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Income Tax Appellate Tribunal - Chennai

Lakshmigraha Enterprises, Coimbatore vs Assessee on 30 January, 2012

           IN THE INCOME TAX APPELLATE TRIBUNAL
                         'D' BENCH, CHENNAI

     BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
          AND SHRI GEORGE MATHAN, JUDICIAL MEMBER

                       I.T.A. No. 1133/Mds/2011
                     (Assessment Year : 2007-08)

M/s Lakshmigraha Enterprises,                The Assistant Commissioner
No.29, Race Course,                          of Income Tax,
Opp. Masonic Hospital,                 v.    Circle - III,
Coimbatore - 641 018.                        Coimbatore.

       (Appellant)                               (Respondent)

                 Appellant by  :            Shri K. Raghu, CA
                 Respondent by :            Shri K.E.B. Rengarajan,
                                            Junior Standing Counsel

      Date of Hearing              :        30.01.2012
     Date of Pronouncement         :        30.01.2012


                            O R D E R


PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER :

In this appeal filed by the assessee, its grievance is that the CIT(Appeals) upheld the disallowance of market survey expenditure of ` 57,46,615/- without disputing its genuineness.

2. When the matter came up before us, learned A.R. submitted that a similar survey expenditure laid out to M/s Holidon Marketing Pvt. Ltd., for preceding assessment year 2006-07, was a subject matter in the appeal before this Tribunal in I.T.A. No. 847/Mds/2010.

Placing on record a copy of order dated 6th May, 2011 of this Tribunal, learned A.R. submitted that the claim was allowed by this Tribunal.

3. Learned D.R. fairly admitted that the decision of Tribunal in I.T.A. No. 847/Mds/2010 went in favour of assessee. Nevertheless, according to him, the number of customers newly introduced and number of customers dropped were different for the impugned assessment year.

4. We have perused the orders and heard the rival submissions.

Claim of similar market survey expenditure by the assessee had come up before this Tribunal for assessment year 2006-07 in assessee's appeal. At para 5 of its order dated 6.5.2011 in I.T.A. No. 847/Mds/2010, Tribunal had decided as under:-

"5. We have considered the rival submissions. At the outset, one must keep in mind that a businessman knows what is good for his business. His decision as a businessman cannot be judged by sitting in an arm chair. A businessman knows practical difficulties involved in his business. The fact that 63 new customers were added during the year, whereas, 55 old customers were dropped during the relevant assessment year, remains undisputed. After this, though the turnover dropped, the profits went up. It is also to be noted that as per the P&L account, the profits have gone up by ` 6,00,000/- during the relevant assessment year. It is also not disputed by the Revenue that M/s Halidon Marketing (P) Ltd. was in the business as stated or that it was paid for the purposes other than the business requirements of the assessee. The explanation as provided by the assessee cannot be blindly brushed aside without there being any evidence to the contrary. The assessee has produced the agreement entered with M/s Halidon Marketing (P) Ltd. The assessee has produced the survey reports which was seen by the ld. CIT(Appeals) along with a list of 9 new customers. The fact that 63 new customer were introduced while 55 customers were dropped also remains undisputed. What was the explanation of the assessee which was too general and without specifics, does not come out of the order of the A.O. A perusal of the order of the ld. CIT(Appeals) also shows that another new nine customers were added. It shows that the CIT(Appeals) has mistaken the engagement of M/s Halidon Marketing (P) Ltd. to promote sales, whereas, it has been clearly mentioned by the assessee that M/s Halidon Marketing (P) Ltd. was engaged for conducting the survey and assist the assessee in getting better business. In the circumstances, we are of the view that the expenditure incurred by the assessee on the payment to M/s Halidon Marketing (P) Ltd. is for the purpose of business of the assessee and is liable to be allowed and we do so. Thus the appeal of the assessee is allowed."

5. We do not find any change in the fact situation for the impugned assessment year. Just because number of customers 4 I.T.A. No. 1133/Mds/11 introduced and number of customers dropped has changed will not be a reason to deviate from the view taken by the Tribunal on similar fact situation for the earlier year. We are, therefore, of the opinion that assessee has to succeed in the appeal filed by it.

6. In the result, appeal filed by the assessee is allowed.

Order pronounced in the open court after conclusion of hearing on 30th January, 2012.

              sd/-                                    sd/-
       (George Mathan)                           (Abraham P. George)
       Judicial Member                           Accountant Member

Chennai,
Dated the 30th January, 2012.

Kri.

             Copy to:    (1)   Appellant
                         (2)   Respondent
                         (3)   CIT(A)-I, Combatore
                         (4)   CIT-I, Coimbatore
                         (5)   D.R.
                         (6)   Guard file