Income Tax Appellate Tribunal - Delhi
Sbi Card And Payment Services (P) Ltd., ... vs Assessee on 22 February, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'G': NEW DELHI
BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER
AND
SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER
ITA No. 2808/Del/2011
Assessment Year: 2006-07
DCIT, SBI Cards & Payment
Circle 7(1), Services Pvt. Ltd.,
rd
Room No. 312, 3 Floor, Vs. State Bank of India,
C.R. Bldg., I.P. Estate, 11-Local Head Office,
New Delhi. Parliament Street,
New Delhi.
AAECS5981K
(Appellant) (Respondent)
ITA No. 1293/Del/2012
Assessment Year: 2007-08
DCIT, SBI Cards & Payment
Circle 7(1), Services Pvt. Ltd.,
rd
Room No. 312, 3 Floor, Vs. State Bank of India,
C.R. Bldg., I.P. Estate, 11-Local Head Office,
New Delhi. Parliament Street,
New Delhi.
AAECS5981K
(Appellant) (Respondent)
ITA No. 1047/Del/2012
Assessment Year: 2007-08
SBI Cards & Payment Addl. CIT,
Services Pvt. Ltd., Range-7,
State Bank of India, Vs. New Delhi.
11-Local Head Office,
Parliament Street,
New Delhi.
AAECS5981K
(Appellant) (Respondent)
ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 2
ITA No. 3977/Del/2010
Assessment Year: 2005-06
SBI Cards & Payment Addl. CIT,
Services Pvt. Ltd., Range-7,
State Bank of India, Vs. New Delhi.
11-Local Head Office,
Parliament Street,
New Delhi.
AAECS5981K
(Appellant) (Respondent)
ITA No. 2470/Del/2011
Assessment Year: 2006-07
SBI Cards & Payment DCIT,
Services Pvt. Ltd., Circle 7(1),
State Bank of India, Vs. Room No. 312, 3rd Floor,
11-Local Head Office, C.R. Bldg., I.P. Estate,
Parliament Street, New Delhi.
New Delhi.
AAECS5981K
(Appellant) (Respondent)
Appellant by: Sh. Rameshchandra, CIT(DR) & Smt. Renuka Jain Gupta, Sr. DR
Respondent by: S/Sh. N. Venkat Raman, Sr. Adv., Tushar Jarwal &
Rahul Sateeja, Adv.
ORDER
PER S.V. MEHROTRA, A.M.
First we take up ITA No. 3977/D/2010.
2. Brief facts of the case are that assessee is a Joint Venture promoted by State Bank of India & GE Capital (Mauritius) Investment Company Ltd., Mauritius. The assessee was incorporated on May 15, 1998 and is engaged in the business of issuance of credit cards and providing card services to customers in India. It had filed its return of income declaring income of Rs. 87,84,00,090/-. The assessment was completed at a total ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 3 income of Rs. 88,13,76,451/-, inter-alia, making a disallowance in respect of provision for reward point redemption amounting to Rs. 2,90,73,000/- on the ground that the said provision was for unascertained liability.
2. Ld. CIT(A) confirmed the AO's action.
2.1 Being aggrieved with the order of ld. CIT(A), the assessee is in appeal before us and has, inter-alia, taken following grounds of appeal:
2. "That on the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in confirming the disallowance of provision for reward point redemption amounting to Rs. 2,90,73,000/- by erroneously considering the same as unascertained liability." 2.2 Brief facts apropos this issue are that assessee had offered 2,90,73,000/- being provision for reward point redemption in the computation of income by reserving the right to claim the aforesaid liability as an allowable deduction during the course of assessment proceedings which it was required to justify. The assessee, in its reply to show-cause notice issued by AO, submitted as under:
"During the captioned assessment year, the assessee has debited a sum of Rs. 2,90,73,000/- to its Profit & Loss Account for F.Y. 2004-05 towards liability in respect of reward points met of payments made during the year and based on actuarial valuation granted to card holders under the Triple Advantage reward points scheme. The above amount of Rs. 2,90,73,000/-."
3. The movement chart in respect of liability for reward point was as under:
ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 4
Particulars Year ended Year ended Year ended
31.3.04 31.03.05 31.03.06
Opening Provision 33,24,000 1,69,90,000 4,60,63,000
Additions during the 1,41,85,173 3,26,02,047 6,23,00,786
Year
Amounts used during 5,19,173 35,29,047 72,22,786
The year
Closing provision 1,69,90,000 1,60,63,000 10,11,41,000
4. The assessee further submitted as under:
"In respect of the same it is submitted that in order to promote credit cards and their usage and loyalty amongst its customers the company has introduced a Triple Advantage Rewards program which allows card members to earn points based on spends through the cards that can be redeemed for discounts on rental merchandise and other gifts. The Company makes payments to its reward partners when card members redeem their points and establishes provisions to cover the cost of future reward redemptions. Thus, liability for reward points outstanding as at the year end and expected to be redeemed in the future has been estimated on the basis of an actuarial valuation and provided for in the books.
This scheme is open for holders of SBI Gold Card. SBI Card for Doctors and SBI International card for every Rs. 125 spent using SBI card, the cardholder earns one reward point. Thus, once the cardholder make spends using the card. The Company's liability towards reward points redemption accrues. Hence, this liability towards reward point redemption is an actual liability in present. It is a definite and certain liability only its quantification is based on actuarial valuation. Also as per the opinion of Expert Advisory Committee of Institute of Chartered Accountants of India, the said amount is crystallized liability and, therefore, the same has been claimed as deductible by the assessee in its return of income. The opinion expressed by the Expert Advisory Committee of Institute of ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 5 Chartered Accountants of India has also been reproduced in this regard.
