9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (6) TMI 361 - AT - Income TaxAddition towards advertisement and publicity expenses on account of being relating to prior period - HELD THAT - We observe that both the authorities below have confused the expenses to be on account of repair and maintenance whereas as a matter of fact these expenses were incurred on account of advertisement and publicity. We find merit in the contentions of the assessee that since the bills pertaining to these expenses were received during the year though these bills related to the earlier year therefore these expenses have to be allowed as pertaining to the current year as the crystalisation has happened during the year. Without prejudice the assessee has submitted that the year of allowability of expenses should be of no consequences so long as the rate of tax for both the years is uniform. The assessee has placed reliance on the decision of CIT vs. Nagri Mills Co. Ltd. 1957 (9) TMI 30 - BOMBAY HIGH COURT and also 3 other decisions. We have perused the decisions and found that the case of the assessee is squarely covered by the ratio laid down in the said decisions. We also find that the addition made by the AO is tax neutral. Accordingly we set aside the order of Ld. CIT(A) and direct the AO to delete the disallowance Deduction for provisions for bad and doubtful debts on the ground that claim by the assessee was an afterthought - HELD THAT - We find that the issue raised by the assessee is squarely covered by the decision of the Apex Court in the case of Vijay Bank 2010 (4) TMI 46 - SUPREME COURT wherein as held that for the purpose of claiming the deduction under section 36(1)(vii) of the Act it is sufficient to debit the profit loss account and correspondingly reduce the amount from sundry debtors and it is not necessary to close the individual account of all debtors in the books. Accordingly we set aside the order of Ld. CIT(A) and direct the AO to allow the deduction. Ground No.2 is allowed. Addition bad and doubtful debts and provisions for the doubtful advances to the book profit computed under section 115JB by treating it as provisions for unascertained liability within the meaning of clause c of explanation to 115JB - HELD THAT - As we have already decided the issue of provision of bad and doubtful debts in favour of the assessee in ground No.2 directing the AO to allow the same. This grounds is consequential ground and accordingly we are inclined to hold that assessee is entitled to deduction of provisions for bad and doubtful debts and provision for advances while computing book profits. Accordingly the ground is allowed. Deduction u/s 35ABB - HELD THAT - Respectfully following the decision of the co-ordinate bench of the Tribunal we direct the AO to determine the eligible amount in this year also following the decision in A.Y. 2004-05 and allow the same. The ground is allowed for statistical purposes. Addition of loss on account of foreign currency - HELD THAT - As observe that Ld. CIT(A) has allowed the appeal of the assessee by following the decision of the Apex Court in the case of CIT vs. Woodward Governor 2009 (4) TMI 4 - SUPREME COURT wherein it has been held that loss resulting from fluctuation in foreign currency is revenue loss as the same is recognised on the basis of accounting policy at the end of each year in respect of outstanding contracts of the assessee. We note that Ld. CIT(A) has allowed the appeal of the assessee following the decision of the Apex Court in the case of CIT vs. Woodward Governor (supra). We therefore find no reason to interfere with the order of Ld. CIT(A). Accordingly we uphold the order of Ld. CIT(A) by dismissing the ground raised by the Revenue.
Issues Involved:
1. Deduction under Section 35ABB. 2. Amortized license fees. 3. Revenue License Fees under Section 37(1). 4. Foreign currency loss. 5. Advertisement and publicity expenses. 6. Provisions for bad and doubtful debts. 7. Book profit computation under Section 115JB. Detailed Analysis: 1. Deduction under Section 35ABB: The primary issue was whether the CIT(A) was correct in allowing the entire deduction under Section 35ABB amounting to ?40,24,22,970 as claimed by the assessee, contrary to the Assessing Officer's (AO) allowance of only ?16,28,41,776. The Tribunal upheld the CIT(A)'s decision, referencing a prior Tribunal decision in the assessee's favor for assessment year 2004-05. The Tribunal directed the AO to determine the eligible amount for the current year following the methodology used in the previous year. 2. Amortized License Fees: The Tribunal addressed whether the CIT(A) was right in deleting the disallowance of amortized license fees of ?23,95,81,194. The AO had disallowed this amount based on the previous telecom policy. The Tribunal found that the issue was covered by the Tribunal's earlier decision and directed the AO to follow the same method for the current year. 3. Revenue License Fees under Section 37(1): The Tribunal examined whether the CIT(A) was correct in allowing the deduction of ?19,25,06,859 as revenue expenditure under Section 37(1). The AO had treated this amount as capital expenditure. The Tribunal upheld the CIT(A)'s decision, referencing the Bombay High Court's ruling in favor of the assessee for the assessment year 2003-04, which treated such fees as revenue expenditure. 4. Foreign Currency Loss: The Tribunal considered whether the CIT(A) was right in allowing the foreign currency loss of ?96,80,000. The AO had disallowed this as a notional loss. The Tribunal upheld the CIT(A)'s decision, referencing the Supreme Court's decision in CIT vs. Woodward Governor, which recognized foreign exchange losses as deductible revenue losses. 5. Advertisement and Publicity Expenses: The Tribunal evaluated the disallowance of ?21,78,491 towards advertisement and publicity expenses, which the AO had treated as prior period expenses. The Tribunal found that these expenses were related to the current year as they crystallized during the year, despite being dated from the previous year. The Tribunal directed the AO to delete the disallowance, noting that the addition was tax-neutral. 6. Provisions for Bad and Doubtful Debts: The Tribunal addressed the issue of provisions for bad and doubtful debts amounting to ?1,97,50,000. The AO had disallowed this, treating it as an afterthought. The Tribunal, referencing the Supreme Court's decision in Vijay Bank vs. CIT, allowed the deduction, stating that it was sufficient to debit the profit & loss account and reduce the amount from sundry debtors. 7. Book Profit Computation under Section 115JB: The Tribunal considered the addition of ?1,97,50,000 for bad debts and ?70,60,000 for doubtful advances to the book profit under Section 115JB. The AO had treated these as provisions for unascertained liabilities. The Tribunal, having allowed the deduction for bad debts, directed that these amounts should not be added back to the book profit, as they were not unascertained liabilities. Conclusion: The Tribunal allowed the assessee's appeal for statistical purposes and dismissed the revenue's appeal, providing detailed directions to the AO for recalculating the deductions and disallowances in line with the Tribunal's and higher courts' precedents. The Tribunal's decisions were grounded in prior rulings and legal principles, ensuring consistency and fairness in the application of tax laws.
|
