2017 (8) TMI 1486 - AT - Income Tax

Disallowance of advertisement expenditure - Held that - CIT(A) deleted the additions on account of disallowance of advertising and publicity expenses by following various orders of the Tribunal for several preceding assessment years. The matter went up-to Hon ble Delhi High Court and the departmental appeals have been dismissed by the Hon ble High Court vide its Judgment in CIT VERSUS MAHASHIAN DI HATTI LTD. 2015 (12) TMI 1182 - DELHI HIGH COURT . The issue is, therefore, covered in favour of the assessee by the Judgment of the Hon ble jurisdictional High Court and the Tribunal. - decided against revenue.

Summary

Issues:
- Disallowance of advertisement expenditure for various assessment years challenged by Revenue.

Analysis:
The judgment pertains to appeals by the Revenue against orders of the Ld. CIT(A)-I, New Delhi, for different assessment years. The primary issue in contention was the deletion of additions on account of advertisement expenditure disallowed by the Assessing Officer (A.O.). The A.O. had disallowed 20% of the advertisement and publicity expenses, alleging that these expenses promoted the Chairman, thus not being incurred wholly and exclusively for business purposes. The Ld. CIT(A) deleted these additions, citing precedents from the Tribunal in favor of the assessee.

In response to the Revenue's challenge, the assessee argued that the issue had been settled by the Hon’ble Delhi High Court in related cases, where it was held that the advertisement expenses were indeed for business purposes. The High Court emphasized that it was the assessee's prerogative to promote its products as deemed fit, and the disallowance lacked a valid basis. The Tribunal upheld the CIT(A)'s decision, leading to the dismissal of departmental appeals by the High Court.

The Ld. D.R. also acknowledged that the issue had been settled by the jurisdictional High Court in favor of the assessee. After considering the submissions and facts of the case, the Tribunal concluded that the Ld. CIT(A) rightly deleted the additions based on precedents and the High Court's judgment. Consequently, the departmental appeals were dismissed as lacking merit, as the issue was deemed to be conclusively settled in favor of the assessee by the High Court and the Tribunal.

In the final pronouncement, the Tribunal dismissed the departmental appeals, affirming the decisions of the lower authorities and the High Court. The judgment highlights the significance of legal precedents, the interpretation of business expenses, and the authoritative nature of High Court decisions in resolving disputes related to advertisement expenditure disallowances.