Itta/49/2007 Of The Commissioner Of Income Tax v. M/S.amar Raja Batteries Ltd

THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. No. 49 of 2007 DATED:5.12.2013 Between:The Commissioner of Income Tax,Tirupathi. … Appellant And M/s. Amar Raja Batteries Ltd.,Tirupathi. ….Respondent THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTISENGUPTA AND THE HON’BLE SRI JUSTICE SANJAY KUMAR I.T.T.A. No.49 of 2007 Judgment:(per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal was admitted on 1.3.2007 without formulating any substantial question of law. We now formulate thesubstantial question of law. Whether on the facts and circumstances of thiscase, the learned Tribunal was justified to treat theadvertisement expenses as being the Revenueexpenses ? We have heard Mr. B. Narasimha Sharma and we havegone through the impugned judgment and order of the learnedTribunal. It is true that both the Assessing Officer as well as theCommissioner of Income Tax (Appeals) concurrently held on facttaking note of the books of account that the expenditure incurred isof capital in nature as the expenses have got enduring benefit. The learned Tribunal took note of the books of account and it wasrecorded as deferred revenue expenditure. Admittedly, in this case, the assessment proceeded on the basis of the books of account and not on the estimated basis andthus the books of account as audited was accepted and there wasno order appointing a Special Auditor for inspection of the books ofaccount or a statutory audit. Under the circumstances, the books of account are to betreated as a valid piece of materials. Admittedly, the assesseemaintained mercantile system of accounting and therein it isrecorded that the same is revenue in nature. Therefore, it has tobe held that it is a revenue expenditure and the learned Tribunalhas rightly done so. More over, in case of business run by anyestablishment, advertisement expenses is part of business andordinarily it is a revenue expenditure. Therefore, we affirm the judgment and order of the learnedTribunal and dismiss the appeal. _____________________ K.J. SENGUPTA, CJ _________________ SANJAY KUMAR, J 5.12.2013 PNB