TaxTMI 
TaxTMI 
2008 (4) TMI 219
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....-89, the following substantial question of law has been referred for opinion of this Court : "Whether on the facts and in the circumstances of the case, the Tribunal was justified in confirming the orders of CIT (A) that expenses of Rs.1,86,406/- and Rs. 1,79,833/- debited to Publicity and Advertisement account were of revenue nature." 2. In all the 10 appeals, filed by the revenue, which are arising from the orders of the Tribunal, pertaining to the different assessment years, the Revenue has raised the following substantial question of law for determination of this Court : "Whether the ITAT was right in law in confirming the order of CIT (A) that the expenses incurred on Glow Sign Boards were of revenue nature?" 3. In three appeals i.e. ITAs No. 200 of 2005, 159 and 160 of 2006, the following additional substantial question of law has been raised by the Revenue : "Whether the ITAT was correct in law in allowing assessee's claim for deduction under Section 80 I of the Income Tax Act, 1961, when conditions laid down for grant of such deduction were not fulfilled?" 4. In all these 11 cases, the assessee is M/s Liberty Enterprises, Karnal and M/s Liberty Group Marke....
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.... Cycle Inds. Ltd. is also valid as the Revenue apparently accepted the findings of the learned CIT (A), Chandigarh in that case to the effect that expenditure on Glow-signs was of a revenue nature. It is also true that the Supreme Court of India has repeatedly held that where two opinions are possible on an issue the view in favour of the assessee should prevail. The expenditure in question was clearly in the nature of advertisement and publicity. Thus, even if the Bombay High court view is against the appellant, the issue will have to be decided in favour of the appellant in view of the Himachal Pradesh High Court judgment particularly since there is no judgment on this issue of the jurisdictional High Court i.e. Punjab and Haryana High Court or the Supreme Court of India. Considering these facts, the learned Assessing Officer is held to have not been justified in treating the expenditure in question to be of a capital nature. The expenditure in question is held to be allowable as revenue expenditure. The learned Assessing Officer is directed to allow the same. He shall, however, withdrew the depreciation, if any allowed on this expenditure." 6. Feeling aggrieved ag....
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....n of the assessee. The said expenditure is not a long period expenditure and the Glow Sign Boards are destroyed or damaged every year and the assessee has to spend on such Glow Sign Boards on each year. Therefore, the expenditure incurred on the Glow Sign Boards is not for the enduring advantage of the business. Learned counsel referred to the finding of the Tribunal, where it has been held that the expenditure incurred by the assessee on Glow Sign Boards is being incurred regularly in almost each year. This finding in itself shows that the Glow Sign Boards, on which the expenditure had been incurred every year, were not of permanent nature. Therefore, the expenditure incurred by the assessee is not for acquiring an asset of permanent nature. Learned counsel submitted that the decision of the Bombay High Court, as relied upon by learned counsel for the Revenue, is not applicable to the facts and circumstances of the case. In that case, the expenditure incurred by the assessee for purchasing the film was taken to be the enduring advantage and thus, the said expenditure was held to be of capital nature. Learned counsel submitted that the purchasing of a film and expenditure on ....
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.... 11. In Bombay Steam Navigation Co. (1953) Private Ltd. v. Commissioner of Income Tax, Bombay, (1965) 56 ITR 52, it was observed that if the expenditure is so related to the carrying on or conduct of the business that it may be regarded as an integral part of the profit-earning process, then such expenditure is to be taken as revenue expenses. In Lakshmiji Sugar Mills Co. P. Ltd. v. Commissioner of Income Tax, New Delhi, (1971) 82 ITR 376, it was held that if the expenditure is made not for the purpose of bringing into existence any asset or advantage but for running the business or working it with a view to produce the profit, it is a revenue expenditure. It was held that the criteria has to be applied from the business point of view and on a fair appreciation of the whole situation. In Commissioner of Income Tax v. Madras Auto Service (P) Ltd., (1998) 233 ITR 468, it was held as under : "the general principles applicable in determining whether a particular expenditure is capital or revenue are as follows : (1) Outlay is deemed to be capital when it is made for the initiation of a business, for extension of a business, or for a substantial replacement of equipment; (2) Expen....
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....aid expenditure was disallowed by the Assessing Officer being not of revenue nature, by placing reliance upon the decision of the Bombay High Court in the case of M/s Patel International Film Ltd., (supra). The CIT (A) allowed the said expenditure by considering the same as an expenditure of advertisement and publicity in view of subsection (3) of Section 37 of the Act, while relying upon the decision of the Himachal Pradesh High Court in the case of Mohan Meakin Breweries Ltd. (supra), where it was held that the expenditure on advertisement and publicity cannot be treated as capital expenditure. The decision of the CIT (A) was affirmed by the Tribunal on the same reasoning. In our view, the expenditure on production of a TV film was rightly ordered to be deducted on account of advertisement expenditure in view of sub-section (3) of Section 37 of the Act, which was in force at that time. Sub-section (3) which has been omitted by Finance Act 1997 with effect from 1.4.1998 dealt with three types of expenditure, one on advertisement, second on maintenance of any residential accommodation and third in connection with travelling by an employee or other person. It was held that Section 3....