ACIT, SPECIAL RANGE-6, NEW DELHI vs. MOET HENNESSY INDIA PVT. LTD., MUMBAI

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ITA 6788/DEL/2019Status: DisposedITAT Delhi05 September 2022AY 2015-166 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that advertisement and sales promotion expenses are revenue in nature, as they are incurred periodically to enhance sales and profit, not for enduring benefit. The CIT(A) correctly followed the Tribunal's previous decisions on similar matters.

What were the facts?

The Revenue appealed against the deletion of additions made on account of advertisement and sales promotion expenses. The Assessing Officer considered these expenses to be capital in nature, while the CIT(A) treated them as revenue.

What were the issues?

Whether advertisement and sales promotion expenses are capital or revenue in nature. Whether the CIT(A) erred in deleting the addition made by the AO on this ground.

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI ‘E’ BENCH,

Before: SHRI N.K. BILLAIYA, & SHRI KUL BHARAT

For Respondent: Ms. Rakhi Vimal, CIT-DR, Shri Jitendra Chand, Sr. DR
Hearing: 05.09.2022Pronounced: 05.09.2022

Heard together (3 matters)

ITA No. 6787/DEL/2019
ITA No. 6788/DEL/2019
ITA No. 6789/DEL/2019

Read from the judgment's own cause title. This page is filed under one of them.

PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-

1.

The above captioned three separate appeals by the Revenue are preferred against three separate orders of the ld. CIT(A) - 37, New Delhi dated 13.05.2019 and 28.05.2019 pertaining to Assessment Years 2014-15, 2015-16 and 2016-17.

2.

Since common grievance is involved in all the three captioned appeals, they were heard together and are disposed of by this common order for the sake convenience and brevity. The quantum of deletion of addition may differ in each Assessment Year under consideration.

3.

At the very outset, we would like to refer to the following application moved by the ld. DR:

“BEFORE THE INCOME TAX APPELLATE TRIBUNAL HON’BLE E - BENCH, NEW DELHI

MAY IT PLEASE YOUR HONOURS

Reg: Appeal No. : & 6789/Del/2019 In the case of : Moet Hennessy India Pvt. Ltd. Asstt. Year : 2014-15,2016-17

The above appeals are fixed for hearing on: 05.09.2022.

It is submitted that certain information is being called from Assessing Officer in the above -mentioned case.

It is therefore requested to grant adjournment in the above mentioned •appeals and fix the appeals as per the date convenient to your Honours. I will be greatly obliged for this act of kindness.

(Rakhi Vimal) Commissioner of Income Tax(DR)-5 E-Bench, ITAT New Delhi

4.

The common ground in all the captioned appeals is that the ld. CIT(A) erred in deleting the addition on account of advertisement and sale promotion expenses treating the same as Revenue in nature and not considering the fact that such expenditure give benefit to the assessee of enduring nature, hence the same are capital in nature.

5.

This is the only ground in all the three appeals. The ld CIT-DR sought adjournment in and 6789/DEL/2019 whereas the ld. Sr. DR Shri Jeetendra Chand was ready to argue ITA No. 6788/DEL/2019.

6.

We fail to understand why the CIT-DR wanted adjournment when the ld. CIT(A) has followed the decision of this Tribunal given in Assessment Years 2012-13 and 2013-14 in and 5004/DEL/2014 respectively.

7.

Considering the facts, we decline to entertain the adjournment application. Case records carefully perused.

8.

As mentioned elsewhere, similar disallowances were made in Assessment Years 2012-13 and 2013-14 and the quarrel travelled upto the Tribunal and the Tribunal in and 5004/DEL/2014 for Assessment Years 2012-13 and 2013-14 has decided the dispute in favour of the assessee and against the Revenue. The relevant findings of the co-ordinate bench read as under:

“19. So, in this case, assessee has undisputedly incurred advertisement and sales promotion expenses periodically, and not at once just to refresh the product and quality to be sold in the memory of its customers. So, it cannot be held to be in the nature of enduring benefit for a trader.

20.

So, we are of the considered view that following the ratio laid down by Hon'ble Supreme Court and Hon'ble High Courts, discussed in the preceding paras, advertisement and sales promotion expenses have been incurred by the assessee just to enhance its sales and profit and cannot be treated as capital in nature. Consequently, advertisement and sales promotion expenses debited by the assessee to the tune of Rs. 12,33,64,847/- & Rs. 14,69,15,576/- for AYs 2012-13 & 2013-14 are ordered to be treated as revenue in nature and addition made/ confirmed by the Id. AO/CIT (A) on this score is ordered to be deleted. Hence, ground no. 2 of (AY 2012-13) and No.5004/ Del/ 2014 (AY 2013-14) is determined in favour of the assessee.

9.

As no distinguishing decision has been brought to our notice and finding that the ld. CIT(A) has followed the decision of this Tribunal [supra], we do not find any reason to interfere with the findings of the ld. CIT(A).

10.

In the result, all the three appeals of the Revenue in ITA Nos.

6787/DEL/2019, 6788/DEL/2019 and 6789/DEL/2019 are dismissed.

The order is pronounced in the open court on 05.09.2022.

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