD UNDER CONSIDERATION. ASSESSEE CHALLENGED SUCH ACTION OF THE ASSESSING OF FICER BEFORE FIRST APPELLATE AUTHORITY AND WHILE RELYING UPON CASE OF VIJAY LAKSHMI ENGG. WORKS LTD. VS. ACIT [TIOL 211-ITAT(MAD.)]. THE MU MBAI BENCH OF ITAT HELD THAT EACH ITEM IS TO BE ANALYZED INDIVIDU ALLY AS TO WHEN THE LIABILITY ARISES AND IN THE CASE OF SONY INDIA P. L TD. VS. DCIT 315 INCOME TAX RULES 1962(AT) 150 (DEL.) IT HAS BEEN OBSERVE D THAT THE EXPENSES CATEGORIZED AS PRIOR PERIOD EXPENSE BY THE AUDITORS WAS DISALLOWED BY THE ASSESSING OFFICER IN ASSESSMENT YEAR 2003-04. THES E EXPENSES WERE ACCORDINGLY CATEGORIZED BECAUSE THERE WAS A RETROSP ECTIVE REVISION OF PRICES BY THE DEALERS. FURTHER IN RESPECT OF A REVISED R ETURN BEING FILED BY THE I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 19 ASSESSEE FOR ASSESSMENT YEAR 2002-03 CLAIMING THER EIN SUCH EXPENSE WAS ALSO DISALLOWED BY THE ASSESSING OFFICER. THE TRIB UNAL HELD THAT WHEN THE ASSESSING OFFICER HAS PLACED RELIANCE ON THE COMMEN T OF THE AUDITORS A DEFINITE STAND IS TAKEN BY THE ASSESSING OFFICER TH AT THESE EXPENDITURE PERTAINS TO ASSESSMENT YEAR 2002-03. THEREFORE SA ME SHOULD BE ALLOWED IN ASSESSMENT YEAR 2002-03. 35. FURTHER SUBMISSIONS WERE ALSO MADE AND RELIANCE WAS ALSO PLACED ON THE DECISION OF JURISDICTIONAL HIGH COURT IN THE C ASE OF CIT VS. EXXON MOBIL LUBRICANTS P. LTD. IN ITA NO.288/2010. SINCE FACT S OF THE CASE ARE SAME THEREFORE IT WAS PLEADED FOR DELETION OF THE IMPUG NED ADDITION. 36. LD. CIT(A) WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE HAS CONCLUDED TO RESTRICT THE ADDITION OF RS.3 19 6 80 AS PER PARA.4.1 OF HIS ORDER AS UNDER: DURING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT WAS ASKED TO SUBSTANTIATE ITS CONTENTION AS TO HOW PRIOR PERIOD EXPENSES COULD BE CLAIMED AS A EXPENSE DURING A Y 2 005-06 WHEN THE EXPENSE WERE ACTUALLY INCURRED DURING THE EARLI ER PERIOD. FURTHER IT WAS INCUMBENT ON THE APPELLANT WHO IS FO LLOWING MERCANTILE SYSTEM OF ACCOUNTING TO SUBSTANTIATE WI TH APPROPRIATE DOCUMENT AS TO HOW THE LIABILITY GOT CRYSTALLIZED D URING A Y 2005- 06. I HAVE GONE THROUGH THE ARGUMENTS AND JUDICIAL PREC EDENTS RELIED UPON BY THE APPELLANT AND ALSO GONE THROUGH THE RELEVANT DOCUMENTS AND INVOICES PRODUCED BEFORE ME. AFTER GO ING THROUGH I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 20 THE INVOICES/DOCUMENTS PRODUCED BEFORE ME FOR LPG E XPENSE (PAYMENT MADE TO ASHOKA STORES- THE DISTRIBUTORS OF BHARAT GAS) AMOUNTING TO 24 297 AND FOR PACKING MATERIAL AMOUNT ING