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2016 (6) TMI 298 - ITAT MUMBAIDisallowance of expenses for obtaining ISO certificates - revenue or capital expenditure - Held that:- It is evident from the order of the Departmental Authorities that they have considered the expenditure to be capital in nature because the certificate is valid for three years. However, in our view, that cannot be a ground to treat the expenditure as capital in nature unless it creates an asset of enduring nature. Neither the Assessing Officer nor the learned Commissioner (Appeals) has established on record that by obtaining the certificate, the assessee created any asset of enduring nature. On the other hand, the decisions relied upon by the learned Authorised Representative as referred to above have held that sum paid by the assessee for obtaining ISO certificates are revenue expenditure. Thus we allow assessee’s claim of deduction. As far as the allegation of learned Commissioner (Appeals) that the expenditure does not pertained to the impugned assessment year, we are not convinced with the same. As rightly pointed out by the learned Authorised Representative, there is no dispute that the expenditure was incurred during the relevant previous year. That being the case, assessee is eligible to claim the deduction Disallowance on account of cost of production of feature film - whether provisions of section 194J is applicable to such payments made in kind - Held that:- Since the payment made by the assessee is in kind, the provisions of section 194J are not applicable. Accordingly, allowing assessee’s claim, we delete the addition made by the Assessing Officer. See CIT v/s Chief Accounts Officer, Bruhat Bangalore Mahanagar Palika [2015 (10) TMI 2184 - KARNATAKA HIGH COURT ] Disallowance of advertisement and publicity expenses - Held that:- The expenditure incurred in regular course of business has to be allowed under section 37. The ratio laid down by the co–ordinate bench of the Tribunal is squarely applicable to the facts of the present case. Therefore, expenditure incurred by the assessee being wholly and exclusively laid down for the purpose of assessee’s business is allowable as deduction under section 37 of the Act. Accordingly, allowing assessee’s claim of deduction, we delete the addition made by the Assessing Officer. See Dharma Productions Pvt. Ltd. v/s DCIT[2013 (11) TMI 319 - ITAT MUMBAI] Disallowance of cost of Television serials and film projects abandoned during the year - Held that:- On a perusal of the orders of the Departmental Authorities, it is observed that the Department has not disputed the fact that the assessee has incurred the expenditure. It is also not disputed that the television and film projects have been abandoned. The expenditure has been disallowed only on the ground that the assessee has not been able to prove that by abandoning the projects, the assessee has benefited. In our view, the reasoning of the Departmental Authorities for disallowing the expenditure is not valid. The very fact that the assessee abandoned the projects goes to prove that the projects were not found to be viable or workable. Therefore, keeping in view the business interest, the assessee decided to abandon the projects. In fact, in the CBDT circular no.16 of 6th October 2015, the Board has clearly stated that cost incurred in abandoned projects should be allowed as revenue expenditure under section 37 of the Act Disalllowance under section 14A r/w rule 8D - Held that:- On a perusal of the assessment order, we do not find any observations by the Assessing Officer to the effect that during the relevant previous years, assessee had earned / claimed any exempt income. It is the assertion of the learned Authorised Representative before us that assessee has not earned any exempt income during the previous year relevant to the assessment year under dispute. As held by the Hon'ble Delhi High Court in Cheminvest (2015 (9) TMI 238 - DELHI HIGH COURT unless during the relevant previous year, assessee earns any exempt income no disallowance under section 14A r/w rule 8D can be made. Therefore, applying the ratio laid down by the Hon'ble Delhi High Court as aforesaid, we hold that no disallowance under section 14A r/w rule 8D can be made in case assessee had not earned any exempt income during the relevant previous year. Therefore, we direct the Assessing Officer to verify this aspect and if it is found that the assessee has not earned any exempt income during the relevant previous year, no disallowance under section 14A can be made. In view of our aforesaid observation, there is no need to deal with the alternative contention of the assessee that the investment in shares since was made out of interest free funds available with the assessee, no disallowance under section 14A can be made out of the interest expenditure.
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