Tribunal rules in favor of assessee for AY 2012-13 & 2013-14. Advertisement expenses treated as revenue.

The appeal for Assessment Year (AY) 2012-13 was allowed, and the appeal for AY 2013-14 was allowed for statistical purposes. Specific issues were remanded for fresh consideration. The Tribunal ruled in favor of the assessee regarding the nature of advertisement and sales promotion expenses, directing them to be treated as revenue expenses. The Tribunal also deleted the disallowance of bank guarantee commission and remanded the issue of road access charges back to the Assessing Officer for further review.

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Issues Involved:
1. Legality of the CIT(A) orders under Section 250 of the Act.
2. Nature of advertisement and sales promotion expenses (capital vs. revenue).
3. Nature of road access charges (capital vs. revenue).
4. Tax deduction on bank guarantee charges.
5. Principle of consistency in assessment.

Detailed Analysis:

Issue 1: Legality of the CIT(A) Orders
The assessee challenged the orders passed by the CIT(A) as "bad in law and on the facts and circumstances of the case." However, this ground was deemed general in nature and required no specific findings.

Issue 2: Nature of Advertisement and Sales Promotion Expenses
The assessee debited significant amounts for advertisement and sales promotion expenses in the profit & loss account for AYs 2012-13 and 2013-14, treating them as revenue expenses. The AO and CIT(A) reclassified these expenses as capital in nature, arguing they provided enduring benefits by propagating the brand name.

The Tribunal noted that the assessee incurred these expenses periodically to boost sales, which aligns with the nature of revenue expenses. Citing the Delhi High Court's decisions in Monto Motors Ltd. and Jubliant Foodworks (P.) Ltd., the Tribunal emphasized that advertisement expenses aimed at increasing sales are typically short-lived and should be treated as revenue expenses. The Tribunal concluded that the advertisement and sales promotion expenses did not create long-lasting benefits and ordered these expenses to be treated as revenue in nature, thereby deleting the additions made by the AO and CIT(A).

Issue 3: Nature of Road Access Charges
For AY 2013-14, the AO added Rs. 67,01,490 debited by the assessee for road access construction charges, treating them as capital expenses due to lack of evidence. The Tribunal remanded this issue back to the AO for fresh consideration, directing the AO to provide the assessee an opportunity to present evidence.

Issue 4: Tax Deduction on Bank Guarantee Charges
The AO disallowed Rs. 9,81,336 debited for bank guarantee commission under Section 40A(ia) due to non-deduction of TDS. The CIT(A) provided partial relief based on a CBDT Notification effective from January 1, 2013. The Tribunal noted that the bank guarantee commission does not fall under the definition of "interest" and is not subject to Section 194A. Additionally, it is not covered by Section 194H in the absence of a principal-agent relationship.

The Tribunal further referenced a Delhi High Court decision in Pr.CIT vs. Make My Trip India Pvt. Ltd., which clarified that the CBDT Notification is clarificatory and applicable retrospectively. Moreover, under the Second Proviso to Section 40A(ia), disallowance is not warranted if the income has been included in the total income of the banks, which are tax residents of India. Therefore, the Tribunal deleted the disallowance of Rs. 9,81,336.

Issue 5: Principle of Consistency in Assessment
The assessee argued that the CIT(A) failed to follow the principle of consistency despite no change in facts. This ground was considered general and did not require specific findings.

Conclusion:
- The appeal for AY 2012-13 was allowed.
- The appeal for AY 2013-14 was allowed for statistical purposes, with specific issues remanded for fresh consideration.

Order Pronouncement:
The order was pronounced in open court on April 24, 2019.

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