2017 (11) TMI 1312 - HC - Income Tax

Order of TPO - ITAT confirmed entire reimbursement received treated as its operating income - Held That - the Court is not inclined to revisit the issue and ITAT s view in the above matter is plausible. It does not give rise to any substantial question of law warranting interference with the impugned order of the ITAT. ITAT has followed the earlier order in the case of Samsung India Electronics Pvt. Ltd. v. Department of Income Tax 2013 (4) TMI 872 - ITAT DELHI was followed. Treatment of advertisement and sales promotion expenses on basis of brand promotion or capital nature - expenses on computer software and on recruitment and training - Held That - ITAT has affirm the order of CIT(A)in deleting the additions made of the above expenses by treating them as not resulting in benefits of an enduring nature. Revenue appeal dismissed.

Summary

Issues:
1. Exemption application
2. Condonation of delay in filing the appeal
3. Interpretation of Income Tax Act, 1961
4. Treatment of reimbursement as operating income
5. Treatment of advertisement and sales promotion expenses
6. Treatment of expenses on computer software and recruitment/training
7. Deemed income issue

Analysis:

1. Exemption Application:
The exemption application was allowed, subject to all just exceptions.

2. Condonation of Delay:
The delay of 2 days in filing the appeal was condoned by the court based on the reasons stated in the application.

3. Interpretation of Income Tax Act, 1961:
The appeal under Section 260A of the Income Tax Act, 1961 was filed by the Revenue against the order passed by the Income Tax Appellate Tribunal for the Assessment Year 2002-03.

4. Treatment of Reimbursement as Operating Income:
The issue regarding the treatment of reimbursement received by the Assessee as operating income was raised. The ITAT directed that the entire reimbursement should be treated as operating income, following its earlier order in a similar case. The Court affirmed the ITAT's decision, stating that it does not give rise to any substantial question of law.

5. Advertisement and Sales Promotion Expenses:
The ITAT affirmed the order of the CIT (A) in deleting the additions made on the grounds of advertisement and sales promotion expenses, considering them not resulting in enduring benefits. The Court agreed with the decisions of both the CIT (A) and the ITAT on this matter.

6. Expenses on Computer Software and Recruitment/Training:
The issues related to expenses on computer software and recruitment/training were also raised. The ITAT affirmed the order of the CIT (A) in deleting the additions made on these grounds, stating that they do not result in enduring benefits. The Court found the decisions of both authorities justified.

7. Deemed Income Issue:
The issue of deemed income was raised, and the ITAT affirmed the order of the CIT (A) in deleting the addition. The ITAT relied on its earlier order in a similar case. The Court concluded that no substantial question of law arises in this regard.

In conclusion, the appeal was dismissed by the Court as it found no substantial question of law warranting interference with the impugned order of the ITAT. The decisions of the CIT (A) and the ITAT on various issues were upheld, and the appeal was accordingly dismissed.