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2014 (11) TMI 851 - HC - Income TaxProceedings u/s 153C – restriction on allowance of deduction of expenditure towards advertisement and brand building expenses - Held that:- The Tribunal noticed that revenue has not been able to substantiate the findings of the AO - none of the documents contained any incriminating evidence/material – the AO has not observed or held that the expenditure was not incurred by the assessee - It has been accepted that the expenditure in fact was incurred - the expenditure incurred on advertisement/brand building was in respect of Joie Agarbatti and incense sticks - The expenditure was not incurred for brand building/advertisement of tobacco products etc., in respect of which royalty payments were received - Reasonableness and whether the assessee was wise and prudent in incurring the expenditure, is not within the domain of examination by the assessing officer, unless permitted and allowed under the statute. Expenses can be disallowed u/s 37(1) of the Act, if it is held that it was not wholly and exclusively for business and not by adopting subjective standard of reasonableness - Section 40A(2) of the Act has not been invoked and there is no provision which stipulates that advertisement and brand building expenses could be restricted or partly allowed – there was no need to examine the question as to whether any document belonging to the assessee was found during the course of search and whether Section 153C of the Act was rightly invoked – Decided against revenue.
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