2018 (7) TMI 2238 - HC - Income Tax

Expenses incurred on account of advertisement, publicity and sales promotions - HELD THAT - Tribunal found such addition to be erroneous. TDS u/s 195 - TDS liability on income accrued outside India - HELD THAT - Tribunal has considered in detail the nature and expenses in respect of which the assessee was sought to be penalised for not deducting the tax deducted at source, holding that these expenses were in respect of the income accrued outside the territory of India for services rendered. Deduction allowed for writing off advance - Revenue s stand is that the course followed by the Commissioner or the Tribunal was not permissible, as specific deduction was not claimed in the return - HELD THAT - There are two authorities of this Court in the cases of Binani Cement Ltd. 2015 (3) TMI 849 - CALCUTTA HIGH COURT and Commissioner of Income-Tax Vs. Britannia Industries Ltd. 2017 (7) TMI 502 - CALCUTTA HIGH COURT where deduction claimed for the first time before the appellate authority was found to be permissible. Revenue relies on the decision of the Supreme Court in the case of Goetze (India) Ltd. Vs. Commissioner of Income-Tax reported in 2006 (3) TMI 75 - SUPREME COURT . However this authority was considered in Britannia Industries Ltd. where it was held that the impermissibility of such a course was confined to the case of the assessing officer only Treatment of writing off amount which was invested by the assessee in a joint venture agreement - The Tribunal allowed deduction of the same as Revenue expenditure. Revenue s stand on the other hand is that such investment was in capital assets and Revenue s expenditure ought not to have been allowed by the Tribunal following the decision in Binani Cement Ltd 2015 (3) TMI 849 - CALCUTTA HIGH COURT allowed the claim of the assessee. We do not find any error of law in such a course being adopted as the point involved is covered in favour of the assessee in the aforesaid authority. Treatment of certain expenses - Unclaimed salary and wages and depreciation were allowed by the two statutory appellate fora - HELD THAT - There is concurrent finding of fact on the points involved in these questions which cannot be held to be perverse. In our opinion, no substantial question of law is involved in this appeal. The appeal and the stay petition shall stand dismissed.

Summary

Issues involved:
1. Disallowance of expenses incurred on advertisement, publicity, and sales promotions.
2. Penalty for not deducting tax at source on certain expenses.
3. Deduction allowed for writing off advance.
4. Treatment of writing off amount invested in a joint venture agreement.
5. Treatment of unclaimed salary, wages, and depreciation expenses.

Analysis:

1. The first issue pertains to the disallowance of expenses incurred on advertisement, publicity, and sales promotions. The Tribunal found the addition of these expenses to be erroneous based on the facts presented. The Appellate Court agreed with the Tribunal's decision, indicating that there was no question of law involved in this aspect.

2. The second and third issues revolve around the penalty imposed for not deducting tax at source on certain expenses related to income accrued outside the territory of India. The Tribunal examined the nature of these expenses and concluded that penalizing the assessee for not deducting tax at source was unwarranted in this case.

3. Moving on to the third issue, which concerns the deduction allowed for writing off advance, the Revenue contended that the deduction was impermissible as it was not specifically claimed in the return. However, citing precedents, the Court highlighted instances where such deductions were deemed permissible when claimed before the appellate authority, thus upholding the Tribunal's decision.

4. The fourth issue involves the treatment of the amount written off by the assessee in a joint venture agreement. The Tribunal allowed the deduction of this amount as revenue expenditure, contrary to the Revenue's stance that it should be considered an investment in capital assets. The Court supported the Tribunal's decision, citing relevant case law in favor of the assessee.

5. Lastly, the fifth issue pertains to the treatment of unclaimed salary, wages, and depreciation expenses. Both statutory appellate bodies had allowed these expenses, and the Court found no perversity in their concurrent findings of fact. Consequently, the Court concluded that no substantial question of law was involved in this matter, leading to the dismissal of the appeal and stay petition.