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TMI Blog2021 (7) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... me over a number of years for income tax purposes is not sustainable - Revenue s appeal is dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... will yield income over a period of more than one year and hence, debited only a portion of such expenditure relatable to the year under consideration. That here, the prime question is whether the entire expenditure can be treated as the expenditure is relating to the year under consideration, while a contrary view is taken by the assessee itself. That further, in the Income tax Act, the income of a particular year is determined, which means that the expenditure also should be allowed on the same lines. That with due respect to the rationale determined in the case laws cited by the assessee, it is stated that the assessee's case is quite distinguishable, in that the expenditure claimed by the assesee is not governed by a particular provisions of the Income tax Act. That in view of the above discussion and also in view of the stand taken in assessee's own case for AY 2012-13, claim made by the assessee in the computation of income on account of Deferred Brokerage expenses of ₹ 11,26,94,520/- is not allowed. 4. Upon assessee's appeal Ld.CIT(A) noted the that the appellant has stated that following the accepted accounting principle, it has amortized the upfront brokerage expense ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resented revenue expenses and the liability for the same had arisen during the previous year itself. Hence, the ratio of the decision of the Hon'ble Supreme Court needs to applied to the assessee's case and it has to be held that the said expenditure is required to be treated; as an allowable expenditure for the present assessment year itself. If the assessee: claims the expenditure incurred, the .Department cannot deny the same and the fact that assessee has deferred the expenditure in the books of account is irrelevant In view of the above discussion, the disallowance of ₹ 11,26,94,520 made by the A.O. is directed to be deleted. 6. Against the above order revenue is in appeal before us. We have heard both the parties and perused the records. 7. Ld. DR relied upon the order of AO and also on ITAT Delhi decision of Citi Financial Consumer Finance vs ACIT in ITA No.4305/Del/2005, dated 18/12/2009. 8. Per contra Ld. Senior Counsel of assessee Shri Percy Pardiwala relied upon order of Ld.CIT(A). He relied upon Hon'ble Supreme Court decision of Taparia Tools Ltd.(supra). He further submitted that the said decision of ITAT Delhi was considered and explained by ITAT in ITA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, the facts may justify spreading the expenditure and claiming it over a period of ensuing years, where allowing the entire expenditure in one year could give a very distorted picture of the profits of a particular year. One such instance was issuing debentures at discount. The Supreme Court was of the opinion that though in such cases the assessee had incurred the liability to pay the discount in the year of issue of debentures, the payment is to secure the benefit over a number of years. There was a continuing benefit to the assessee of the company over the entire period and, therefore, the liability was to be spread over the period of debentures. 11. We note that the aforesaid decision had a distinguishing feature that it was the assessee who sought to spread the expenditure. Thus, What follows from the decision is that normally the ordinary rule is to be applied, namely, revenue expenditure incurred in a particular year is to be allowed in that year. Thus, if the assessee claims that expenditure in that year, the Income Tax department cannot deny the same. However, in those cases where the assessee himself wants to spread the expenditure over a period of ensuing year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 - Business expenditure - Allowability of -Assessment years 2001-02 and 2002-03 - Expenditure on publicity and advertisement is to be treated as revenue in nature allowable fully in year in which it is incurred [In favour of assesee] The expenditure on publicity and advertisement is to be treated as revenue in nature allowable fully in year in which it is incurred. In the income-tax law, there is no concept of deferred revenue expenditure. Once the assessee claims the deduction for the whole amount of such an expenditure, even in the year in which it is incurred, and the expenditure fulfils the test laid down under section 37, it has to be allowed. In the assessment year 2001-02, the assessee-company claimed an expenditure of ₹ 3.93 crores on account of advertisement and publicity expenditure as revenue expenditure and the same had been debited to the profit and loss account. The Assessing Officer was of the view that this expenditure could not be termed as an expenditure relevant exclusively for the period of 12 months under consideration during the said assessment year; such advertisement and publicity expenses had a bearing on the period which spread over a period of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermed as having the chargeability in the year which they were incurred. He took the average of three years for such agreements and spread the expenses over a period of three years, thereby allowing 1/3rd expenditure incurred in that particular year. The Tribunal held that as the expenditure incurred had nothing to do with the period or length of time and had no linkage, whatsoever, to any period, the entire expenditure was allowable in the year in which it was incurred. It further held that the expenditure was incurred once and for all in the form of stamping duty as well as commission paid to the direct selling agents for procuring the loan assignments and it was not dependent upon the working out of the agreements ultimately entered into between the assessee and the customers. It held that since the commission was paid to the direct selling agents, for their services in sourcing hires in the year in which the loan was disbursed, it was to be allowed as business expenditure. Held that the Tribunal was right in holding that the expenditure was incurred once and for all in the form of stamping duty as well as commission paid to the direct selling agents for procuring the loan assi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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