2018 (9) TMI 536 - AT - Income Tax

Allowability of expenses on account of advertisement - main contention of the revenue is that the CIT(A) did not certify the period of the claim of the assessee - Held that - There is no specific period explained in the order with regard to the expenses incurred. Since the period has not been specified in the finding of the CIT(A). Therefore, we are of the view that it is necessary to ascertain the period in which the advertisement expenses have been incurred, therefore, we set aside the finding of the CIT(A) on this issue and remand this issue before the AO to verify the claim of the assessee in connection with advertisement expenses and period relating to.

Summary

Issues Involved:
1. Allowance of Advertisement Expenses
2. Allowance of Holding Company's Expenses
3. Acceptance of Fresh Evidences in Appellate Proceeding

Issue 1 & 3 - Allowance of Advertisement Expenses:
The revenue challenged the CIT(A)'s decision to allow the claim of the assessee for advertisement expenses totaling &8377;1,07,60,179. The CIT(A) considered the expenses incurred by a holding company for foreign tour expenses of potential customers and agents, which were later transferred to the appellant. The CIT(A) found that these expenses were revenue in nature, recoverable from the appellant as per the business transfer agreement. However, the revenue contended that the period of the claim was not specified. The tribunal noted the lack of specificity regarding the period of the expenses in the CIT(A)'s finding. Consequently, the tribunal set aside the CIT(A)'s decision and remanded the issue to the assessing officer for verification of the claim and the period of the advertisement expenses. The tribunal emphasized the need for a fair opportunity for the assessee before reaching a final decision. Ultimately, the tribunal decided in favor of the assessee against the revenue, allowing the appeal for statistical purposes.

Issue 2 - Allowance of Holding Company's Expenses:
The revenue also challenged the CIT(A)'s decision to allow expenses incurred by the holding company based on a Memorandum of Understanding (MOD) entered into before the incorporation of the assessed company. However, the tribunal did not provide a detailed analysis or decision on this specific issue in the judgment.

Conclusion:
The tribunal's judgment primarily focused on the allowance of advertisement expenses, remanding the issue to verify the period of incurring such expenses. The decision highlighted the importance of providing a fair opportunity to the assessee during the verification process. The judgment did not extensively address the allowance of holding company expenses based on a MOD entered into before the assessed company's incorporation.