TaxTMI 
TaxTMI 
2015 (6) TMI 279
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....e grounds of appeal taken in these three appeals are reproduced below: 1.1 I.T.A.No. 5661/Del/2011: "1. "The Ld. C!T(A) erred in deleting addition of -1,34,35,168/- made by the AO on account of disallowance of Management Fee." 2. "The Ld. CIT(A) erred in deleting the addition of Rs. 21,56,211/- made by the AO on account of Capitalization of Advertisement expenses." 3. "The Ld. CIT(A) erred in deleting the addition of Rs. 1,22,500/- made by the AO on account of Filing Fees paid to the Registrar of Companies for increasing its Authorized Share Capital." 1.2 I.T.A.No. 4932/Del/2012: "1. "On the facts and in the circumstances of the case, the Id. CIT(A) has erred in law as well as on merits in deleting the addition on account of advertisement expenditure amounting to Rs. 29,06,982/-. 2. "On the facts and in the circumstances of the case, the Id. CIT(A) has erred in law as well as on merits in deleting the addition on account of depreciation on printers and other peripherals of Rs. 60,4101-." 1.3 I.T.A.No. 4443/Del/2013: "1. "On the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs. 25,47,682/- on account of advertisement....
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....es and for students registered for UK University. Our attention was invited to paper book page 179-181 where the basis of allocation of expenses was placed. Our specific attention was invited to paper book page 181 where distribution of expenses of general and administrative rent etc., were placed. It was further submitted that the management fee as debited in the P & L account were credited to payee after deduction of appropriate taxes and moreover, it was submitted that even service taxes were paid on such management fee and therefore, the allegation of the A.O. that agreement was used for minimizing the taxes is not correct. It was further submitted that both the companies i.e. payer and payee are Indian domestic companies and expenses incurred by one company had become income of another company. Our attention was invited to paper book page 133 where a part of copy of balance sheet relating to payee company was placed and our specific attention was invited to the fact that income received by this company on account of management fee has been reduced from its expense and thereby the payee company had declared more profit to this extent and, therefore, it was submitted that there ....
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....if inflated in one company will become income in another group company. Therefore, there is no tax advantage to the group as a whole in inflating and deflating the profits of one company. Moreover, the assessee has been subjected to significant service tax payments on account of management fee. Therefore, there was in fact no advantage to Assessee Company to evade income tax. Ld. CIT(A) had dealt the issue in a reasonable manner. For the sake of convenience, findings of Ld. CIT(A) in this respect are reproduced below: "3.13 I have carefully considered the findings of the AO, the written submissions made by the appellant on the same including all relevant material placed on record and judicial precedents relied upon by the appellant. During the course of the appellate proceedings the appellant has rebutted the allegations made by the AO as follows: a) Appellant duly submitted details of the expenses comprising of the management expense along with documentary evidence to support the incurrence of such expenditure by SOIPL. b) Appellant submitted a detailed note to substantiate the necessity of cross charge of expenditure incurred by SOIPL to the appellant and duly demonstrat....
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....iled to define the period over which such benefit is expected to be incurred. Thus, placing reliance on the judicial precedents specifically the decision jurisdictional Delhi High Court in case of Salora International (supra) and the decision of the Madras High Court in case of Brilliant Tutorials P Ltd (supra) which is on similar fact pattern, the claim of advertisement expenditure made by the appellant is correct and the addition made by the AO is deleted. As a result, the Ground No 4 of the appeal is allowed." 5.3 Ld. CIT(A) has followed the jurisdictional High Court decision and there is no infirmity in his findings. Therefore, ground No.2 is also dismissed. 5.4 Ground No.3 has been decided by Ld. CIT(A) by holding as under: "During the course of the assessment proceedings, the AO observed that as per clause 17(a) of the Tax Audit Report pertaining to A.Y. 2008-09 the appellant had deposited filing fee of Rs. 1,22,500 with the Registrar of Companies for increase in authorized share capital of the Company. Since the same is in the nature of a capital expenditure, hence, the AO disallowed the same U/s 37 of the Act. In this regard, the appellant submitted that the filing....
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....is is the first year of operation of the company, the advertisement expenditure would render enduring benefit to the company. Moreover, the AO has failed to define the period over which such benefit is expected to be incurred. Thus, placing reliance on the judicial precedents specifically the decision jurisdictional Delhi High Court in case of Salora International (supra) and the decision of the Madras High Court in case of Brilliant Tutorials P Ltd (supra) which is on similar fact pattern, the claim of advertisement expenditure made by the appellant is correct and the addition made by the AO is deleted. This issue has also been decided in favour of assessee's sister concern in my order dated 23.9.11 vide Appeal 0.118/2010- l l for the A.Y.2008-09. Hence, these grounds of the appeal are allowed. Ground No.3. I have examined the issue and have also considered the submission made by the appellant as well as facts stated in the assessment order, on the same including all relevant material placed on record and judicial precedents relied upon by the appellant. The accessories and peripherals of computer provide input processing, storage and various output devices. The output d....