2019 (2) TMI 2111

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....our of the appellant by the order of the Delhi Bench of the Tribunal in the appellant's own case for assessment years 2007-08, 2008-09 & 2009-10 in ITA Nos. 5650/Del/2011, 6240/Del/2012 and 916/Del/2014, order dated 29.04.2016. He further submitted that the decision was followed by Tribunal in appellant's own case for the assessment years 2010-11, 2011-12 and 2012-13 in ITA Nos. 1516/Del/2015, 1004/Del/2016 and 1706/Del/2017, order dated 22.01.2018. 5. He submitted that the DRP at page no. 2 para 3 has stated as under: "3. The DRP has considered the submission of assessee and finds this is a legacy issue and has been the subject matter of adjudication by this Panel in several earlier years including AY 2013-14. It is to be noted that the issue was decided by the Hon'ble ITAT in favour of assessee for AY 2007-08 to 2009-10 vide order dated 29.04.2016 (2016) 70 taxmann.com 67 (Delhi-Trib), and for AY 2010-11 and 2011-12 vide order dated 22.01.2018. Revenue's appeal before the Hon'ble Delhi High Court (against ITAT's order dated 29.04.2016) has been admitted in ITA No. 77 to 79/2017 vide order dated 13.02.2017. We have examined the facts carefully i....

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....uted facts of the case are that during the financial year 2014-15, the assessee company incurred a sum of Rs. 12,69,00,000/- towards advertising and sales promotion. The AO required the assessee to show cause as to why the expenditure incurred on advertisement should not be disallowed being in the nature of brand building activity. In reply to the show cause notice, the assessee submitted that any disallowance on account of advertisement and sales promotion expenses holding the same to be incurred for brand building for the entities owing brand shall not be sustainable in law. It was further submitted that the expenses were incurred for advertisement/marketing support activities etc. and are incidental to carrying on the business and were incurred by the assessee regularly for promotion/quality control and its product. The expenses incurred are to enable and increase efficiency in business and therefore, was revenue in nature and deductible u/s. 37 of the Act. The expenses are solely incurred for the benefit of the assessee and not its foreign affiliate. Any benefit flowing to the foreign affiliate out of the said expenditure is purely incidental. Thus, the expenditure incurred on ....

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.... terms of section 37(1) of the Act, deduction is admissible for expenditure incurred wholly and exclusively for purposes of business. Expenditure justified by business considerations and incurred out of commercial expediency is allowable deduction. It was also submitted that since the aforesaid expenditure of advertisement and brand promotion has undergone a benchmarking analysis under the Transfer Pricing regulations and an arm's length price thereof has been determined, there could not be any further disallowance of the said payment under section 37(1) of the Act, holding the same to be not an expenditure incurred wholly and exclusively for the purpose of the business of the appellant. Reliance is placed on the decision of the Hon'ble Delhi Bench of the Tribunal in the case of Whirlpool of India Ltd. vs. DCIT (ITA No. 426/D/13), wherein, it is held as under: "16. ......................Once the total amount of AMP expenses is processed through the provisions of Chapter X of the Act with the aim of making TP adjustment towards AMP expenses incurred for the foreign AE, or in other words such expenses as are not incurred for the assessee's business, ther....

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....of income u/s. 139(1) of the Act and hence, no disallowance u/s. 36(1)(va) of the Act should be made. 18. The Assessing Officer, however did not accept the explanation of the assessee and held that as per para 5 of CBDT Circular No. 22/2015 dated 17.12.2015, the Board has clarified that the such claim of deduction are governed by Section 36(1)(va) of the Act. Therefore, he held that accordingly the claim for deduction regarding the employee's contribution deposited after the due date as per ESI rules has to be seen within the provisions of Section 36(1)(va) of the Act and since the assessee has defaulted, accordingly, an amount of Rs. 26,79,798/- is added to the income of the assessee. 19. On appeal, the DRP confirmed the order of the AO. 20. At the time of hearing, the ld. Counsel for the assessee submitted that the issue has been decided against the assessee and in favour of the revenue by the Hon'ble Delhi High court in the case of CIT Vs M/s. Bharat Hotels Ltd. in ITA No. 271/2005, order dated 06.09.2018. 21. We find that the Hon'ble Delhi High Court has held as under: "8. Having regard to the specific provisions of the Employees' Provident ....