It is submitted that the spends made by the credit card holder using the credit card and liability towards redemption of reward points are bound with each other and, therefore, if spends made through credit card are taken note in a year, following the matching principle of accountancy the liability in respect of the same should also be taken note of in the same year. The Institute of Chartered Accountants of India (ICAI) has issued accounting standards which are mandatorily required to be followed by all the companies. In this regard, your kind attention is drawn towards the Accounting Standard (AS)-1, "Disclosure of Accounting Policies", which in its definition of accrual states that the cost are recognized as they are incurred and recorded in the financial statements of the period to which they relate."
5. The assessee had relied on following decisions:
1. Calcutta Co. Ltd. vs. CIT (37 ITR 1);
2. Metal Box Company of India Ltd. vs. Their Workmen (73 ITR 53);
3. Bharat Earth Movers vs. CIT (245 ITR 428);
4. CIT vs. Beema Mfrs. (P) Ltd. (130 Taxman 400) (Mad.);
5. Tata Iron & Steel Co. Ltd. vs. D.V. Bapat, ITO (101 ITR 292) (Mum.);
6. CIT, A.P.-II vs. Sh. Sarvaraya Sugars Ltd. (163 ITR 429) (AP);
7. CIT vs. Indian Transformers Ltd. (270 ITR 259) (Ker.);
8. Protos Engineering Co. P. Ltd. vs. DCIT (282 ITR 550) (Mum.);
9. Maruti Udyog Ltd. vs. Dy. CIT (92 ITD 119) (Del.);
6. The AO did not accept the assessee's contention, inter-alia, observing that provision was created in the books of account to meet unascertained liability and hence it was a provision for contingent liability. ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 6 The AO relied on the decision of Hon'ble Supreme Court in the case of M/s Indian Molasses Company (P) Ltd. vs. CIT, 37 ITR 66, wherein the Hon'ble Supreme Court had, inter-alia, held that expenditure which is deductible for Income tax purposes is one which is towards a liability actually existing at the time, but the putting aside of money which may become expenditure on the happening of an event is not expenditure. He also relied on the decision of Hon'ble Supreme Court in the case of Shree Sajjan Mills Ltd. vs. CIT, 156 ITR 0585, wherein it was held that assessee was not entitled to deduct on account of its liability for gratuity under the payment of Gratuity Act, 1972 without complying with the provisions of sec. 40A(7) of the Act. He also referred to the decision of Mumbai Tribunal in the case of M/s Alliwed Photographic India Ltd. vs. ITO (2006) 8 SOT 318 (Mum. Tri.). Before ld. CIT(A) the assessee reiterated the submissions made before ld. CIT(A). Ld. CIT(A) confirmed the AO's action.
7. Ld. Counsel relied on the submissions made before lower revenue authority and pointed out that the provision had been made on the basis of Guidelines issued by Institute of Chartered Accountants of India. Ld. Counsel submitted that the assessee had discharged the entire tax liability and had claimed the provision at assessment stage only. Before ld. CIT(A) it was submitted as under:
5.1 "The AR also submitted that the scheme is open for holders of SBI Gold Card, SBI Card for Doctors and SBI International card.
For every Rs. 125 spent using SBI Card, the cardholder earns one ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 7 reward point. Thus, once the cardholder make spends using the card, the Appellant's liability towards reward points redemption accrues. Hence, this liability towards reward point redemption is an actual liability in prasenti. It is a definite and certain liability, although to be discharged at subsequent date. Also, as per the opinion of Expert Advisory Committee of Institute of Chartered Accountants of India, the said amount is crystallized liability and, therefore, the same has been claimed as deductible by the assessee in its return of income. The opinion expressed by the Expert Advisory Committee of Institute of Chartered Accountants of India is as under:
"The Committee is of the view that the bank should create a provision for the liability at an amount equivalent to the cost expected to be incurred on the redemption of outstanding reward points any time in future. The liability for the reward points outstanding expected to be redeemed in future may be estimated, at the year-end, by applying the actuarial method."
5.2 It was submitted that the spendings made by the credit cardholder using the credit card and liability towards redemption of reward points are inextricably linked with each other and therefore, if income accruing to the Appellant on account of spendings made through credit card are taken into account in a year, following the matching principle of accountancy, the liability in respect of the same should also be taken note of in the same year.
5.3 It has been claimed that the Institute of Chartered Accountants of India ('ICAI') has issued accounting standards which are mandatorily required to be followed by all the companies. In this regard, attention has been drawn towards the Accounting Standard (AS)-1, "Disclosure of Accounting Policies", which in its ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 8 definition of accrual states that the cost are recognized as they are incurred and recorded in the financial statements of the period to which they relate.
5.4 It was pleaded that in the case of the assessee, obligation towards reward points arises as soon as a customer becomes entitled to the reward points although payment in this regard is made whenever the customer chooses to redeem the reward points any time in future. Thus, liability has been committed by the assessee as soon as spends are made by the credit cardholder and, therefore, following the accrual system of accounting the same has to be provided for in the books of accounts on scientific basis."
8. Ld. Counsel for the assessee further submitted that this issue is covered by the decision of Bangalore Tribunal in the case of Syndicate Bank vs. DCIT, vide ITA No. 668/Bang./2010 for A.Y. 2006-07, wherein Tribunal in para 87 has observed as under:
87. "We have considered the rival submissions. We are of the view that the CIT(A) has fallen into error in rejecting the claim of the assessee for deduction. As laid down by the Hon'ble Supreme Court in the case of BEML vs. CIT, 245 ITR 428 (SC), the criteria for allowing deduction on account of a provision is that the liability to incur the expenditure which is claimed by way of a provision should be certain and secondly the quantification of such liability should be scientific/reasonable. In the present case, as per the terms of issue of credit cards, on accumulation of minimum points, then customers were free to encash those points. The assessee was legally bound to provide equivalent of reward points in cash or kind.