TO RS 43 000 (PAYMENT MADE TO BRITE OFFSET MUMBAI ON A B ILL RAISED BY THEM FOR RS. 1.21 LAKHS WHICH WAS SETTLED AT RS. 43 0001-) AND AFTER CONSIDERING THE ARGUMENT I AM OF THE CONSIDER ED VIEW THAT THE LIABILITY IN RESPECT OF THE ABOVE EXPENSES ACTU ALLY GOT SETTLED IN THE CURRENT ASSESSMENT YEAR WITH BOTH THESE PARTIES AND THE APPELLANT SHOULD BE ALLOWED THE DEDUCTION IN RESPEC T OF THESE EXPENSES IN THE CURRENT ASSESSMENT YEAR. FURTHER TH E APPELLANT HAD PRODUCED THE DEBIT NOTE FOR RS. 5 20 000/- FOR IT SERVICES RECEIVED FROM JUBILIANT ORGANOSYS LTD. AND ARGUED T HAT THOUGH THE EXPENSE PERTAINS TO A Y 2004-05 BUT SINCE THER E WAS CONFUSION ON WHETHER 11 SERVICES PROVIDED BY THE GROUP CONCER N DURING PREVIOUS PERIOD ARE FREE OF COST OR FOR WHICH PAYME NT IS REQUIRED TO BE MADE THIS LIABILITY ULTIMATELY GOT BOOKED IN FY THE VENDOR RAISED DEBIT NOTE IN SEPTEMBER 2004 AND AFTER CONSI DERABLE CORRESPONDEN~AVE EXAMINED THE DEBIT NOTE AND THE AR GUMENT OF THE APPELLANT AND CORRES PONDENCE WITH JUBILANT ORGANSOYS ON THE ISSUE OF PAYMENT AND I AM OF THE VIEW THAT THE LIAB ILITY GOT CRYSTALLIZEDIN THE CURRENT YEAR ONLY AND THAT THE A PPELLANT SHOULD BE ALLOWED THE DEDUCTION OF THIS EXPENSE IN CURRENT _A SSESSMENT. IN ALLOWING THIS EXPENSE I AM ALSO GUIDED BY THE RATIO OF DECISION IN CASE OF EXXON MOBIL (SUPRA) WHICH HAS BEEN RELIED UPON B Y THE APPELLANT. AS A RESULT OUT OF THE TOTAL ADDITIONS OF RS.9 0 6 977 MADE BY THE ASSESSING OFFICER ADDITION AMOUNTING TO RS.5 8 7 297 I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 21 (RS.5 20 000+RS.4 24 297+RS.43 000) IS DELETED AS T HESE EXPENSES CRYSTALLIZED IN THE CURRENT ASSESSMENT YEAR. HOWEV ER AS THE APPELLANT WAS UNABLE TO SUBSTANTIATE ITS CONTENTION IN RESPEC T OF OTHER EXPENSES. I HOLD THAT THE ASSESSING OFFICER WAS CORRECT IN DI SALLOWING THE BALANCE EXPENSES FOR RS.3 19 680/- SINCE THEY DID N OT PERTAIN TO THE RELEVANT PERIOD UNDER CONSIDERATION AND THE APPELLA NT WAS UNABLE TO ESTABLISH WHY SUCH EXPENSES COULD BE ALLOWED DURING ASSESSMENT YEAR 2005-06. 37. AGGRIEVED BY PART RELIEF GIVEN TO THE ASSESSEE BY CIT(A) DEPARTMENT HAS COME UP IN APPEAL WHILE RELYING UPON ASSESSING OFFICERS OR4DER IT WAS PLEADED FOR SETTING ASIDE THE ORDER OF CIT(A) AND R ESTORING THAT OF THE ASSESSING OFFICER. IT WAS FURTHER SUBMITTED THAT S INCE EXPENSES DID NOT PERTAIN TO THE PERIOD UNDER CONSIDERATION THEREFOR E THERE WAS EVERY JUSTIFICATION FOR THE ASSESSING OFFICER TO MAKE THE ADDITION AND CIT(A) WAS NOT JUSTIFIED IN RESTRICTING SUCH ADDITION TO RS.3 19 680/- WHEREAS ENTIRE ADDITION WAS CALLED FOR. THEREFORE LD.DR SUBMITTE D FOR RESTORATION OF THE ORDER OF THE ASSESSING OFFICER. 