DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-20, JHANDEWLAN EXTN. vs. LOTUS HERBALS PRIVATE LIMITED , DELHI

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ITA 5143/DEL/2025Status: DisposedITAT Delhi15 January 2026AY 2017-18Bench: Sh. Satbeer Singh Godara, Judicial Member & Sh. Amitabh Shukla (Accountant Member)1 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the CIT(A)'s decision regarding the advertisement, sales promotion, and marketing expenses, noting it as a recurring issue where the assessee had succeeded in prior assessment years. For the Section 14A disallowance, the Tribunal followed precedents stating that only dividend-yielding investments should be considered for computation.

What were the facts?

The Revenue appealed against the CIT(A)'s order deleting the disallowance of advertisement, sales promotion, and marketing expenses amounting to Rs.23,57,61,205/-. The Revenue also contested the reversal of disallowance under Section 14A read with Rule 8D, amounting to Rs.42,49,228/-.

What were the issues?

Whether the CIT(A) was correct in deleting the disallowance of advertisement, sales promotion, and marketing expenses and the disallowance under Section 14A read with Rule 8D.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 14A

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Income Tax Appellate Tribunal, DELHI BENCH ‘E’, NEW DELHI

Before: Sh. Satbeer Singh Godara&

For Appellant: Adv. &, Ms. Deepashree Rao, Adv
For Respondent: Ms. Amish S. Gupt, CIT-DR
Hearing: 15.01.2026Pronounced: 15.01.2026

ORDER

Per Satbeer Singh Godara, Judicial Member:

1.

This Revenue’s appeal for Assessment Year 2017-18, arises against the CIT(A)-27, New Delhi’s DIN & order No. ITBA/APL/M/250/2025–26/1076443794(1) dated 22.05.2025, in proceedings u/s 147 r.w.s. 143(3) of the Income Tax Act, 1961 (in short “the Act”).

2.

Heard both the parties at length. Case file perused.

3.

The Revenue’s first and foremost substantive ground raised in the instant appeal seeks to reverse the CIT(A)’s action deleting the impugned advertisement, sale promotion and marketing expenses claim disallowance amounting to Lotus Herbals Pvt. Ltd. Rs.23,57,61,205/- made in the Assessing Officer assessment order dated 29.09.2022. It’s case accordingly is that the learned assessing authority had rightly disallowed the same on the ground that it was the assessee’s attempt to claim the impugned expenditure incurred with related parties/sister concerns Lotus Herbal Color Cosmetics and Kanidi Cosmetics; to reduce profitability so as to evade payment of higher taxes.

4.

That being the case, learned CIT-DR could hardly dispute that allowability of assessee’s advertisement, sales promotion and marketing expenditure is a recurring issue between the parties wherein it has already succeeded in assessment years 2013-14 to 2016-17 and 2019-20 in department’s five cases decided vide common order dated 23.12.2025 forming part of the case records. It is further made clear that there is no distinction on facts or law; as the case may be, stated to be arising in all these assessment years. We thus adopt judicial consistency to uphold the learned CIT(A)’s detailed discussion deleting the impugned expenditure. Rejected accordingly.

5.

Next comes the second substantive issue between the parties regarding section 14A r.w.s. Rule 8D disallowance of Rs.42,49,228/- made in the assessment order as reversed in the CIT(A)’s detailed discussion. Suffice to say, the earlier learned co-ordinate bench has already settled the same in light

Lotus Herbals Pvt. Ltd. of ACIT Vs. Vineet Investments Pvt. Ltd. (2019) 165 ITD 27 (Del. (SB) and ACB India Ltd. Vs. ACIT (2012) 347 ITR 108 (Del.) that only the dividend yielding investments ought to be taken into consideration whilst computing the impugned disallowance. This is what the learned CIT(A) has precisely done in the lower appellate discussion under challenge. We thus find no merit in the Revenue’s instant latter substantive ground as well.

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