In the case of the assessee, the reward points are given in the form of cash reimbursement. The fact that the customers did not make ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 9 claim for such reimbursement will not stop the accrual of liability. In our view, the liability of the assessee insofar as accumulated reward points are concerned is certain and the revenue has not disputed the basis of quantification of such liability. In such circumstances, we are of the view that in the light of the principles laid down by the Hon'ble Supreme Court in the case of BEML (supra), the claim for deduction should be allowed. We, accordingly, direct then AO to allow the claim of the assessee in this regard. Ground No. 1 & 2 raised by the assessee are accordingly allowed."
8.1 Therefore, ld. Counsel submitted that the provision made by assessee is legally allowable. However, he submitted that he has instructions that since liability on actual payment basis has been allowed, therefore, this issue need not be pressed any further.
8.2 We have considered the rival submissions and have perused the record of the case. The assessee had made a provision on the basis of opinion expressed by the Expert Advisory Committee of Institute of Chartered Accountants of India on the issue of reward point provided by Banks in order to promote their credit cards as contained at pages 159 to 163 of paper book. As clearly demonstrated by ld. Counsel for the assessee, the provision made by assessee was an allowable deduction. Therefore, the submission of ld. Counsel for the assessee that the provision was made on bona fide basis cannot be disputed. However, since ld. Counsel for the assessee has not seriously pressed this ground as deduction on actual payment basis has already been allowed to assessee ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 10 and the taxes were already paid by the assessee, therefore, this ground is dismissed.
9. In the result, this ground is dismissed.
10. Now we take the appeals for A.Y. 2006-07, vide ITA No. 2470 filed by the assessee and ITA No. 2808 filed by the Department. 10.1 In this assessment year, the assessee's business remained the same. The assessee had filed return of income declaring total income of Rs. 72,01,85,256/-. The assessment was completed at a total income of Rs. 120,52,30,650/- after making following additions:
Income as per return declared 72,01,85,256
Add:
Disallowances of Credit 5,65,63,127
Investigation expenses
Disallowance of Expenditure 73,50,418
on application capture
Creation of brand and 42,11,31,848
Advertisement expenses
Total additions 48,50,45,393 48,50,45,393
Total assessed income 1,20,52,30,649
r/o 1,20,52,30,650
11. Ld. CIT(A) partly allowed and partly enhanced the assessee's appeal as under:
Ground Description Amount Involved (Rs.) Decision in brief No.
1. General - Does not require adjudication
2. Provision for reward 6,23,00,786 Dismissed - with directions to allow Point redemption part relief
3. Provision for doubtful 8,74,93,050 Dismissed debts as per RBI Norms
4. Credit investigation 5,65,63,127 Allowed expenses
5. Application capture 73,50,418 Allowed expenses
6. Advertisement and sales 42,11,31,848 Allowed promotion expenses
7. Withdrawal of Interest - Consequential u/s 244A
8. Levy of Interest u/s 234D - Consequential
9. Initiation of penalty - Dismissed proceedings Claim of deferred 17,93,59,566 Direction for enhancement given.ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 11
Revenue expenses (Net)
12. Being aggrieved with the order of ld. CIT(A), both Assessee and Department are in appeal before us. First we take up the assessee's appeal, vide ITA No. 2470/D/2011. The assessee has taken following grounds of appeal:
1. "That on the facts and in the circumstances of the case and in law, the impugned order dated February 22, 2011 passed by the ld. CIT(A) u/s 250(6) of the Act for the subject year is erroneous and bad in law to the extent the same enhances the income of the Appellant/confirms the disallowances made by the Deputy Commissioner of Income Tax, Circle 7(1), New Delhi ('AO');
2. That on the facts and in the circumstances of the case and in law, the ld.
CIT(A) erred in confirming the disallowance of provision for reward point redemption amounting to Rs. 5,50,78,000 considering the same as unascertained liability. The ld. CIT(A) has further erred in holding that the above liability accrues when the claim for redemption of reward points is lodged by the cardholder and not at the time of purchase by the cardholder; 2.1That on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in directing the AO to allow deduction of Rs. 72,22,786/- towards actual reward points redeemed by the Appellant, subject to the Appellant accepting the disallowance of Rs. 6,23,00,786. The ld. CIT(A) has erred in not appreciating that deduction of above amount actually paid/disbursed by the Appellant is not dependent upon any subsequent appellate proceedings instituted by the Appellant; 2.2That the ld. CIT(A) has erred in not appreciating that the above provision for reward point was recognized on scientific basis, duly supported by the Actuarial Valuation Certificate furnished during the course of appellate proceedings.
ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 12
3. That on the facts and in the circumstances of the case, the ld. CIT(A) has erred in exercising jurisdiction to enhance the income of the Appellant by making a disallowance of Rs. 17,93,59,566 towards card acquisition expenditure incurred by the appellant and claimed upfront in the return of income though treated as Deferred Revenue expenditure in the books of accounts.
3.1That the ld. CIT(A) has erred on facts and in law in not appreciating that for purposes of the Act, revenue expenses have to be allowed in entirely in the year of accrual and no adverse inference can be drawn on the basis of entries in the books of accounts.
3.2That the ld. CIT(A) has erred in not applying the under-noted binding judicial precedents on the allowability of card acquisition expenses:
a) That the Hon'ble Income Tax Appellate Tribunal, Delhi Branch ('ITAT') has dismissed the Departmental appeal for AYs 2000-01 to 2002-03 on this issue for want of approval of Committee of Disputes ('COD');
b) That the COD has declined permission to Central Board of Direct Taxes to appeal before the Hon'ble ITAT on deduction of card acquisition expenditure for AYs 2000-01 and 2001-02, by holding that above expenditure is revenue expenditure allowable under the Act;
c) That the ld. CIT(A), New Delhi has also deleted the disallowance of card acquisition expenses made in assessment order for AYs 2000-01 to 2002-
03 on similar grounds.
