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TMI Blog2016 (9) TMI 1145X X X X Extracts X X X X X X X X Extracts X X X X ..... d at Rs. 1,31,01,860/-. Aggrieved by the order of the Assessing Officer (AO), assessee carried the matter before the ld.CIT(A), who vide order dated 05/06/2013 (in Appeal No.CIT(A) XIV/DCIT, Cir.8/336/2012-13) granted substantial relief to the assessee. Aggrieved by the order of ld.CIT(A), Revenue is now in appeal before us and Assessee is in Cross Objection thereof. 2.2. The Revenue in appeal bearing No.2172/Ahd/2013 has raised the following grounds:- 1) The Ld.Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in treating disallowance of Rs. 25,75,940/- made in respect of show-room expenses as Revenue expenditure. 2) The Ld.Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the notional addition of Rs. 3,96,000/- made on account of interest u/s.36(1)(iii) of the Act. 3) The Ld.Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the addition of Rs. 18,29,568/- made on account of advertisement expenses u/s.40A(2)(b) of the Act. 4) The Ld.Commissioner of Income-Tax (Appeals)-XIV, Ahmedabad has erred in law and on facts in deleting the addition of Rs. 10,715 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om renovation pertains to Ghatlodia show room and other show rooms and according to him it will not require repairs and renovation at one particular time and according to him as per narration of the ledger these are capital expenditures. From the submission of the appellant and the details of showroom renovation expenses it is seen that the expenses relate to various show rooms of assessee and in the earlier years these expenses were borne by other concerns namely M/s. Sales India, M/s. Santosh Trading Co., M/s, Sales Centre and M/s. Jose Jones whose business now stands merged in the business of the appellant. All show rooms in question are on rented premises. The major repairs expenses during the year relate to show room at Ghatlodia. As per agreement with the Hindustan Petroleum Corporation Ltd. the appellant has to assume complete responsibility including cost and risk to operate the C- STORE in all respects like carrying out interiors (flooring, false ceiling airconditioning, electrical points, plumbing, etc), sourcing inventory, storage and sales for purposes of commerce, to install and maintain telephone connection, telephone instrument, drainage and sewerage system to run th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rce in the submission of the appellant and impugned expenditure of Rs.25,75,940/- on repairs and renovation of show rooms is directed to be treated as revenue expenditure being in the nature of current repairs and this ground of appeal is allowed." 4. Aggrieved by the order of the ld.CIT(A), Revenue is now in appeal before us. 4.1. Before us, ld.Sr.DR supported the orders of AO and ld.CIT(A). Ld.AR, on the other hand, reiterated the submissions made before AO and ld.CIT(A) and further submitted that the ld.CIT(A) had deleted the addition by following the order of his predecessor passed for AY 2008- 09. He submitted that against the order of ld.CIT(A) for AY 2008-09, Revenue had preferred the appeal before the Tribunal (ITAT "B" Bench Ahmedabad). Tribunal while deciding the appeal in ITA No.972/Ahd/2011 for AY 2008-09) vide order dated 13/06/2014 had dismissed the appeal of Revenue and thus decided the issue in favour of assessee. He therefore submitted that since the facts and circumstances are identical to that of AY 2008-09, no interference to the order of ld.CIT(A) is called for. 5. We have heard the rival submissions, perused the material available on record and gone throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposit. He also noticed that the security deposit included Rs. 5 lacs given to Shri John J. Vargeese Proprietor of Santosh Trading Company and Rs. 28 lacs given to S/Shri John J. Vargeese and Jose John, partners of Sales India Pvt.Ltd. He also noticed that assessee has taken unsecured loan of Rs. 4.87 crores on which interest of Rs. 33.55 lacs was paid. He therefore concluded that assessee has given interest-free furniture deposit to its Director which was not justified and therefore the interest paid on the amount advanced to Directors, according to him, was not allowable as business expenditure. He accordingly worked out interest @ 12% of Rs. 33,00,000/- (being the amount of security deposit and disallowed Rs. 3,96,000/- u/s.36(1)(iii) of the Act. Aggrieved by the order of the AO, assessee carried the matter before the ld.CIT(A) who deleted the addition by holding as under:- "3.3. Decision I have carefully perused the assessment order and the submissions given by the appellant. The submission of the appellant is considered and from the assessment order it is noticed that this disallowance is made because according to him interest free furniture deposit has been given to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for using the existing furniture of these concerns without payment of rent. He has further noted that the deposits have been given for the purpose of business and there was no justification of disallowing the notional interest. Before us, ld.D.R. could not controvert the findings of CIT(A) and therefore we find no reason to interfere with the order of CIT(A) and thus this ground of Revenue is dismissed." 8. Before us, Revenue has not brought any material on record to controvert the findings of the ld.CIT(A) nor has placed any material to demonstrate that the order of the Coordinate Bench of the Tribunal in assessee's own case for AY 2008-09 has been set aside by Higher Judicial Forum. In view of the aforesaid facts, we see no reason to interfere with the order of the ld.CIT(A) and thus this ground of Revenue is dismissed. 9. Third ground is with respect to deleting the addition made u/s.40A(2)(b) of the Act. 9.1. AO noticed that the assessee had made payment of Rs. 1,21,97,119/- to Arts India (a related party) covered u/s.40A(2)(b) of the Act for advertisement. AO obtained the details from the different advertising agencies wherein he observed that Arts India was getting 15% d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smissed the appeal of the Revenue. He therefore submitted that since the issue is identical to that of AY 2008-09, no interference to the order of ld.CIT(A) is called for. 10. We have heard the rival submissions, perused the material available on record and gone through the orders of the authorities below. We find that the ld.CIT(A) has noted that no disallowance of expenditure was made in earlier years in the scrutiny assessment except for AY 1990-91 and even the addition made was deleted in appellate proceedings. He, further relying on the decision of his predecessor of AY 2008-09, deleted the addition. We further find that in assessee's own case for AY 2008-09 the issue was decided by the Coordinate Bench in assessee's favour by observing as under:- "15. We have heard the rival submissions and perused the material on record. CIT(A) while granting the relief has noted that the similar expenditure aid for advertisement to Arts India has been allowed in the preceding years in scrutiny assessment except in AY 90-91 where disallowance of 25% was made by AO but the same was deleted by CIT(A). Before us nothing has been brought on record to demonstrate that against the order of CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le w.e.f. 01/04/2004 by the amendment by Finance Act, 2003. It has been held that the first proviso to section 43B was curative in nature and, hence, retrospective in operation with effect from 1-4-1988. It is important to note once again that by the Finance Act, 2003, not only the second proviso is deleted but even the first proviso is sought to be amended by bringing about an uniformity in tax, duty, cess and fee on the one hand vis-à-vis contributions to welfare funds of employee(s) on the other. This is one more reason to hold that the Finance Act, 2003, is retrospective in operation. Morever, the judgment in Allied Motors (P) Ltd.'s case (supra) is delivered by a Bench of three judges, which is binding on the Court. Accordingly, the Finance Act, 2003, to the extent indicated above, is curative in nature and, hence, it is retrospective and would operate with effect from 1-4- 1988 when the first proviso came to be inserted. In view of judgement of Hon'ble Supreme Court, as things stand today, the contribution to PF/ESIC both by employees or employers' contribution towards employees' PF/ESIC are allowable u/s.43B provided the same are deposited before the due date of filin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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