Full Text
20.
ITA
PR GIT CENTRAL-3 Appellant
Through: Mr Ashok K. Manchanda, Senior Standing counsel with Ms Vibhooti Malhotra, Junior Standing counsel and Mr Aamir Aziz, Advocate.
Through: Mr Deepak Chopra and Mr Amit Shrivastava,Advocates.
21.
PR.CIT CENTRAL-3 ..... Appellant
Through: Mr Ashok K. Manchanda, Senior Standing counsel with Ms Vibhooti Malhotra, Junior Standing counsel and Mr Aamir Aziz, Advocate.
Through: Mr Deepak Chopra and Mr Amit Shrivastava, Advocates.
06.04.2016 ITA 224&225of2016 p^ge]of4 2016:DHC:8478-DB
CM No.l1991/2016 in TTA 224/2016 CM No.l1993/2016 in TTA 225/2016
1• Fortho reasonsstated in the applications,the delay in filing the appeals is condoned.
2.The applications are disposed of.
3.These two appeals by the Revenue are directed againstthe common order dated 10^*"July,2015 passed bytheIncomeTax AppellateTribunal(TTAT') in ITA Nos. 5178/Del/2010 and 1846/Del/2012 for the Assessment Years
('AYs')2006-07 and 2008-09.
4.Thetwo broad issues urged by the Revenue are:
(i) Whether the ITAT erred in accepting the case ofthe Assessee that making a provision for breakage in transit amounts to provisioning for contingentliability?
(ii) Whether the ITAT wasjustified in holding thatthe expenditure incurred on brand creation as part of the revenue expenses did not result in creation oflong term benefit and, therefore, was not in the nature ofcapital expenditure.
ORDER
5. As far as the first issue is concerned it is not in dispute that it stands covered in favour of the Revenue by the decision of this Court dated 6'^ October,2015 in Seagram DistilleriesPvt.Ltd. v. CIT(2015)378ITR 581 ITA 224&225of2016 Page2of[4] (Del). Consequently, the appeals are admitted as far as this question is concerned and the question is answered in the negative i.e. in favour ofthe Revenue and against the Assessee. The impugned order ofthe ITAT to that extent is set aside.
6. As far as the second question is concerned,it is seen from the impugned order ofthe ITAT that the Assessee was in appeal against the order ofthe Commissioner ofIncome Tax (Appeals) restricting the brand expenses to only 1/5"''for the relevant AYs.The Assessing Officer('AO')held that the brand expenses were incurred for enhancing the image ofthe brand and thus created an asset ofenduring value. Accordingly the expenditure was treated as capital in nature and disallowed.
7. The ITAT accepted the plea of the Assessee that the said expenditure incurred in brand enhancement had not resulted in creating an asset of enduring nature.It was,therefore,held that it was not a capital expenditure. The ITAT relied on the decision of this Court in CIT v. Monto Motors (2012)206 taxman 43(Del) which, as informed by the learned counsel for the Assessee, has been affirmed by the Supreme Court by the dismissal of the SpecialLeave Petition againstthe saidjudgment.
8. The Court is ofthe view that the spread ofthe brand expenses over a period of five years was actually in the nature of deferred revenue expenditure and the question of treating it as capital expenditure did not arise. Consequently, the Court is not inclined to frame a question on this issue. ITA224&225of20I[6] ^
9. The appeals are disposed ofin the above terms.
APRIL 06,2016 MK S.MURALIDHAR,J VIBHU BAKHRU,J