3.3Without prejudice to above, the ld. CIT(A) has erred in directing the AO to allow deduction of Rs. 17,93,59,566 towards card acquisition expenditure in AY 2007-08 only on the condition that no appeal is filed against the above disallowance. The ld. CIT(A) has erred in not appreciating the fact that in the event the above amount is not allowed in subject year, the same ought to be allowed in AY 2007-08."
13. Ground no. 1 is general and does not call for any adjudication. ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 13
14. Apropos ground no. 2 to 2.2, the facts are identical to the solitary issue in A.Y. 2005-06 in assessee's appeal. In the present assessment year the assessee had made the provision on the basis of Actuarial Valuer's report contained at page 315 of paper book which further prove the assessee's bona fide in making the provision. In view of these facts for the reasons given in A.Y. 2005-06 in assessee's appeal these grounds are dismissed.
15. Apropos ground no. 3 to 3.3, brief facts are that AO noticed that during the year under appeal, the assessee had changed its accounting policy for booking of card acquisition expenses. He referred to schedule XIV clause (2F) of the significant accounting policies forming part of the audited financial statement for the relevant year which read as under:
"Deferred card acquisition cost:
Till 31st March, 2005 sales force compensation, card acquisition cost (sales service provider expenses, incentives related to card acquisition, credit investigation cost, application printing cost), consumption of plastic cards, and delivery charges were recognized on an upfront basis.
During current year (with effect from 1st April, 2005), the Company has changed its policy to recognize productive sales force compensation, card acquisition cost, consumption of plastic cards and delivery charges over a period of one year as this more closely reflects the period to which the fee relates to. As a result of this change in accounting policy, profit before tax for the current year is higher by Rs. 19,64,39,035/-."
9.2 This accounting treatment is being explained by the under- noted illustration.
ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 14
"If Card-making expense of Rs. 1000/- has been incurred in the month of July 2005, then as per the above accounting policy, the amount to be charged to the profit and loss account for the financial year 2005-06 would be computed as under:
= Rs. 1000*9/12= Rs. 750 The balance amount to be deferred & claimed in the next financial year i.e. 2006-07 would be calculated as under: =Rs. 1000*3/12=Rs. 250"
15.1 However, on perusal of the computation of income for income tax purposes, he found that the aforesaid expenses, which were "deferred" in the books of account to the extent of Rs. 19.64 crores, had been claimed as a deduction. Consequently, the book results, which should have shown a higher profit by Rs. 19.64 crores, had been neutralized and for income tax purposes, profits had been disclosed at a lower figure.
16. The assessee filed detailed submissions, in which, inter-alia, it was submitted that the expenditure had been incurred by the assessee for running the business more efficiently and effectively and as such allowable u/s 37(1) of the Act. The assessee had relied on the decision in the case of Empire Jute Co. Ltd. vs. CIT, 124 ITR 1. It was further submitted that since legislature has not provided any deferment of expenses of the nature present in the instant case, it will be against the intent of the legislature to defer such expenses. The assessee relied on the decision in the case of Hindustan Commercial Bank Limited vs. Revenue 21 ITR 353 (All.) and ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 15 Kedarnath Jute vs. CIT, 82 ITR 363 (SC). The assessee also pointed out that in assessment years 2000-01 & 2001-02, the assessee had amortized such expenses over the period of two years which was not accepted by the AO.
16.1 However, ld. CIT(A) allowed the assessee's appeal and the department was denied going in further appeal by the COD. Ld. CIT(A) however, did not accept the assessee's contentions for the following reasons:
1. Section 211(2) of the Companies Act, 1956 provides that "every Profit & Loss Account of a company shall give a true and fair view of the Profit & Loss of the company for the financial year. Sub-sections (3A) & (3C) of section 211 of the Companies Act provide that "every Profit & Loss Account of the Company" shall comply with the accounting standards prescribed by the Institute of Chartered Accountants of India.
2. He pointed out that as per (AS-5) issued by the Institute of Chartered Accountants of India, the same accounting policies should normally be adopted for similar events of transactions in each period. In view of these, ld. CIT(A) pointed out that in view of section 211(3A) & (3C) of the Companies Act, AS-5 issued by the Institute of Chartered Accountants of India needs to be mandatorily followed. There is no choice left with the assessee in this regard. Ld. CIT(A) referred to the decision of Hon'ble Supreme Court in the case of CIT vs. Woodward Governor India Pvt. Ltd. (2009) 312 ITR 254 (SC) and pointed out that in this case the Hon'ble Supreme Court was of the view that the assessee company, in view of the provisions in the Companies Act, had no choice but to follow the accounting treatment suggested in AS-ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 16
11 and, therefore, foreign exchange loss was an allowable deduction.
He pointed out that since assessee company had followed AS-5 while preparing its annual financial statements, therefore, in view of the decision of Hon'ble Supreme Court in the case of the computation of income for Income tax purposes had to be made on the same basis.
17. Ld. CIT(A) also referred to section 145(2) of the Income Tax Act which mandates that the Central Government may notify the accounting standards to be followed from time to time by any class of assessee. He pointed out that CBDT has notified accounting standard vide SO-69(E) dt. 25/01/1996 which is mandated to be followed by all assesses following mercantile system of accounting. He referred to para 4 of the said notification which reads as under:
"Accounting policy adopted by an assessee should be such as to represent a true and fair view of the State of Affairs of the business, profession or vacation in the financial statement prepared and presented on the basis of such accounting policy."
17.1 Ld. CIT(A) further discussed in detail the assesses submissions but did not agree with the earlier decision of ld. CIT(A) or with the decisions relied by the assessee and held that the claim of the deduction of the deferred revenue expenditure amounting to Rs. 19,64,39,035/-, had been wrongly made in the computation of income. He, accordingly, disallowed the assessee's claim for a sum of Rs. 17,93,59,566/- (19,64,39,035/- - 1,70,79,469/-), since in the computation of income, the income from membership fee amounting to Rs. 1,70,79,469/- had been offered to tax. ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 17 Though, in view of the changed of accounting policy, the same was not credited to the profit and loss account.