38. LD.COUNSEL FOR THE ASSESSEE WHILE RELYING UPON CIT(A)S ORDER HAS PLEADED FOR CONFIRMATION OF THE SAME. 39. WE HAVE HEARD BOTH THE SIDES CONSIDERED THE MA TERIAL ON RECORD AND FIND THAT ASSESSING OFFICER MADE THE ADDITION MAINL Y ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE ITS CLAI M AND CIT(A) IS FOUND TO HAVE NOT ONLY ACCEPTED ADDITIONAL MATERIAL BUT ALS O CONSIDERED THE SAME TOGETHER PART RELIEF TO THE ASSESSEE WITHOUT HAVING ALLOWED THE ASSESSING OFFICER TO ASSOCIATE WITH THE PROCEEDINGS OR WITHOU T CALLING FOR THE REMAND I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 22 REPORT. SINCE PROVISIONS OF RULE 46A HAVE NOT BEE N COMPLIED WITH IT IS UNDISPUTED FACT THAT CERTAIN DOCUMENT AND MATERIAL HAS BEEN FILED AND ACCEPTED TOGETHER RELIEF TO THE ASSESSEE ON FIRST A PPEAL STAGE. THEREFORE THERE IS CLEAR VIOLATION OF RULE 46A. IN THE INTER EST OF JUSTICE AND TO HAVE FAIR PLAY IN THE MATTER WE FIND IT JUST AND APPROPRIATE TO SET ASIDE THE ORDER OF THE AUTHORITIES BELOW AND RESTORE THE MATTER BACK ON TH E FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO RESTRICT THE ISSUE AF RESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. THIS GROUND OF APPEAL IS PARTLY ALLOWED. 39.1 AS A RESULT APPEAL IS PARTLY ALLOWED FOR STAT ISTICAL PURPOSE. 40. ITA NO.184/DEL./2011 41. FIRST ISSUE IS ARISING FROM THE ORDER PASSED BY THE CIT(A) IN APPEAL OF THE ASSESSEE AGAINST ORDER OF THE ASSESSING OFFICER U/S 143(3) READ WITH SECTION 263 OF THE I.T. ACT 1961 AND THE OTHER GRO UND RELATES TO DELETION OF ADDITION OF RS.20 53 550/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF STORE ALLOCATION EXPENSES. 42. FACTS IN RELATION TO FIRST GROUND INDICATE THAT THE ASSESSEE HAD CLAIMED DEDUCTION OF RS.20 33 590/- IN RETURN OF INCOME FIL ED BY THE ASSESSEE. THE ASSESSEE SUBMITTED BEFORE ASSESSING OFFICER THE EX PENSES IN RELOCATION WAS IN THE NATURE OF RENT SECURITY CHARGES TRANSPORT EXPENSES ON SHIFTING OF MATERIAL FROM ONE GODOWN TO ANOTHER AND PAYMENT FOR DISMANTLING OF ITEMS FROM THE STORES. ALL THE EXPENSES INCURRED IN THE NORMAL COURSE OF CARRYING ON THE BUSINESS OF THE ASSESSEE AND ARE REVENUE IN NATURE AND THEREFORE SHOULD BE ALLOWED AS CLAIMED BY THE ASSESSEE. HOWE VER ASSESSING OFFICER HELD IN THE ASSESSMENT ORDER THAT - I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 23 ON GOING THROUGH THE DETAILS IT IS FOUND THAT THES E CANNOT BE VERIFIED IN ABSENCE OF BOOKS OF ACCOUNTS. THEREFORE I HOLD THAT THE RELOCATION EXPENSE DEBITED IN P&L ACCOUNT AMOUNTING TO RS.20 5 3 590/- IS NOT A REVENUE EXPENDITURE BUT CAPITAL EXPENDITURE HENCE NOT ALLOWABLE FORM INCOME OF ASSESSEE. THUS RS.20 53 590/- IS DISALL OWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 43. ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER IN APPEAL AND RAISED VARIOUS PLEAS TO SUPPORT THE CLAIM AND RELIA NCE WAS ALSO PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF EA STERN INVESTMENT LIMITED VS. CIT (1951) 20 ITR 1 4 (SC) TO SATISFY THE EXPENDITURE INCURR3ED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS ETC.: (A) THOUGH THE QUESTION MUST BE DECIDED ON THE FACT S OF EACH CASE THE FINAL CONCLUSION IS ONE OF LAW; (B) IT IS NOT NECESSARY TO SHOW THAT THE EXPENDITUR E WAS A PROFITABLE ONE OR THAT IN FACT ANY PROFIT WAS EARNED; (C) IT IS ENOUGH TO SHOW THAT THE MONEY WAS EXPENDE D NOT OF NECESSITY AND WITH A VIEW TO A DIRECT AND IMMEDIATE BENEFIT TO THE TRADE BUT VOLUNTARILY AND ON THE GROUND OF COM MERCIAL EXPEDIENCY AND IN ORDER INDIRECTLY TO FACILITATE T HE CARRYING ON OF THE BUSINESS; (D) BEYOND THAT NO HARD AND FAST RULE CAN BE LAID D OWN TO EXPLAIN WHAT IS MEANT BY THE WORD SOLELY. I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 24 44. SUCH TEST LAID DOWN BY THE HONBLE SUPREME COUR T IN ANOTHER CASE OF STATE OF MADRAS VS. G.J. COELHO (1964) 53 ITR 186 T HAT EXPENDITURE MADE UNDER A TRANSACTION WHICH IS SO CLOSELY RELATED TO THE BUSINESS THAT IT COULD BE VIEWED AS AN INTEGRAL PART OF CONDUCT OF THE BUSINE SS AND FURTHER RELIANCE WAS ALSO PLACED ON BOMBAY STEAM NAVIGATION CO. PVT. LTD . (1965) 56 ITR 52 PAGE 61 (SC) CIT VS. DELHI SAFE DEPOSIT CO. LTD. 133 INCOME TAX RULES 1962 756 PAGE 760 (SC) ROYAL CALCUTTA TURF CLUB V S. CIT 188 ITR 352 PAGE 356 (CAL.) AND CIT VS. RAJARAM BANDERKAR 208 INCOME TAX RULES 1962 503 PAGE 507 (BOM.). SINCE CIT-IV AS WELL AS ASSESSING OFFICER HAVE MISUNDERSTOOD THE NATURE OF THE EXPENDITURE AN D AS ASSESSEE IS IN THE BUSINESS OF SELLING PIZZAS SINCE 1994 AND NO DOUBT AT TIMES THE ASSESSEE COMPANY SHIFTS ITS LOCATION FROM ONE STORE TO ANOTH ER FOR VARIOUS COMMERCIAL OPERATIONAL MARKETING OR OTHER REASONS AND ALL THE EXPENSES WHICH ARE INCURRED FOR OPENING ANY NEW STORE ARE CA PITALIZED AND NONE OF THE CAPITAL EXPENSES HAS BEEN DEBITED UNDER THIS HEAD A S IT COULD BE SEEN FROM THE DETAILS OF RELOCATION EXPENSES. AND IT CONTINU ES TO BE IN BUSINESS EVEN TODAY. SO EXPENSES HAS CLAIMED SHOULD BE ALLOWED. 