2009 (4) TMI 1032 - AT - Income Tax

Summary

Issues involved: Appeal against CIT order u/s 263 for advertisement and publicity expenses, appeal against disallowance of foreign travel expenses, revenue's appeal against deletion of prior period expenses.

Issue 1: Advertisement and Publicity Expenses
The appeal was against the CIT's order u/s 263 regarding the deduction claimed for advertisement and publicity expenses. The original assessment allowed the claim without discussion. The CIT contended that the provision for advertisement and publicity expenses was for unascertained liability and not deductible. The assessee argued that the provision was based on purchases made by distributors under a scheme, making it an allowable expenditure. The ITAT set aside the CIT's order, restoring that of the Assessing Officer.

Issue 2: Disallowance of Foreign Travel Expenses
The appeal challenged the disallowance of a portion of foreign travel expenses. The Assessing Officer disallowed a balance of expenses after allowing a portion based on proof of business purpose. The CIT (Appeals) upheld the disallowance. The ITAT found that the Assessing Officer's disallowance of a lesser amount was justified due to lack of full details, reversing the CIT (Appeals) order.

Issue 3: Deletion of Prior Period Expenses
The revenue's appeal concerned the deletion of addition on account of prior period expenses. The assessee argued that the expenses accrued in the relevant previous year, justifying their deduction in the assessment year under consideration. Citing relevant case law, the ITAT upheld the CIT (Appeals) decision to allow the claim, dismissing the revenue's appeal.

In summary, the ITAT allowed the assessee's appeal in ITA No.2403/Del/2008, partly allowed the assessee's appeal in ITA No.1561/Del/2008, and dismissed the revenue's appeal in ITA No.1216/Del/2008.