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TMI Blog2017 (5) TMI 1043X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer had jurisdiction to issue notice under section 148 for bringing to tax income escaping assessment in an intimation under section 143(1)(a) on the ground that the claim for bad debts by the assessee was not acceptable as the conditions for allowance specified in section 36(1)(vii) and (2) were not fulfilled. Accordingly, re-opening is valid in law. Regarding nonissue of notice u/s.143(2) of the Act where was no return filed by the assessee in response to notice u/s.148 of the Act and the return was not pending for assessment, there is no question of issuing of notice u/s.143(2) of the Act. Being so, we are of the opinion that the nonissue of notice u/s.143(2) of the Act does not make the assessment bad in law. - Decided in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of notice u/s.143(2) of the Act before completion of assessment. 2.1 The brief facts of the issue are that the assessee filed return of income for assessment year 2005-06 on 30.10.2005 admitting the income of ₹ 5,09,160/-. The return of income was processed u/s.143(1) of the Act on 14.09.2006. Later on verification of records and materials, it was seen from the schedule 26 & P&L account, under "Administrative and selling expenses" that the assessee company has debited ₹ 61,82,990/-. On further perusal, it was noticed that "notes on accounts" serial No.16 states the advertisement expenses were incurred with an intention of creating a "brand image" for the product of the company. In this circumstance, according to AO, this expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that there was no original assessment and the return was process u/s.143(1) of the Act. The assessment was re-opened after recording reasons for re-opening the assessment and also by issuing the notice u/s.148 of the Act, sicn ethe assessee has not filed any return of income in response to notice u/s.148 of the Act. There is no question of issuing of notice u/s.143(2) of the Act. In our opinion, considering the escaped income to the assessment where there was no assessment and only processed u/s.143(1) of the Act is covered by the provisions of the section 147 of the Act as substituted with effect from 01.04.1989 and initiated re-assessment proceedings. In case, processing returns would be covered by the main provisions of the section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot pending for assessment, there is no question of issuing of notice u/s.143(2) of the Act. Being so, we are of the opinion that the nonissue of notice u/s.143(2) of the Act does not make the assessment bad in law. Accordingly, in our opinion, the ground regarding reopening of assessment and non issue of notice u/s.143(2) by Revenue is allowed. 4. The next common ground in all these appeals is with regard to disallowance of advertisement expenses, made by the AO. 4.1 All these assessment years under consideration, the AO considered the advertisement expenses as a deferred revenue expenditure and allowed on one fifth of the expenditure amortizing the same for 5 years. Against this, the assessee carried the appeal before the Ld.CIT(A). On a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying on or conduct of the business, that it may be regarded as an integral part of the profit-making process and not for acquisition of an asset or a right of a permanent character, the possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure. Any liability incurred for the business of obtaining a loan would be revenue expenditure. Ordinarily, revenue expenditure which is incurred wholly and exclusively for the purposes of business must be allowed in its entirety in the year in which it is incurred. It cannot be spread over a number of years even if the assessee has written it off in his books, over a period of years. However, the facts may justify an assessee who has incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The next common ground in ITA No.310/Mds./13 & ITA No.1164/Mds./16 for assessment year 2009-10 & 2011-12 respectively is with regard to disallowance u/s.40(a)(ia) of the Act with reference to non-deduction of TDS on interest paid bythe assessee on the loan availed from the MBFC.
7. Similar issue came for consideration before the Hon'ble supreme Court in M/s.Palam Gas Agencies Vs. CIT in C.A. No.5517/2-17 dated 3/5/2017 wherein held that the provisions of the section 40(a)(ia) is applicable to both paid and payable. Hence, we allow the ground taken by the Revenue.
8. In the result, all the appeal of the Revenue in ITA No.1404/Mds./13, ITA No.310/Mds./13 & 1164/Mds./16 are partly allowed.
Order pronounced on 11th May, 2017, at Chennai. X X X X Extracts X X X X X X X X Extracts X X X X
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