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TMI Blog2019 (2) TMI 2111X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be incurred for brand building for the entities owing brand shall not be sustainable in law and the expenses were incurred for advertisement/marketing support activities etc. and are incidental to carrying on the business - HELD THAT:- Aa decided in earlier assessment years 2007-08, 2008-09 2009-10 vide order dated 29.04.2016 [ 2016 (7) TMI 21 - ITAT DELHI] the advertisement expenditure incurred by the assessee is incurred wholly for the purpose of its business and profession and ought to be allowed deduction in entirety. Further, the assessing officer has clearly made an ad-hoc disallowance of advertisement expenditure incurred by the assessee, which is not permissible under the law. We are of the considered view that AO was not justified in making such ad-hoc disallowances and therefore, direct the assessing officer to delete the adjustment on this account - Thus allow this ground of appeal of the assessee. Disallowance on account of delay in deposit of employee's contribution towards Provident Fund u/s. 36(1)(va) - HELD THAT:- The issue has been decided against the assessee and in favour of the revenue by the Hon'ble Delhi High court in the case of CIT Vs M/s. Bhara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment years 2007-08, 2008-09 2009-10 in ITA Nos. 5650/Del/2011, 6240/Del/2012 and 916/Del/2014, order dated 29.04.2016. He further submitted that the decision was followed by Tribunal in appellant's own case for the assessment years 2010-11, 2011-12 and 2012-13 in ITA Nos. 1516/Del/2015, 1004/Del/2016 and 1706/Del/2017, order dated 22.01.2018. 5. He submitted that the DRP at page no. 2 para 3 has stated as under: 3. The DRP has considered the submission of assessee and finds this is a legacy issue and has been the subject matter of adjudication by this Panel in several earlier years including AY 2013-14. It is to be noted that the issue was decided by the Hon'ble ITAT in favour of assessee for AY 2007-08 to 2009-10 vide order dated 29.04.2016 (2016) 70 taxmann.com 67 (Delhi-Trib), and for AY 2010-11 and 2011-12 vide order dated 22.01.2018. Revenue's appeal before the Hon'ble Delhi High Court (against ITAT's order dated 29.04.2016) has been admitted in ITA No. 77 to 79/2017 vide order dated 13.02.2017. We have examined the facts carefully in the light of taxpayer's submissions and find that there is no change in the factual matrix or business mode. Thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sales promotion. The AO required the assessee to show cause as to why the expenditure incurred on advertisement should not be disallowed being in the nature of brand building activity. In reply to the show cause notice, the assessee submitted that any disallowance on account of advertisement and sales promotion expenses holding the same to be incurred for brand building for the entities owing brand shall not be sustainable in law. It was further submitted that the expenses were incurred for advertisement/marketing support activities etc. and are incidental to carrying on the business and were incurred by the assessee regularly for promotion/quality control and its product. The expenses incurred are to enable and increase efficiency in business and therefore, was revenue in nature and deductible u/s. 37 of the Act. The expenses are solely incurred for the benefit of the assessee and not its foreign affiliate. Any benefit flowing to the foreign affiliate out of the said expenditure is purely incidental. Thus, the expenditure incurred on advertisement is wholly and exclusively for the business of the assessee. The Assessing Officer disallowed the same on the ground that the brand (m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommercial expediency is allowable deduction. It was also submitted that since the aforesaid expenditure of advertisement and brand promotion has undergone a benchmarking analysis under the Transfer Pricing regulations and an arm's length price thereof has been determined, there could not be any further disallowance of the said payment under section 37(1) of the Act, holding the same to be not an expenditure incurred wholly and exclusively for the purpose of the business of the appellant. Reliance is placed on the decision of the Hon'ble Delhi Bench of the Tribunal in the case of Whirlpool of India Ltd. vs. DCIT (ITA No. 426/D/13), wherein, it is held as under: 16. ......................Once the total amount of AMP expenses is processed through the provisions of Chapter X of the Act with the aim of making TP adjustment towards AMP expenses incurred for the foreign AE, or in other words such expenses as are not incurred for the assessee's business, there can be no scope for again reverting to section 37(1) qua such amount to make addition by considering the same expenditure as having not been incurred 'wholly and exclusively' for the purposes of assessee's bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2015, the Board has clarified that the such claim of deduction are governed by Section 36(1)(va) of the Act. Therefore, he held that accordingly the claim for deduction regarding the employee's contribution deposited after the due date as per ESI rules has to be seen within the provisions of Section 36(1)(va) of the Act and since the assessee has defaulted, accordingly, an amount of Rs. 26,79,798/- is added to the income of the assessee. 19. On appeal, the DRP confirmed the order of the AO. 20. At the time of hearing, the ld. Counsel for the assessee submitted that the issue has been decided against the assessee and in favour of the revenue by the Hon'ble Delhi High court in the case of CIT Vs M/s. Bharat Hotels Ltd. in ITA No. 271/2005, order dated 06.09.2018. 21. We find that the Hon'ble Delhi High Court has held as under: 8. Having regard to the specific provisions of the Employees' Provident Funds Act and ESI Act as well as the concerned notifications which granted a grace period of 5 days (which appears to have been late withdrawn recently on 08.01.2016), we are of the opinion that the ITAT's decision in this case was not correct. The assessee undoubtedly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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