Case Law Details
PCIT Vs Moet Hennessy (I) Pvt. Ltd. (Delhi High Court)
The Assessee in its appeal before ITAT contended that as per Section 144C(8) of the Act, DRP may confirm, reduce or enhance the variation proposed in the draft order. However, DRP is not empowered to set aside any proposed variation or issue any direction under Section 144C(5) for further enquiry for passing the assessment order and therefore, the disallowance proposed under Section 37 (1) of the Act was without jurisdiction.
The ITAT agreed with the contention of the Assessee that the direction of the DRP to AO for determining the disallowance of AMP expenditure under Section 37(1) of the Act after hearing the Assessee was in the nature of a remand. It held that such a direction by DRP is impermissible under Section 144C of the Act and held that AO is not empowered to make a fresh determination under Section 144C.
The ITAT also held that the DRP/AO has taken a general view, and there is no finding of facts, that the provisions of Cable Television Network Rule, 1994 or ASCI has indeed been violated by the Assessee with respect to the advertisement and promotion.
Lastly, the ITAT placed reliance and followed the decision of its coordinate Bench for AYs 2012-13 and 2013-14 in Assessee’s own case, wherein it was held that the expenditure incurred by the Assessee was to enhance its sales and profits and therefore, it cannot be treated as capital in nature. ITAT held that the said expenses are revenue in nature having been incurred for commercial expediency. Consequently, the ITAT deleted the disallowance of AMP expenses of Rs. 6,64,24,161/-, made in light of Explanation 1 to Section 37(1) of the Act.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
