Itta/653/2014 Of The Commissioner Of Income Tax-Iv v. J.c Brothers Jewellers

THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTAAND THE HON’BLE SRI JUSTICE SANJAY KUMARI.T.T.A No.653 of 2014 DATE: 24.10.2014 Between: The Commissioner of Income Tax – VI,Hyderabad. … Appellant And M/s. J.C. Brothers Jewellers,Hyderabad. … Respondent This Court made the following: THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA I.T.T.A.No.653 of 2014 JUDGMENT:(per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal is sought to be preferred and admitted against the judgment andorder of the learned Tribunal dated 30.06.2011 in relation to the Assessment Year2006-07, on the following suggested questions of law: 1. Whether on the facts and in the circumstances of the case, theappellate tribunal is justified in holding that advertisement chargespaid by M/s.J.C. Brothers Jewellers to M/s. Jeans Cornerate isonly a reimbursement of expenses to sister concern and that theprovisions of Section 194C of Income-tax Act is not applicable?appellate tribunal is justified in holding that advertisement chargespaid by M/s.J.C. Brothers Jewellers to M/s. Jeans Cornerate isonly a reimbursement of expenses to sister concern and that theprovisions of Section 194C of Income-tax Act is not applicable? 2. In the face of the advertisement work being carried out by outsideagencies, and not associate concern, whether the appellatetribunal is justified in holding that the same does not constituteadvertisement expenses within the meaning of Section 194C ofthe Act and hence disallowable by reason of omission to deducttax at source under Section 40(a)(ia) of the Income-tax Act?agencies, and not associate concern, whether the appellatetribunal is justified in holding that the same does not constituteadvertisement expenses within the meaning of Section 194C ofthe Act and hence disallowable by reason of omission to deducttax at source under Section 40(a)(ia) of the Income-tax Act? We have heard Mr.S.R.Ashok, learned Senior Standing Counsel for theappellant and perused the findings of the learned Tribunal. It appears the learned Tribunal had found that the assessee has reimbursedthe expenditure incurred on account of advertisement made by its sister concern. So,it is not a case of payment and since it is reimbursement, the question of deductionof tax at source does not arise and the learned Tribunal has correctly held that this isan allowable deduction. It is also correctly held that while the amount spent wasfound to be genuine, the question of the necessity of incurring of huge amount foradvertisement cannot be questioned. Since the assessee incurred the expendituredirectly for promotion of its business, the amount has to borne exclusively by theassessee and it cannot be shared by a third party so to say. Hence, we are of the agreement that this sort of expenditure is not in thenature of capital expenditure. We are of the view that no element of law is involvedin this matter. Therefore, the appeal is dismissed. No costs. _________________ K.J. SENGUPTA, CJ _________________ SANJAY KUMAR, J