45. CIT(A) WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE HAS CONCLUDED TO DELETE THE ADDITION AS PER PARA 4.1 OF HIS ORDER AS UNDER: I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT ALONG WITH VARIOU S DOCUMENTS INVOICES AGREEMENTS FURNISHED BY THE APPELLANT. A FTER EXAMINING THE VARIOUS DOCUMENTS PRODUCED BY THE APPELLANT IT IS OBSERVED THAT THE EXPENSES INCURRED BY THE APPELLANT UNDER THIS HEAD WERE IN THE NATURE OF RENT OF GODOWN SECURITY GUARD EXPENSES FOR GODO WN AND STORES I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 25 TRANSPORT CHARGES FOR SHIFTING OF MATERIAL FROM ONE PLACE TO ANOTHER ON CLOSURE OF STORE DISMANTLING EXPENSE ROUTINE REPA IR AND MAINTENANCE AND OTHER EXPENSES OF SIMILAR NATURE. FROM THE VER Y NATURE OF THESE EXPENSES THEY ARE FOUND TO HAVE BEEN INCURRED BY TH E APPELLANT IN NORMAL COURSE OF CARRYING ON THEIR BUSINESS ACTIVIT IES AND ARE REVENUE IN NATURE. I AGREE WITH THE CONTENTIONS OF THE APP ELLANT THAT THEY ARE NOT CAPITAL EXPENDITURE AND THE APPELLANT WAS JUSTI FIED IN CLAIMING THE SAID EXPENSES AS REVENUE EXPENDITURE. THUS THIS G ROUND OF APPEAL IS ACCEPTED AND THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF STORE RELOCATION EXPENSES FOR RS.20 53 5 90/- IS HEREBY DELETED. 46. AGGRIEVED BY THE ORDER OF CIT(A) DEPARTMENT HA S COME UP IN APPEAL AND IT WAS STRONGLY PLEADED THAT ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE ASSESSEE GIVING APPROPRIATE REASONS AND CIT( A) HAS DELETED THE ADDITION BY CONSIDERING THE SUBMISSION OF THE ASSES SEE IN THE LIGHT OF VARIOUS DOCUMENTS INVOICES AGREEMENTS FURNISHED BY THE AS SESSEE BEFORE CIT(A) AND FROM THE PAPER BOOK FILED THERE IS NO INDICATI ON THAT ASSESSEE HAS EVER APPLY FOR ADMISSION OF ADDITIONAL EVIDENCE AND CIT( A) HAS CATEGORICALLY STATED THAT VARIOUS DOCUMENTS INVOICES AGREEMENTS WERE FURNISHED BY THE ASSESSEE BEFORE FIRST APPELLATE AUTHORITY AND IT AP PEARS THAT NEITHER ASSESSING OFFICER HAS BEEN ASSOCIATED WITH THE APPEAL PROCEED INGS NOR ANY REMAND REPORT HAS BEEN OBTAINED FORM HIM. LD.DR HAS ALSO R ELIED UPON THE DECISION REPORTED IN 135 ITR 421 (DEL.) AND 251 ITR 487 (K ER.). I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 26 47. LD.COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF CIT(A) AND PLEADED FOR ITS CONFIRMATION. SHE HAS ALSO CONTENDED THAT NECESSARY MATERIAL WAS CONSIDERED BY THE CIT(A) IN THE LIGHT OF CASE LAWS CITED AND PASSED A VERY REASONED ORDER BY BRINGING RELEVANT FACTS AND CIRCU MSTANCES. THEREFORE HIS ORDER SHOULD BE UPHELD. 