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TMI Blog2018 (10) TMI 1351X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 2006-07. Accordingly, respectfully following the ratio of the judgment of the Hon’ble Delhi High Court in assessee’s own case for assessment year 2006-07. Taxing the allotment of shares by VISA Inc. by invoking Section 28(iv) - bringing notional share price to tax - Held that:- The case of the assessee finds support from the judgment of the Hon’ble Andhra Pradesh High Court in the case of CIT vs. K.N.B. Investments Pvt. Ltd.[2014 (10) TMI 253 - ANDHRA PRADESH HIGH COURT] wherein it has been held that the word used in Section 28(iv) of the Act are ‘arisen from business’ where ‘arisen’ signifies that benefit itself must have arisen. It was held that mere issuance of shares does not result in any benefit. We also note that the assessee has already paid short term capital gains at the rate of 30% on 86565 shares which were sold during the year under consideration. The taxability on the rest of the shares would arise only when such shares are sold. Accordingly, we hold that the lower authorities were not justified in bringing the notional share price to tax and further the CIT(A) had erred in confirming the addition as well as enhancing same to ₹ 26,37,01,571/-. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n expenses. The Ld. CIT (A) also deleted the disallowance of expenditure of ₹ 2,57,61,950/- on account of application capture expenses. With respect to the disallowance of advertisement expenses of 105,27,85,289/-, the Ld. CIT (A) partly sustained the disallowance by holding that an amount of ₹ 1 crore needed to be disallowed in this regard. With respect to disallowance of ₹ 17,85,92,045/- on account of card acquisition expenses the Ld. CIT(A) dismissed the assessee s challenge. With respect to the disallowance of ₹ 11,55,38,563/- on account of redemption shares of VISA, the Ld. CIT (A) upheld the addition. Apart from this, the Ld. CIT (A) also held that the amount of ₹ 14,81,63,008/- shown as short term capital gain by the assessee on this account was also to be treated as business income. 2.2 Now, the assessee is in appeal before the ITAT and has challenged the various disallowances and additions sustained by the Ld. CIT (A). Following grounds have been raised:- 1. Disallowance of Provision for reward point redemption 1.1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed for these expenses as deferred revenue expenditure in its books of accounts and that these expenses were providing enduring benefit to the Appellant. 3.2 That, the Ld. CIT(A) has erred in merely placing reliance on the order passed by his predecessors for AY 2006-07 without independently examining the issue and distinguishing the decisions relied upon by the Appellant. 3.3 That, the Ld. CIT(A) and the Ld. AO have failed to appreciate that: i. the treatment is books of account is not decisive / conclusive for deciding the taxability of an item in the Act which is a trite law ; and ii. the test of enduring benefit is not the conclusive test to decide the nature of expenditure as capital. 3.4 That the Ld. CIT(A) and the Ld. AO have erred in not following decisions of the Hon ble ITAT decided in favor of the Appellant on similar issue for AY 2002-03. 4 Addition made on account of allotment of shares by VISA Inc. 4.1 In the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the addition of ₹ 11,55,38,563 made by the Ld. AO in respect of shares allotted by VISA Inc as consideration under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ire credit card acquisition expenditure in the year of incurrence u/s 37(1) of the Act. With respect to ground no. 4 on taxability of allotment of shares by VISA Inc. it was submitted that the issuance of shares is on capital account in the same cannot be taxed as income from business. It was further submitted that out of total shares numbering 1,54,609 shares allotted to the assessee, the assessee had sold 86,565 shares during the year under consideration on which tax had already been paid under the head capital gains as short term capital gains and accordingly no further issue of taxability arose on this account. The Ld. Authorised Representative also submitted that the assessee had also filed an additional ground with respect to ground no. 4 as there was a typographical error in the grounds of appeal filed by the assessee. It was submitted that the addition made by the Ld. CIT (A) was ₹ 26,37,01,557/- which was in advertently taken as ₹ 11,55,38,563/- in the grounds of appeal. 3.3 The Ld. Authorised Representative, with respect to ground no. 5, submitted that the ground pertained to short grant of TDS credit to the extent of ₹ 33,91,887/- and prayed that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee before adjudicating this issue. Accordingly ground nos. 2.1 and 2.2 stand allowed for statistical purposes. 5.2 Ground no. 3 which challenges the disallowance of card acquisition expenses amounting to ₹ 17,85,92,045/- is squarely covered in favour of the assessee in assessee s own case by the judgment of the Hon ble Delhi High Court in assessment year 2006-07. While upholding the order of the ITAT, the Hon ble Delhi High Court held that the assessee is entitled to treat the same as revenue expenditure in view of section 37(1) of the Act and the right to claim deferred revenue expenditure is given to the assessee and not to the revenue. The Ld. Sr. Departmental Representative also could not point out if there was any difference in the facts of the case in the impugned year and assessment year 2006-07. Accordingly, respectfully following the ratio of the judgment of the Hon ble Delhi High Court in assessee s own case for assessment year 2006-07 as aforesaid, we set aside the order of the Ld. CIT (A) on this issue and direct the AO to allow the entire card acquisition expenses of ₹ 17,85,92,045/- as revenue expenditure in the year under consideration. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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