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TMI Blog2019 (8) TMI 803X X X X Extracts X X X X X X X X Extracts X X X X ..... pt income. Though the entire investment as per schedule of the balance sheet is towards mutual funds of various companies but in our considered opinion the assessee must have incurred some expenditure in making these investments. Some employees must have been engaged for selecting the mutual funds for making the investments. In our considered view some element of expenditure cannot be ruled out. We are of the considered view that a disallowance of ₹ 1,00,000/- should meet the ends of justice. - - ground of assessee is partly allowed Expenditure incurred for giving new look to the channel Aaj Tak - AO consider capital expenditure and allowed deprecation @15% - HELD THAT:- The Aaj Tak channel which started from 1999 with a logo needed fresh look because of the passage of time and cut throat competition and for improving the viewership the logo was given a fresh look for which the assessee had incurred impugned expenditure. In our considered opinion the Aaj Tak logo was already there and by incurring the impugned expenditure the assessee has only enhanced its look by giving fresh and improved technical face. We are of the considered view that such expenditure is a ro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d assessment years. 4. At the very outset the counsel for the assessee stated that the disputed issue has been settled by the Tribunal in subsequent assessment years in favour of the assessee and against the revenue. 5. The DR fairly conceded. 6. We have carefully considered the orders of the authorities below. We find force in the contention of the Ld. Counsel. We find that similar issue was considered by the Tribunal in assessee s own case in ITA No.2452/Del/2013 and others. The relevant findings of the coordinate bench read as under :- 6. The 1st disallowance contested by the assessee is with respect to the disallowance of ₹ 20569764/- on account of accrued incentive. The assessee explained that these expenses have been incurred in respect of the payments to be made to the employees for encouraging them to promote business of the assessee. Assessee also submitted that the incentive is meant for the employees which is pertaining to the financial year 2003-04. It is based on the performance of the employees and it has become due and payable to them based on certain criteria such a collection of sales, dete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed incentive of the employees. The assessee has given a complete detail of these expenditure of the provisions made for the year. The assessee has also stated that no tax is required to be deducted u/s 192 of the income tax act unless the salaries are paid to those employees. The assessee has also stated that the performance is with respect to the sales, collection of sales etc. On perusal of page Nos. 1 to 7 of the details furnished by assessee before the learned CIT(A) which shows that the assessee has submitted the complete detail of the employee wise accrued incentive as well as the closing balance as on 31-3-2004, amount debited during the year and actual payment made by the assessee in the subsequent year. The above provision has been made by the assessee on year-to-year basis on the basis of the performance of the employees. The excess provision is always written back to the profit and loss account in the subsequent year, if it is found to be short, further provision is made. This accounting practice is carried on by the assessee consistently. As the expenditure has been incurred for the incentive of the employees of the company raised on their performance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g any satisfaction the Assessing Officer made disallowance u/s. 14A of the Act. The counsel further stated that in A. Y.2007-08 the Assessing Officer has erroneously invoked rule 8D which is not applicable for the relevant assessment year. 13. Per contra the DR strongly supported the findings of the Assessing Officer. It is the say of the DR that even if rule 8D is not applicable some reasonable disallowance has to be made for the expenditure incurred for earning the exempt income. 14. We have carefully considered the orders of the authorities below. The perusal of the balancesheet of the assessee as at 31.03.05 shows that investment of ₹ 309045238/- was made during the year itself. It is true that the Assessing Officer has not recorded any satisfaction as regards to the accounts of the assessee. It is equally true that the assessee has also not disallowed any expenditure for earning the exempt income. Though the entire investment as per schedule of the balance sheet is towards mutual funds of various companies but in our considered opinion the assessee must have incurred some expenditure in making these investments. Some emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme Court and came to the conclusion that the expenses incurred for new look of the TV channel are not routine expenses and, therefore, cannot be treated as revenue expenditure. 23. We have given a thoughtful consideration to the orders of the authorities below. The Aaj Tak channel which started from 1999 with a logo needed fresh look because of the passage of time and cut throat competition and for improving the viewership the logo was given a fresh look for which the assessee had incurred impugned expenditure. In our considered opinion the Aaj Tak logo was already there and by incurring the impugned expenditure the assessee has only enhanced its look by giving fresh and improved technical face. 24. We are of the considered view that such expenditure is a routine expenditure. No doubt some enduring benefit will accrue to the assessee but giving a fresh look to the existing logo, no new asset was created and there was no addition to or expansion of the profit making apparatus of the assessee. The Hon ble Supreme Court in the case of Empire Jute Co. Ltd 124 ITR 1 has held as under :- (ii) There may be cases where expenditure, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made addition of ₹ 109210/-. 29. The assessee agitated the matter before the CIT(A) but without any success. 30. Before us the counsel for the assessee stated that the Assessing Officer has not appreciated the facts in their true perspective. It is the say of the counsel that both the lower authorities have considered the write off of the advance as claim of bad debts though the advances were given in the ordinary course of business and since the assessee could not recover the advances or the services for which the advances were given, the advances were write off and claimed as business loss. 31. Per contra the DR strongly supported the findings of the Assessing Officer. 32. We have carefully considered the orders of the authorities below. It is true that the write off of advances do not fulfill the conditions laid down for claiming the bad debts but it is equally true that the said write off should not be considered as bad debts but has to be considered as business loss. Considering the facts of the case in their true perspective we are of the considered view that the write off should be allowed as business ..... X X X X Extracts X X X X X X X X Extracts X X X X
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