2020 (7) TMI 95 - AT - Income Tax

Allowable expenses - Liability as ascertained liability or not - assessee has itself shown the amount as provision for discount not debited to accounts of respective parties - CIT (A) relying the order of his predecessors and by treating the liability as ascertained liability without appreciating the fact that the assessee has itself shown the amount as provision for discount not debited to accounts of respective parties - HELD THAT - The assessee company gave various schemes to its advertiser like consumption incentive, series discount etc. In case of consumption incentive, the advertisers are given an offer that in case if it consumes particular amount of time during the given period for broadcasting and advertising then it will be entitled to the consumption incentive. During the year, assessee has passed on this consumption incentive of ₹ 34059992/-. Learned CIT (A) has held that this is the expenditure in the nature of incentive to the advertiser and the assessee has also shown income against this expenditure. Before the Learned CIT-A the assessee demonstrated by producing the copies of the deals of some of the parties and shown that it is not an asset or liability but actual expenditure. In view of this, he held that assessee is eligible for deduction of the above expenditure. Disallowance on account of software expenses - revenue or capital expenditure - HELD THAT - CIT-A who held that software expenditure incurred by the assessee is an application software for upgradation. The assessee has not incurred any expenditure on acquiring any asset of enduring nature. No infirmity in the order of the CIT-A in deleting the above disallowance. - Decided against revenue.

Summary

Issues:
1. Disallowance of provision for interest payable to Prasar Bharti
2. Disallowance of claim of software expenses
3. Disallowance of consumption debtors
4. Disallowance of leave encashment

Analysis:
1. The department contested the order passed by the Ld. Commissioner of Income Tax (Appeals) regarding the disallowance of provision for interest payable to Prasar Bharti. The Ld. CIT (A) had treated the liability as an ascertained liability, which the department disputed, arguing that the amount was shown as a provision for discount not debited to accounts of respective parties. The ITAT, after considering the arguments, dismissed the department's appeal based on the findings in the assessee's own case for a previous assessment year.

2. The disallowance of software expenses claimed by the assessee was another issue raised in the appeal. The Ld. CIT (A) had treated the software expenses as revenue in nature, while the department argued that they should be considered capital expenditure due to enduring benefits to the assessee company. The ITAT referred to its previous decision in the assessee's case for a different assessment year, where it was held that the software expenses were revenue in nature. Consequently, the ITAT dismissed the department's appeal on this ground as well.

3. The issue of disallowance of consumption debtors was also addressed in the appeal. The Ld. CIT (A) had deleted the additions related to consumption debtors, which the department contested. However, the ITAT relied on its previous decision in the assessee's case for another assessment year to uphold the Ld. CIT (A)'s decision, dismissing the department's appeal on this issue.

4. Lastly, the disallowance of leave encashment was a point of contention in the appeal. However, detailed analysis or specific mention of the outcome regarding this issue was not provided in the summarized judgment.

In conclusion, the ITAT dismissed the department's appeal after considering the arguments presented by both parties and referring to its previous decisions in the assessee's own case for different assessment years. The judgment highlighted the importance of consistency in decisions and the relevance of past rulings in determining the outcome of current appeals.