48. WE HAVE HEARD BOTH THE SIDES CONSIDERED THE MA TERIAL ON RECORDED AS WELL AS THE CASE LAWS CITED BY THE RIVAL SIDES AND FIND THAT THERE APPEARS TO BE A CLEAR VIOLATION OF RULE 46A OF I.T. RULES 196 2 AND THEREFORE IMPUGNED ORDER CANNOT BE LEGALLY SUSTAINED. AS SUC H WHILE ACCEPTING THIS GROUND OF APPEAL OF THE REVENUE WE SET ASIDE THE O RDERS OF THE AUTHORITIES BELOW AND RESTORE THE MATTER BACK ON THE FILE OF TH E ASSESSING OFFICER WITH THE DIRECTION TO DECIDE THE APPEAL AFRESH AFTER GIV ING DUE OPPORTUNITY TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. 49. IN THE NEXT GROUND ASSESSING OFFICERS ACTION IN DISALLOWING DEBENTURE RESTRUCTURING FEES OF RS.15 LAKHS PAID BY THE ASSESSEE BY TREATING THE SAME AS CAPITAL EXPENDITURE HAS BEEN CHALLENGED . 50. THE ASSESSEE HAS CLAIMED A DEDUCTION OF THIS AM OUNT OF RS.15 LAKHS AS BUSINESS CHARGES IN RETURN OF INCOME AND IT WAS SUB MITTED BEFORE ASSESSING OFFICER THAT HE ASSESSEE HAS ISSUED NON-CONVERTIBLE REDEEMABLE DEBENTURES OF RS.25 CRORES DURING THE FINANCIAL YEAR 2000-01 TO M EET ITS WORKING CAPITAL REQUIREMENTS. DURING THE IMPUGNED ASSESSMENT YEAR THE APPELLANT WAS SHORT OF FUNDS AND HENCE WAS NOT IN A POSITION TO REDEEM THE DEBENTURES. THUS THE ASSESSEE RENEGOTIATED THE TERMS AND CONDI TIONS OF THE ISSUE OF DEBENTURES WITH THE HOLDERS OF SUCH DEBENTURES AND MANAGED TO CONVINCE THE DEBENTURE HOLDERS TO RESTRUCTURE THE TERMS AND MADE THEM AGREEABLE FOR REDEMPTION A LATER DATE. FOR CARRYING OUT ALL THIS FUNCTIONS THE ASSESSEE I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 27 MADE A ONE TIME PAYMENT OF RS.15 LAKHS. THE ASSESS EE PLACE4D RELIANCE ON THE DECISION IN THE CASE OF PREMIER AUTOMOBILES LTD . VS. CIT (1971) 80 INCOME TAX RULES 1962 415 (BOM.) CIT VS. MODI IND USTRIES LTD. (1933) 200 ITR 341 (DEL.) IN SUPPORT OF HIS CLAIM FOR AL LOWANCE OF THIS EXPENDITURE AS A REVENUE EXPENDITURE. BUT ASSESSI NG OFFICER STATED IN HIS ORDER THAT SINCE IT WAS IN REGARD TO SUBSCRIPTION O F DEBENTURE IT WAS CAPITAL IN NATURE AND THEREFORE ADDED THE AMOUNT OF RS.15 LA KHS TO THE INCOME OF THE ASSESSEE. 