18. Ld. Counsel for the assessee submitted that there is no dispute that the impugned amount was revenue expenditure and incurred during the year under consideration. However, since the impugned amount was of deferred revenue nature, being partly relatable to current year and partly to subsequent year, therefore, for preparation of balance sheet, it was claimed as deferred revenue expenditure in the balance sheet but for Income tax purposes the entire amount was claimed as deduction in the computation of income u/s 37 of the Income Tax Act. Ld. Counsel submitted that balance sheet in the case of a company would be prepared as per the requirements of the Companies Act but for computation of income under the Income Tax Act, the provisions of the Income tax Act have to be applied.
19. Ld. DR relied on the order of ld. CIT(A).
19.1 We have considered the rival submissions and have perused the record of the case. We find that there is no concept of deferred revenue expenditure under the Income Tax Act except under certain specific provisions like section 35D. Therefore, unless statutory provision is there to defer the revenue expenditure over a period, the entire amount is to be allowed in the year in which it is incurred for running the business as per section 37 of the Income Tax Act. Ld. CIT(A) has relied on the decision of Hon'ble Supreme Court in the case of Woodward Governor (supra), wherein ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 18 the issue was regarding claim for foreign exchange loss and there was no issue regarding deferred revenue expenditure. The said decision is not applicable to the facts of the present case. The Hon'ble Supreme Court considered the applicability of accounting standard XI in that context only. As far as the present issue is concerned, we find that this issue is no more resintegra in view of following decisions:
1. 335 ITR 29 in the case of CIT vs. Casio India Ltd., wherein the Hon'ble Delhi High Court held that direct selling expenses, stamping fee and commission paid to the selling agents in the case of assessee who was financing the higher purchase of vehicles and homes and the period of such financing were ranging from less than 1 year upto 5 years was allowable in the year in which the expenditure was incurred and not over 5 years;
2. 308 ITR 199 in the case of CIT vs. Salora International Ltd., head note reads as under:
"For the assessment year 2001-02, the assessee had incurred advertising expenditure of about Rs. 3.08 crores for launching of its products and the AO held that the expenditure was of an enduring nature and treated one-third of it as capital expenditure. The Tribunal, confirming the findings of the Commissioner (Appeals) that the expenditure was revenue expenditure, held that there was a direct nexus between the advertising expenditure and the business of the assessee and that unless the assessee made its products known in the market, its business would suffer. On appeal by the Department: Held also, that the questions whether the Tribunal was correct (i) in deleting the addition made by the AO by amortising the expenditure towards the professional fee paid towards the project of ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 19 supply chain management and human resource revenue-engineering by allowing deduction of one-fifth as expenditure in the year under assessment, and (ii) in holding that the unutilized amount of DEPB would be allowed as expenditure u/s 37(1) of the Income Tax Act,1961, and could be allowed as loss, were substantial questions of law."
3. CIT vs. Panacea Biotech Ltd., vide ITA No. 22 & 24/2012, wherein the Hon'ble Delhi High Court observed as under:
4. "The question of deferred revenue expenditure and the judgment of the Supreme Court in the case of Madras Industrial Investment Corporation Ltd. vs. CIT, MANU/SC/0493/1997 :
(1997)225 ITR 802 (SC) was examined and distinguished in CIT vs. Industrial Corporation of India MANU/DE/2521/2009 :
(2009) 185 Taxman 296 (Delhi) and it was held:
22. ...The ld. Counsel for the Revenue had strongly argued that matching concept is to be applied, as per which part of the expenditure had to be deferred and claimed in the subsequent years and, therefore, approach of the AO was correct. However, this argument overlooks that even in Madras Industrial Investment Corporation (supra), on which the reliance was placed by Ms. Bansal, the general principle stated was that ordinarily revenue expenditure incurred wholly and exclusively for the purpose of business can be allowed in the year in which it is incurred. Some exceptional cases can justify spreading the expenditure and claiming it over a period of ensuing years. It is important to note that in that judgment, it was the assesse who wanted spreading the expenditure over a period of time as was ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 20 justifying such spread. It was a case of issuing debentures at discount; whereas the assessee had actually incurred the liability to pay the discount in the year of issue of debentures itself. The Court found that the assessee could still be allowed to spread the said expenditure over the entire period of five years, at the end of which the debentures were to be redeemed. By raising the money collected under the said debentures, the assessee could utilize the said amount and secure the benefit over number of years.
