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2018 (10) TMI 1351 - AT - Income TaxAd hoc disallowance of advertisement expenditure - Held that - Although the Ld. CIT (A) has made an ad hoc disallowance without pointing out any specific instance where the vouchers were not available and the Ld. Authorised Representative has also drawn our attention to the various documentary evidences filed in support of these expenses as available on pages 148,149,151,154, 155,169,171,174 and 176 of the paper book filed by the assessee, it would be in fitness of things that the issue be re-examined by the AO in this regard. Restore this issue to the file of the AO to be adjudicated afresh after duly considering the evidences which the assessee seeks to rely upon Disallowance of card acquisition expenses - Held that - As decided in assessee s own case the assessee is entitled to treat the same as revenue expenditure in view of section 37(1) of the Act and the right to claim deferred revenue expenditure is given to the assessee and not to the revenue. DR also could not point out if there was any difference in the facts of the case in the impugned year and assessment year 2006-07. Accordingly, respectfully following the ratio of the judgment of the Hon ble Delhi High Court in assessee s own case for assessment year 2006-07. Taxing the allotment of shares by VISA Inc. by invoking Section 28(iv) - bringing notional share price to tax - Held that - The case of the assessee finds support from the judgment of the Hon ble Andhra Pradesh High Court in the case of CIT vs. K.N.B. Investments Pvt. Ltd. 2014 (10) TMI 253 - ANDHRA PRADESH HIGH COURT wherein it has been held that the word used in Section 28(iv) of the Act are arisen from business where arisen signifies that benefit itself must have arisen. It was held that mere issuance of shares does not result in any benefit. We also note that the assessee has already paid short term capital gains at the rate of 30% on 86565 shares which were sold during the year under consideration. The taxability on the rest of the shares would arise only when such shares are sold. Accordingly, we hold that the lower authorities were not justified in bringing the notional share price to tax and further the CIT(A) had erred in confirming the addition as well as enhancing same to ₹ 26,37,01,571/-. Non granting TDS credit - Held that - We restore this issue to the file of the AO for grant of TDS credit as per law after duly verifying the claim of the assessee and after giving due opportunity to the assessee to present its case.
Issues Involved:
1. Disallowance of Provision for reward point redemption 2. Disallowance of ad-hoc advertisement expenses 3. Disallowance of card acquisition expenses 4. Addition made on account of allotment of shares by VISA Inc. 5. Short grant of prepaid taxes Detailed Analysis: 1. Disallowance of Provision for Reward Point Redemption: The assessee did not press ground nos. 1.1 to 1.4 as the provision for reward point redemption was already allowed by the department on an actual basis in subsequent years. Therefore, this issue was dismissed as not pressed. 2. Disallowance of Ad-Hoc Advertisement Expenses: The assessee challenged the ad-hoc disallowance of ?1 crore sustained by the CIT (A). The assessee argued that the issue was covered by the judgment of the Delhi High Court in its own case for AY 2006-07, where the entire advertisement expenditure was allowed. The CIT (A) had noted that the assessee failed to provide proper details and documents for various items distributed under the head 'Gifts and Others.' The Tribunal restored this issue to the AO for re-examination after considering the evidences and the judgment of the Delhi High Court. Thus, ground nos. 2.1 and 2.2 were allowed for statistical purposes. 3. Disallowance of Card Acquisition Expenses: The assessee contended that the disallowance of ?17,85,92,045/- was covered by the Delhi High Court's judgment in its own case for AY 2006-07, which allowed the entire credit card acquisition expenditure under Section 37(1) of the Act. The Tribunal, agreeing with the assessee, set aside the CIT (A)'s order and directed the AO to allow the entire card acquisition expenses as revenue expenditure. Thus, ground nos. 3.1, 3.2, 3.3, and 3.4 were allowed. 4. Addition on Account of Allotment of Shares by VISA Inc.: The assessee argued that the issuance of shares was on capital account and could not be taxed as business income. It was noted that the relevant transaction pertained to AY 2008-09, whereas the Legislature introduced Section 56(2)(vii)(a) in June 2010, making such transactions taxable as income from other sources prospectively. The Tribunal found support from the Andhra Pradesh High Court judgment in CIT vs. K.N.B. Investments Pvt. Ltd., which held that mere issuance of shares does not result in any benefit under Section 28(iv). The assessee had already paid short-term capital gains on the sold shares. The Tribunal directed the AO to delete the addition, thus allowing ground nos. 4.1, 4.2, and 4.3 along with the additional ground. 5. Short Grant of Prepaid Taxes: The assessee claimed a short grant of TDS credit amounting to ?33,91,887/-. The Tribunal restored this issue to the AO for verification and granting of TDS credit as per law, thus allowing ground no. 5.1 for statistical purposes. Ground no. 5.2 was consequential and not adjudicated upon. Conclusion: The appeal was partly allowed, with directions for re-examination and verification on certain issues. The Tribunal's decision emphasized the need for proper documentation and adherence to judicial precedents. The order was pronounced on 23rd October 2018.
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