51. ASSESSEE CHALLENGED SUCH ACTION OF THE ASSESSIN G OFFICER BEFORE CIT(A) AND REITERATED THE SUBMISSIONS AS MADE BEFOR E THE ASSESSING OFFICER TO CONTEND THAT THE DEBENTURES WAS SUBSCRIBED BY M/ S INFRASTRUCTURE LASING & FINANCIAL SERVICES LTD. AND SINCE THE DEBENTURES WERE DUE FOR REDEMPTION BUT DUE TO UNAVAILABILITY OF ADEQUATE SURPLUS FUNDS AVAILABLE WITH THE ASSESSEE IT WAS NOT IN A POSITION TO REDEEM THE DE BENTURES. THE ASSESSEE COMPANY HAD TO THEREFORE RE-NEGOTIATE WITH THE SUB SCRIBERS OF THE DEBENTURES AND WAS SUCCESSFUL IN GETTING THE TERMS RESTRUCTURED FOR REDEMPTION OF THE DEBENTURES. FOR CARRYING OUT THE SE FUNCTIONS THE ASSESSEE HAD TO MAKE A ONE TIME PAYMENT OF RS.15 LAKHS. THE RESTRUCTURING FEE PAID BY THE ASSESSEE COMPANY IS SIMILAR TO THE PROCESSIN G FEE WHICH IS CHARGED BY BANKS WHILE PROCESSING THE LOANS TO A BORROWER. SO PLACING RELIANCE ON INDIA CEMENTS LTD. VS. CIT 60 ITR 52 CIT VS. SEC URE METERS LTD. (2010) 321 ITR 611 (RAJ.) CIT VS. ITC HOTELS LTD. MANU/ KA/0610/2009(ITA NO.377 OF 2004) HONBLE KARNATAKA HIGH COURT HELD THAT EXPENDITURE INCURRED IN CONNECTION WITH THE ISSUE OF DEBENTURES HAS TO BE TREATED AS REVENUE EXPENDITURE AND IN THE CASE OF CIT VS. MODI INDUSTRIES LTD.(SUPRA) I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 28 IT WAS HELD THAT EXPENDITURE INCURRED FOR RAISING L OAN BY ISSUE OF DEBENTURES FOR THE PURPOSE OF UTILIZATION IN A NEW UNIT WAS HE LD DEDUCTIBLE IN AS IT WAS FOUND THAT THE NEW UNIT WAS AN EXTENSION OF THE EXI STING BUSINESS AND NOT A NEW BUSINESS AND THE HONBLE BOMBAY HIGH COURT HAS ALREADY HELD IN CASE OF PREMIER AUTOMOBILES LTD. VS. CIT 80 ITR 415 AND CIT VS. MAHINDRA ENGINE & STEEL CO. LTD. MEDIA VIDEO LTD. VS. CIT 122 TAXMAN 28 (DEL.). 52. CIT(A) WHILE CONSIDERING AND ACCEPTING THE PLEA OF THE ASSESSEE HAS CONCLUDED TO DELETE THE IMPUGNED ADDITION AS PER PA RA. 5.1 OF HIS ORDER 2 WHICH READS AS UNDER: I HAVE CAREFULLY GONE THROUGH THE ORDER OF THE ASS ESSING OFFICER AND THE SUBMISSIONS MADE BY THE APPELLANT AND THE RELEV ANT SUP0PORTING DOCUMENTS PRODUCED BEFORE ME. KEEPING IN VIEW THE RATIO IN THE ABOVE REFERRED DECISIONS AND ON GOING THROUGH THE O RDER OF HIGH COURT OF THE KARNATAKA IN CASE OF ITD HOTEL LTD. IN I/TA NO.377 OF 2004 IT IS OBSERVED THAT IN THIS DECISION THE COUR T HAS HELD THAT EVEN IF THE DEBENTURE HAS TO BE CONVERTED IN A SHARE AT LAT ER DATE THE EXPENDITURE SO INCURRED ON SUCH CONVERTIBLE DEBENT URE HAS TO BE TREATED AS REVENUE EXPENDITURE. WHILE COMING TO TH IS DECISION THE KARNATAKA HIGH COURT HAS REFERRED TO EH JUDGMENT OF RAJASTHAN HIGH COURT IN CIT VS. SECURE METERS LTD. (321 ITR 611). IT HAS ALSO BEEN MENTIONED I THE JUDGMENT OF KARNATAKA HIGH COURT TH AT THE ABOVE ORDER OF RAJAS THAN HIGH COURT IN SECURE METERS (SU PRA) WAS TAKEN UP BEFORE SUPREME COURT IN SLP WHICH HAS BEEN DISMISS ED BY THE HONBLE APEX COURT. I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 