5. In CIT vs. Citi Financial Consumer Fin. Ltd.
MANU/DE/2208/2011 : (2011) 335 ITR 29 (Del.), a Division Bench referred to Industrial Finance Corp. of India (supra) and then quote a passage from the decision of the Supreme Court in CIT vs. Empire Jute Co. Ltd. vs. CIT MANU/SC/0279/1980 :
(1980) 124 ITR 1 (SC):
13. At this stage, it would be of advantage to discuss the judgment of Supreme Court in Empire Jute MANU/SC/0279/1980 : (1980) 124 ITR 1 (SC) which repelled the theory of expenditure of enduring nature, in a great measure. In that case, the SC noted that by decided cases, the courts evolved various tests for distinguishing between the capital and revenue expenditure but no test is paramount or conclusive. Every case has to be decided on its facts keeping in mind the broad picture of whole operation in respect of which the expenditure has been incurred. At the same time, a few tests formulated by the courts were taken note of. One such test which was specifically spelled out and may be relevant for our ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 21 purpose was "when an expenditure is made not only once and for all, but with a view to bringing into existence of an advantage for which enduring benefit of a trade, the expenditure can be treated as capital in nature and not attributable to revenue". However, cautioned the court, it would be misleading to suppose that in all cases securing a benefit for business expenditure would be capital expenditure. The court added the caution in the following words:
"....There may be cases where expenditure, even if incurred for obtaining advantage of enduring benefit, may, none the less, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assessee that brings the case within the principle laid down in this test. What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee's trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably white leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular facts and circumstances of a given case.ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 22
6. It was held that the claim of the Revenue that the revenue expense should be deferred in the absence of a statutory provision or spread over some years cannot be accepted. In the case of Commissioner of Income Tax vs. Casio India Ltd. MANU/DE/2405/2011 : (2011) 335 ITR 196 (Del.), reference was made to the decision in the case of Citi Financial Consumer Fin. Ltd. (supra). It was held that the expenditure incurred on investment and sale promotion was business expenditure u/s 37(1) of the Act and the concept of deferred revenue expenditure should not be accepted at the behest of the Revenue." 19.2 Similar view has been taken in following decisions:
1. 335 ITR 29, CIT vs. Citi Financial Consumer Finance Ltd., wherein it was observed as under:
"We may also add here that in the Income-tax law, there is no concept of deferred revenue expenditure. Once the assessee claims the deduction for the whole amount of such expenditure, even in the year in which it is incurred, and the expenditure fulfils the test laid down u/s 37 of the Act, it has to be allowed. Only in exceptional cases, the nature mentioned in Madras Industrial Investment Corporation Ltd. [1997] 225 ITR 802 (SC), the expenditure can be allowed to be spread over, that too, when the assessee chooses to do so."
2. 338 ITR 177, Cyber Media (India) Ltd. In this case, inter-alia, held as under:
"Once the Tribunal accepted that the assessee had regularly employed the hybrid system of accounting for income-tax purposes and it was only to adhere to procedure under the Companies Act that it changed bona fide to the mercantile system, it erred in concluding that the assessee's income for the ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 23 purposes of income-tax proceedings could not hark back to the hybrid system."
3. 19 SOT 13, Situ Electro Instruments (P) Ltd. vs. ITO has observed as under:
8.4 "This leads us with the only question as to whether it is permissible for the assessee to claim the entire expenditure as revenue expenditure while filing its return of income, while on the other, under the Companies Act, adopted a method of accounting wherein only part of the expenditure in question was debited to the profit and loss account. The issue, in our considered opinion, is covered in favour of the assessee and against the revenue by a number of decisions which were cited before us by the learned counsel for the assessee. In the Hyderabad Bench in the case of Amar Raja Batteries vs. Asstt.
CIT [2004] 91 ITD 280 which is squarely applicable to the facts of this case, it was held that-
"The undisputed fact is that the expenditure is in the revenue filed. The only issue to be considered is whether the assessee can claim the entire expenditure in this year itself, even though it had written off this expenditure in the books over a period of five years. Though the assessee has written off the expenditure in its books of account over a period of five years, it must be allowed in its entirety in the year in which it was incurred, if it is revenue expenditure and if it is wholly and exclusively incurred for the purposes of business. The assessee had launched a new product and incurred heavy advertisement expenditure. The period for which the assessee can be said to have secured benefit by incurring this expenditure cannot be reasonably estimated.ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 24
The undisputed fact is that the new product launched may fail to take off in the year of launch itself or may have a long life as a product. There is no way in which it can definitely be estimated that the benefit of the expenditure would last for a particular period of time. The entries in the books of account do not clinch the issue either way and they do not determine the allowability or otherwise of the expenditure. The entire advertisement expenditure for product launching is to be allowed in this year. The disallowance of Rs. 1,03,63,401/- made by the Assessing Officer on account of advertisement expenditure is deleted."
It is well settled that the entries in the books of account cannot be the basis whether a receipt is taxable or not or whether expenses are allowable as a deduction or not. Courts are compelled to go by the true nature of receipts and not to go by the entries made in the books of account. If any authorities are required to be cited on this case on this issue we derive strength strongly from the following decisions:
1) CIT vs. India Discount Co. Ltd. [1970] 75 ITR 191 (SC).
2) Kedarnath Jute Mfg. Co. Ltd. vs. CIT [1971] 82 ITR 363 (SC).
19.3 In view of above discussion, these grounds are allowed.
20. In the result, the assessee's appeal is partly allowed.
21. Now we come to the Departmental appeal, vide ITA No. 2808/D/2011. The revenue has raised the following grounds of appeal: ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 25
1) "On the facts and circumstances of the case the ld. CIT(A) erred in law and merit of the case is deleting the disallowance made by the AO on account of credit investigation expenses to the tune of Rs.
56563127/- being 75% of the total expenditure treating it as capital expenditure;
2) On the facts and circumstances of the case the ld. CIT(A) erred in law and merit of the case in deleting the disallowance made by the AO on account of expenditure on application capture to the tune of Rs. 7350418/- being 75% of the total expenditure treating it as capital expenditure.
3) On the facts and circumstances of the case the ld. CIT(A) erred in law and merit of the case in deleting the disallowance made by the AO on account of creation of brand and advertisement expenses to the tune of Rs. 421131848/- being 75% of the total expenditure treating it as capital expenditure."
22. Brief facts apropos ground no. 1 are that from perusal of profit and loss account, the AO noticed that assessee had debited Rs. 7,54,17,503/- on account of credit investigation expenses. The assessee submitted as under:
"In this regard, it is submitted that the assessee receives applications from various prospective customers for issuance of credit cards and it needs to verify information and data provided by these customers to establish their bonafide and credit worthiness. For this purpose, the assessee engages the services for credit verification agencies/firms of Chartered Accountants, who carry out residence verification/business verification and report on the bonafide of the data provided by the prospective cardholders. This is essential in order to reduce/curtail the high level of delinquencies and resultant credit losses which are widely ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 26 prevalent in the credit card industry." I have gone through the submission of the assessee and other details filed by the assessee. Its is clear that the need of the credit investigation arises for prospective customers for issuance of credit card. This includes the verification of information and data provided by these customers and also to minimize the risk of the assessee company against incurring future bad debts. As a matter of fact, this kind of investigation is a one time verification of credit worthiness and credit history of the prospective customers which leads to creation of data base which is not only used by assessee company but also shared by other such credit card companies and banks.
