Revenue expenditure and arbitrary disallowance principles prevailed where earlier year findings on unchanged facts were followed.

Identical issues already concluded in the assessee's own earlier years were followed on unchanged facts, and the coordinate bench rulings were treated as binding for the year under review. On that basis, the franchise fee paid for IPL participation was regarded as revenue expenditure, not capital expenditure. The ad hoc 10% disallowance of hospitality expenses was also deleted because the expenditure was accepted as business-related and no distinguishing material justified an arbitrary reduction. The Revenue's challenge therefore failed, and the relief granted by the first appellate authority was maintained.

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Issues: (i) Whether franchise fee paid to BCCI for participation in IPL was revenue expenditure allowable in the year of payment or capital expenditure; (ii) Whether the ad hoc disallowance of 10% of hospitality expenses was sustainable.

Issue (i): Whether franchise fee paid to BCCI for participation in IPL was revenue expenditure allowable in the year of payment or capital expenditure.

Analysis: The issue was held to be covered by the assessee's own cases for earlier assessment years, where similar franchise fee payments were accepted as revenue in nature. No distinguishing facts or contrary higher-court reversal was shown. The pendency of the Revenue's appeals before the High Court did not dilute the binding force of the coordinate bench rulings for the year under consideration.

Conclusion: The franchise fee was held to be revenue expenditure, and the Revenue's challenge was rejected.

Issue (ii): Whether the ad hoc disallowance of 10% of hospitality expenses was sustainable.

Analysis: The issue was treated as covered by earlier coordinate bench decisions in the assessee's own case, which had deleted similar disallowances on the footing that the hospitality expenditure was business-related and that an arbitrary percentage disallowance could not be sustained on the same facts. No material change in facts or law was shown.

Conclusion: The disallowance of hospitality expenses was deleted and the Revenue's challenge failed.

Final Conclusion: The Revenue's appeals did not succeed on any of the disputed additions, and the relief granted to the assessee by the first appellate authority was maintained in full.

Ratio Decidendi: Where an identical issue is already concluded in the assessee's own case on unchanged facts, judicial discipline requires following the coordinate bench ruling unless it has been reversed or stayed; an ad hoc disallowance unsupported by distinguishing material cannot be sustained.

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