2014 (2) TMI 1284 - AT - Income Tax

Deduction u/s.80P(2)(a)(vi) - Held that - As decided in assessee s own case for A.Y. 2007-08 CIT(A) was justified in directing the Assessing Officer to allow the claim of the assessee. This view is fortified by the judgment of Hon ble Supreme Court in the case of Kerala State Co-operative Marketing Federation Ltd & Others Vs. CIT 1998 (5) TMI 6 - SUPREME Court - Decided in favour of assessee Allowability of advertisement expenses - AO disallowed the same on the ground that the assessee has not provided proof that it was for the purpose of business purpose - Held that - It is not a case of the Assessing Officer that the expenditure has not been incurred. Since the assessee has established the expenditure incurred on account of commercial expediency so the commercial expediency is to be viewed from the view point of businessman / assessee. The facts on record indicate the impugned expenditure is on account of public visits of State ministers local elected representatives and other dignitaries to the city of Nashik and the premises of society who have helped the assessee in getting more contracts for labour therefore commercial expediency established. In the facts and circumstances the expenditure was rightly made by the assessee for business purpose and the same was rightly directed by the CIT(A) to deleted the expenditure incurred wholly and exclusively for the growth of assessee s business. Accordingly the same is upheld.- Decided in favour of assessee

Summary

Issues:
1. Quashing of proceedings u/s 147 & 148 of the I.T. Act, 1961
2. Allowability of deduction u/80P(2)(a)(vi)
3. Treatment of Advertisement expenses

Quashing of Proceedings u/s 147 & 148:
The appeals filed by the revenue pertained to the same assessee for different assessment years. The main issue was the quashing of proceedings u/s 147 & 148 of the I.T. Act, 1961. The CIT (A) had annulled the subsequent assessment order, which was challenged by the revenue. The Assessing Officer initiated proceedings u/s 147 issuing a notice u/s 148. The CIT (A) quashed the proceedings, which was contested by the revenue. The Authorized Representative supported the CIT (A) order, citing precedents in favor of the assessee. The Tribunal upheld the CIT (A) order, emphasizing the justification for allowing the claim of the assessee under section 80P(2)(a)(vi) based on relevant case law.

Allowability of Deduction u/80P(2)(a)(vi):
The assessee, a cooperative bank, claimed a deduction u/s.80P(2)(a)(vi) which was initially accepted. The Assessing Officer disallowed the deduction in subsequent proceedings, which was later granted by the CIT (A). The revenue opposed this, arguing that the assessee was not a cooperative society but a district federation of laborers, hence not eligible for the deduction. However, the Tribunal upheld the CIT (A) decision, citing consistency in previous judgments and the commercial expediency of the expenses incurred by the assessee.

Treatment of Advertisement Expenses:
Another issue was the allowability of advertisement expenses of Rs.1,68,600. The Assessing Officer disallowed the expenditure, but the CIT (A) allowed it, considering the commercial expediency and benefits to the business. The Tribunal upheld the CIT (A) decision, emphasizing that the expenditure was incurred for business purposes and was beneficial for the growth of the business. The Tribunal found the expenditure to be justified and upheld the CIT (A) order.

In conclusion, all three appeals filed by the revenue were dismissed, with the Tribunal upholding the CIT (A) decisions on the quashing of proceedings u/s 147 & 148, the allowability of deduction u/80P(2)(a)(vi), and the treatment of advertisement expenses. The Tribunal's detailed analysis considered legal precedents, commercial expediency, and the business benefits derived from the expenses incurred by the assessee.