29 IN THE FACTS OF THE APPELLANTS CASE THE DEBENTURES ARE NON-CONVERTIBLE IN NATURE AND THEREFORE THE EXPENSES INCURRED IN CO NNECTION WITH RESTRUCTURING THE SAME FOR REDEMPTION AT A LATER DA TE ARE THEREFORE CLEARLY IN THE NATURE OF REVENUE EXPENSES AND THUS THE AMOUNT OF RS.15 00 000/- IS ALLOWED AS A TAX DEDUCTIBLE EXPEN SE. THE ASSESSING OFFICER IS ACCORDINGLY DIRECTED TO DELETE THE ADDIT ION. 53. AGGRIEVED BY THIS ORDER OF CIT(A) DEPARTMENT H AS COME UP IN APPEAL AND WHILE RELYING UPON ASSESSING OFFICERS ORDER I T WAS PLEADED FOR SETTING ASIDE THE ORDER OF CIT(A) AND RESTORING THAT OF THE ASSESSING OFFICER AS SUBSCRIP6TION OF DEBENTURES ARE CAPITAL IN NATURE THEREFORE IT WAS NOT ALLOWABLE AS REVENUE EXPENDITURE WHICH HAS ALREADY BEEN DISALLOWED BY THE ASSESSING OFFICER AND CIT(A) IS NOT JUSTIFIED IN DE LETING SUCH DISALLOWANCE WHOSE ORDER SHOULD BE REVERSED AND THAT OF THE ASSE SSING OFFICER BE RESTORED. 54. LD.COUNSEL FOR THE ASSESSEE WHILE RELYING UPON THE ORDER OF CIT(A) HAS PLEADED FOR CONFIRMATION AND BESIDES REITERATIN G THE CASE LAWS AS CITED BY THE ASSESSEE BEFORE FIRST APPELLATE AUTHORITY WHIC H WAS INCORPORATED IN THE IMPUGNED ORDER FURTHER RELIANCE WAS PLACED ON CIT VS. ITC HOTELS LTD. 334 ITR 109 (KAR.) TO PLEAD FOR CONFIRMATION OF THE IM PUGNED ORDER. 55. WE HAVE HEARD BOTH THE SIDES CONSIDERED THE MA TERIAL ON RECORD AS WELL AS BASIS AND REASONING AS GIVEN BY THE CIT(A). IT IS NOT IN DISPUTE THAT DUE TO NON-AVAILABILITY OF FINANCES ASSESSEE WAS N OT IN A POSITION TO NEGOTIATE THE DEBENTURES ISSUE WHICH GOT MATURED DU RING THE YEAR UNDER CONSIDERATION. SO HE HAS ARRANGED THE FINANCE BY PAYING RS.15 LAKHS TO M/S I.T.A. NOS.183 184 185 & 186/DEL./2011 (A.YS. : 2003-04 04-05 & 05-06) 30 INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD. 55.1 IN THE LIGHT OF CASE LAWS CITED BY LD. CIT(A) AND IN THE ABSENCE OF ANY CONTRARY DECISION OR EVIDENCE PRODUCED OR ANY HIGHE R COURTS ORDERS HAVING BEEN PLACED TO SUPPORT THE PLEA RAISED BY THE DEPAR TMENT WE DO NOT FIND ANY REASONABLE GROUND TO INTERFERE IN THE ORDER PASSED BY THE CIT(A) WHICH IS CONFIRMED AND THE APPEAL OF THE REVENUE IS DISMISSE D ON THIS GROUND. 55.2 AS A RESULT THE APPEAL FILED BY THE REVENUE G ETS PARTY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON SD./- SD./- (T.S. KAPOOR) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : 24 TH OCT 2012 SKB/SP COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XIII NEW DELHI. 5. CIT(ITAT) DEPUTY REGISTRAR ITAT