Once the investigation is completed in respect of a prospective customer, there is no need for further investigation and if Okayed, such customers keeps on enjoying the services rendered by assessee company."
23. The AO held the expenditure being in capital field observing as under:
"The assessee has mentioned that such kind of expenditure is essential in order to reduce the high level of delinquencies and credit losses. I agree with the contention of the assessee regarding the necessity of the expenditure but at the same time such kind of expenditure cannot be justified as recurring expenditure. Even if, Assessee Company denies a card to a prospective customer after investigating his creditworthiness even then no further expenditure is required on such prospective customer. Therefore, it can be safely held that the credit investigation expenses are predominantly one time expense for both kinds of decisions viz. providing card to a prospective customer or denying the same.
The information so gathered about risk profile/credit profile of a prospective customer can be used for other occasion and by the other ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 27 agencies also. Therefore, it is a data base/know-how which provides enduring benefit to the assessee company regarding creditworthiness of its prospective customers.
In view of above discussion, the expenditure incurred on credit investigation is held as capital and disallowed as revenue expenditure. However, the assessee is allowed 25% of such expenditure for the A.Y. 2006-07 resulting in addition of Rs. 5,65,63,127/-. Since, I am satisfied that assessee has filed inaccurate particulars about its income, therefore, penalty proceedings u/s 271(1)(c) are initiated separately.
Addition of Rs. 5,65,63,127/-
24. Ld. CIT(A) allowed the assessee's appeal treating the same as revenue expenditure.
25. Ld. DR referred to para 5.7 of ld. CIT(A)'s order and pointed out that he has not considered the reasoning given by AO that the benefit of this expenditure is enduring in nature. She submitted that ld. CIT(A) adopted his own reasoning and, therefore, the matter should be restored back to the file of CIT(A) for considering the AO's reasoning.
26. Ld. Counsel submitted that reasoning given by AO is akin to treating the expenditure as deferred revenue expenditure. He submitted that merely because benefit from a particular expenditure endures over a period does not necessarily make the same as capital expenditure unless the expenditure results into profit yielding apparatus. Ld. Counsel submitted that the expenditure was incurred even for those applicants who did not actually become its customers on account of having poor credit history and from whom the assessee does not obtain any benefit from such investigation. ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 28 Therefore, it is not correct to say that by incurring this expenditure, the assessee had created a profit yielding apparatus for future.
27. Ld. DR's submission that the matter should be restored back to the file of AO as ld. CIT(A) has given his own reasoning cannot be accepted because ld. CIT(A) has primarily considered the issue in the light of AO's finding that the impugned amount was capital in nature. We are in agreement with the submissions of ld. Counsel for the assessee that the reasoning given by AO in regard to impugned amount is akin to treating the amount as deferred revenue expenditure inasmuch as the AO himself has observed that there was necessity of this expenditure and while so holding, the AO himself has allowed 25% of this expenditure impliedly 1/4th of the impugned amount has been considered as expenditure relating to current assessment year and the balance being allowable in subsequent three years. Therefore, the finding of AO that the impugned amount was capital in nature was not correct but he has primarily treated the expenditure as deferred revenue expenditure. As discussed in regard in ground no. 3 to 3.3 of assessee's appeal for A.Y. 2006-07, this treatment is not permissible in law and the entire amount had to be allowed u/s 37 of the Income Tax Act being incurred wholly and necessarily for the purpose of business. In view of above discussion, we uphold the order of ld. CIT(A).
28. Brief facts apropos ground no. 2 are that AO noticed that assessee company had debited a sum of Rs. 98,00,557/- under the head "Application ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 29 Capture Expenses". The assessee pointed out that these expenses pertain to capturing of data entered by prospective cardholder into application form. The AO observed that since this expenditure was incurred only once during the entire period of customer's relation, therefore, it was capital expenditure. He, however, allowed 25% of the claim and, thus, made a disallowance of Rs. 73,50,418/-. Ld. CIT(A) considered this expenditure on the same footing on which credit investigation expenses and allowed the assessee's claim. 28.1 Having heard both the parties, we find that the nature of this expenditure, reasons for making disallowance by AO and the reasons for allowing this expenditure by ld. CIT(A) are identical to the issue relating to credit investigation expenses and, therefore, for the reasons given in regard to ground no. 1, this ground is also dismissed.
29. Ground no. 3: Brief facts apropos ground no. 3 are that AO noticed that assessee had incurred expenditure on advertising and sales promotion to the tune of Rs. 56,15,09,131/-. The AO issued show cause notice to assessee to explain as to why this amount be not treated as capital expenditure as the same lead to creation of brand of SBI Card. The assessee in its reply submitted as under:
"Assessee has submitted its reply vide letter dated 22.12.2009 wherein it has contended that advertisement and sales promotion is essential part of today's business in today's competitive world and also that such expenses do not provide any enduring benefit to the assessee because of following reasons:ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 30
a) Customer can terminate the use of credit card at any point of time.
b) Numerous competitors targeting the customers in a competitive market and short memory of purchasing market advertisement expenses does not have any enduring benefit to the assessee.
c) Expenditure incurred by the assessee are ordinary and routine expenditure which are required to be incurred from year to year.
d) In this era of cut throat competition, it is important for the companies in business of card services to launch new products with enhanced utility and features on regular intervals. Such products are made known to the public at large by undertaking extensive advertising and publicity to promote sales. In the absence of such publicity, the new and enhanced features of products would remain unknown to the public, which would have an adverse impact on the trading operations of the company.
e) The publicity made for a product in one year does not guarantee the sale of products in the future since new products with enhanced features may be introduced by the competitors, thus making the product unpopular.
f) Assessee introduces various schemes, which have a very short shelf life i.e. not more than 2 to 3 months. Since the product itself has such a short life, the expenses incurred to advertise or publicize the product cannot be treated as providing any enduring benefit to the assessee. These expenses are incurred on the business captured during the year.
