TaxTMI 
TaxTMI 
2015 (12) TMI 1761
X X X X Extracts X X X X
X X X X Extracts X X X X
....s of providing cellular mobile telephony network in the telecom circle of Delhi. The assessee filed its return of income declaring total income of Rs. 5,81,140/-. The assessment was completed at a total income of Rs. 537,13,54,673/-, inter alia, by making following additions/ disallowances: Disallowance of commission expenditure Rs. 6,24,87,988 Disallowance of advertisement expenditure Rs. 9,17,179/- Disallowance on account of capitalization of WPC expenses Rs. 39,70,17,632 3. Ld. CIT(A) partly allowed the assessee's appeal. Being aggrieved, the department is in appeal before us and has taken following grounds of appeal: 1. Ld. CIT(A) erred in law by allowing relief f Rs. 6,24,87,988/- against addition made by the AO by....
X X X X Extracts X X X X
X X X X Extracts X X X X
....unt payable to dealers based on scheme launched by the company for specific period - 'this represents the amount paid to the dealers by cross check." 5. Further, the assessee was required to furnish the confirmation of the commission payments made to the top 25 parties, which was also filed before the AO. The assessee also submitted that since its books of a/c had duly been audited by the auditors and in their report they have not given any adverse comments, therefore, in the absence of any evidence, additions/disallowances were totally uncalled for. The AO, however, disallowed 10% of the commission expenses, inter alia, observing as under: The reply of the assessee has been duly considered. The onus for proving the genuineness of a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....allowance can be made unless the AO brings any specific detail on record which may call for any disallowance. Accordingly, this ground is dismissed. 10. Brief facts apropos ground no. 2 are that AO noticed that assessee had incurred advertisement expenditure amounting to Rs. 3,14,244/- on product launches and INR 9,08,662/- on granty signs. The AO was of the view that this expenditure gave enduring benefit to the assessee and, therefore, it should have been capitalized. He has referred to the assessee's submission wherein it was stated that the expenditure represented the assessee's display at various locations including at the dealer shop. Further, it was pointed out that granty signs had a very short shelf life as they keep chang....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9] 308 ITR 199 (Delhi) Advertisement expenditure for launching products is revenue expenditure (iii) CIT v. Pepsico India Holdings (P.) Ltd. [2012] 207 Taxman 5 (Mag.) (Delhi) Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessee incurred certain expenditure on advertising and marketing of its products and claimed it as business expenditure', Assessing Officer disallowed expenditure incurred on glow signs and neon signs holding that same was of capital nature - Whether since expenditure in question was in fact in furtherance of business of assessee and, thus, had direct nexus with its business, and by putting neon signs and glow signs, no assets of permanent nature was created, it was an allowab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....harti Cellular Ltd v. Dy. CIT in ITA No 5335/Delhi/2003; - Bharti Airtel Ltd. v. ACIT TA No 398/Mumj2006; and - Comsat Max Ltd Vs DClT ITA 728 & 701/DeI/2005; - Mahanagar Telephone Nigam Ltd Vs CIT (100 TIJ 1). 15. The AO referred to the decision of Hon'ble Supreme Court in the case of Assam Bengal Cement Co. Ltd. (supra), wherein it has been observed and held as under: "The appellant company acquired from the Government of Assam, for the purpose of carrying on the manufacture of cement, a lease of certain limestone quarries for a period of twenty years for certain half-yearly rents and royalties. In addition to the rents and royalties the appellant agreed to pay the lessor annually a sum of Rs. 5,000 during the whole period of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the decision of Hon'ble Delhi High Court in Fascel Ltd. 221 CTR 305 (supra) allowed the assessee's claim. 18. We have considered the rival submissions and have perused the record of the case. The facts are not disputed. The decision relied upon by the AO in the case of Assam Bengal Cement Co. Ltd. (supra) was rendered in entirely different factual matrix. The impugned amount was paid as a protection fee and was not a payment which was necessary for running the business, as is in the present case. The assessee could not run the business without making these payments on quarterly basis and, therefore, by no stretch of reasoning this could be held as capital in nature. The issue is no more res integra in view of the decision of Hon&#....