2015 (11) TMI 1898 - HC - Income Tax

Expenditure incurred on advertisement and sales promotion - Tribunal deleting the disallowance of 81.25% of the expenditure incurred as relying on of M/s. Star India Pvt. Ltd 2009 (3) TMI 990 - BOMBAY HIGH COURT - as per revenue main liability to incur the said expenditure lay with the holding company of the assessee and that SLP filed by the Department has been admitted by the Hon'ble Supreme Court against the decision of this Court in the case of M/s. Star India (P) Ltd. relied on by the Tribunal HELD THAT - Revenue very fairly states that although the question as formulated proceeds on the basis the SLP filed by the Revenue against order of this Court in Star India Pvt. Ltd. (supra) has been admitted, in fact, it is not so. The Apex Court has only issued a notice before admission. In fact, the SLP is awaiting admission. Be that as it may, no fault can be found with the impugned order of the Tribunal in having allowed the Respondent Assessee's appeal following the decision of this Court in Star India Pvt. Ltd. (supra). No distinguishing feature in the present facts from that existing in Star India Pvt. Ltd. (supra) has been pointed out to us which would warrant our taking a different view in the present appeal. No substantial question of law arise

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding disallowance of expenditure on advertisement and sales promotion for Assessment Year 2005-06.

Analysis:
The High Court heard an appeal under Section 260A of the Income Tax Act, 1961, challenging the Tribunal's order dated 20th March, 2013, for the Assessment Year 2005-06. The main issue raised by the Revenue was whether the Tribunal was correct in deleting the disallowance of 81.25% of the expenditure on advertisement and sales promotion, amounting to Rs. 32,49,91,062. The Revenue argued that the liability to incur the expenditure lay with the holding company of the assessee, and the Supreme Court had admitted the SLP against a similar decision in the case of M/s. Star India Pvt. Ltd. However, the Tribunal had allowed the Respondent Assessee's appeal, citing the decision of the High Court in the case of M/s. Star India Pvt. Ltd. (Income Tax Appeal No. 165 of 2009).

The Counsel for the Revenue acknowledged that the SLP filed against the decision in Star India Pvt. Ltd. had not been admitted by the Supreme Court and was awaiting admission. The High Court found no fault with the Tribunal's decision to allow the Respondent Assessee's appeal based on the precedent set by the decision in Star India Pvt. Ltd. The Court noted that no distinguishing feature in the present case warranted a different view from the one taken in the earlier case. Consequently, the High Court concluded that since the issue was already settled by the decision in Star India Pvt. Ltd., no substantial question of law arose for consideration in the current appeal.

In the final judgment, the High Court dismissed the appeal, stating that no order as to costs was necessary. The decision was based on the precedent set by the earlier case and the lack of any new factors that would require a different outcome.