Assessee has also relied upon following decisions of various codes in support of its claim:
1. Alembic chemicals words versus CIT (177 ITR 377).
2. CIT vs. Berger Paints (254 ITR 503).
3. Hindustan Commercial Bank vs. CIT (21 ITR 353).ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 31
4. Empire Jute Co. Ltd. vs. CIT (124 ITR 1)."
30. The AO after detailed discussion, held as under:
"In view of above discussion and facts & circumstances of the case, the amount spent on advertisement and sale promotion is held to be capital in nature and creating of intangible asset in form of 'Brand' which is of similar nature of capital assets as mentioned in section 32(1)(ii) of the I.T. Act. Therefore, amount claimed as advertisement & sales promotion expense of Rs. 56,15,09,131/- is disallowed as revenue expenditure, however, assessee is allowed to claim depreciation @ 25% on such amount. Total disallowance on this account of this comes to Rs. 42,11,31,848(56,15,09,131 - 14,03,77,282). Since, I am satisfied that assessee has filed inaccurate particulars about its income, therefore, penalty proceedings u/s 271(1)(c) are initiated separately."
31. Ld. CIT(A) allowed the assessee's appeal, inter-alia, observing as under:
6.14 "Accordingly, after considering the relevant facts of the case and the case laws on the subject. I agree with the contention of the Appellant that in today's rapidly changing economic scenario and cut throat competition, for running the business of the appellant as a profitable proposition, it is necessary to incur advertisement expenditure on an year-on-year basis to ensure higher turnover & profits for the appellant. In any case, as mentioned earlier, nearly 79% of the expenses are in the nature of "commission" paid to marketing agents for procuring new cardholders. Accordingly, I hold that no intangible asset has been created by the Appellant by incurring of said expenditure and the whole expense of Rs.ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 32
56,15,09,131/- charged to the profit & loss account is on revenue account and, therefore, allowable as such. Hence, the Ground No. 6 stands allowed."
32. Ld. DR relied on the assessment order and submitted that since the expenditure had been incurred for brand building of SBI Card, therefore, it was in capital field.
33. Ld. Counsel for the assessee submitted that the disallowance made by AO has to be considered in the light of its allowability/ disallowability u/s 37 of the I.T. Act and the decision of Spl. Bench of Delhi Tribunal in the case of LG Electronics India Pvt. Ltd. vs. Asstt. CIT, vide ITA No. 5140/Del/2011dated 23/01/2013 is not applicable to the present facts. In this regard ld. Counsel referred to page 90 of LG's decision (supra) para 16.8, wherein Tribunal has, inter-alia, observed as under:
"The exercise of separating the amount spent by the assessee in relation to international transaction of building brand for its foreign AE for separately processing as per section 92 of the Act cannot be considered as a case of disallowance of AMP expenses u/s 37(1). In fact, both the sections i.e. 37(1) and sec. 92 operate in different fields."
33.1 Ld. Counsel further referred to following decisions in support of his contention that advertisement expenses are to be allowed in full in the year in which they are incurred for the purposes of business.
"For the assessment year 2001-02, the assessee had incurred advertising expenditure of about Rs. 3.08 crores for launching of its products and the Assessing Officer held that the expenditure was of an ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 33 enduring nature and treated one-third of it as capital expenditure. The Tribunal, confirming the findings of the Commissioner (Appeals) that the expenditure was revenue expenditure, held that there was a direct nexus between the advertising expenditure and the business of the assessee and that unless the assessee made its products known in the market, its business would suffer. On appeal by the Department:
Held, that no interference was necessary in the issue in regard to advertising expenditure.
Held also, that the questions whether the Tribunal was correct
(i) in deleting the addition made by the AO by amortising the expenditure towards the professional fee paid towards the project of supply chain management and human resource revenue-engineering by allowing deduction of one-fifth as expenditure in the year under assessment, and (ii) in holding that the unutilized amount of DEPB would be allowed as expenditure u/s 37(1) of the Income Tax Act, 1961, and could be allowed as loss, were substantial questions of law."
33.2 We have considered the rival submissions and have perused the record of the case. As is evident from the findings of AO, he has allowed 25% of the expenses treating the same being relating to current year under consideration and balance has been disallowed. This implies that he has primarily treated this amount as deferred revenue expenditure and, therefore, for the reasoning given in regard to ground no. 3 of the assessee's appeal for A.Y. 2006-07 and also after taking into consideration the various decisions relied upon by ld. Counsel for the assessee, the entire amount was rightly allowed by ld. CIT(A) particularly because 79% of the expenditure was ITA Nos. 2808/D/11, 1293/D/12, 1047/D/12, 3977/D/10 & 2470/D/11 34 in the nature of commission paid to marketing agent for procuring new cardholders. It cannot be denied that this expenditure though classified under the head "advertising expenditure" was essential for running of assessee's business.
34. In the result, this ground is dismissed.
35. In the result, the Department's appeal is dismissed and Assessee's appeal is partly allowed.
Order pronounced in the open court on 31/01/2014 Sd/- Sd/-
(R.P. TOLANI) (S.V. MEHROTRA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 31/01/2014
*Kavita
Copy to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT, New Delhi.
TRUE COPY
By Order
ASSISTANT REGISTRAR