Appeal Dismissed: Tribunal's Deletion of 81.25% Ad Expenditure Disallowance for 2005-06 Stands, Precedent Cited.

The HC dismissed the appeal challenging the Income Tax Appellate Tribunal's decision to delete the disallowance of 81.25% of the expenditure on advertisement and sales promotion for the Assessment Year 2005-06. The Revenue's argument that the expenditure liability lay with the holding company was not upheld. The HC relied on the precedent set in the case of M/s. Star India Pvt. Ltd., where a similar decision was made, and noted no new factors justified a different outcome. Consequently, the appeal was dismissed with no order as to costs.

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Issues:
Challenge to order of Income Tax Appellate Tribunal regarding disallowance of expenditure on advertisement and sales promotion for Assessment Year 2005-06.

Analysis:
The High Court heard an appeal under Section 260A of the Income Tax Act, 1961, challenging the Tribunal's order dated 20th March, 2013, for the Assessment Year 2005-06. The main issue raised by the Revenue was whether the Tribunal was correct in deleting the disallowance of 81.25% of the expenditure on advertisement and sales promotion, amounting to Rs. 32,49,91,062. The Revenue argued that the liability to incur the expenditure lay with the holding company of the assessee, and the Supreme Court had admitted the SLP against a similar decision in the case of M/s. Star India Pvt. Ltd. However, the Tribunal had allowed the Respondent Assessee's appeal, citing the decision of the High Court in the case of M/s. Star India Pvt. Ltd. (Income Tax Appeal No. 165 of 2009).

The Counsel for the Revenue acknowledged that the SLP filed against the decision in Star India Pvt. Ltd. had not been admitted by the Supreme Court and was awaiting admission. The High Court found no fault with the Tribunal's decision to allow the Respondent Assessee's appeal based on the precedent set by the decision in Star India Pvt. Ltd. The Court noted that no distinguishing feature in the present case warranted a different view from the one taken in the earlier case. Consequently, the High Court concluded that since the issue was already settled by the decision in Star India Pvt. Ltd., no substantial question of law arose for consideration in the current appeal.

In the final judgment, the High Court dismissed the appeal, stating that no order as to costs was necessary. The decision was based on the precedent set by the earlier case and the lack of any new factors that would require a different outcome.

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