TMI Blog2013 (1) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... s, it cannot be inferred that any capital apparatus has come into existence which can be the source of income generation for the assessee. It is not justifiable that the "artworks" fall in the capital field. Accordingly, we direct for deleting the addition of ₹ 1,52,809 and allow the ground raised by the assessee. - Decided in favour of assessee. - I.T.A. NO.8637/M/2010 - - - Dated:- 23-1-2013 - SHRI R.K. GUPTA AND SHRI D. KARUNAKARA RAO, JJ. For the Appellant : Shri Firoze Andhyarujina For the Respondent : Shri Rajarshi Dwivedy, Sr. DR ORDER D. Karunakara Rao (Accountant Member).- This appeal filed by the assessee on December 10, 2010 is against the order of the Commissioner of Income-tax (Appeals)-39, M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred on artwork charges constitutes revenue expenditure and not capital expenditure as held by the Assessing Officer. In the process, as detailed in para 6 of the impugned order, the assessee explained the nitty-gritty of the process of making artworks . As per assessee, the said process of making artworks involves creating a basic design by an ad agency as the medium in which an advertisement is to be prepared. After the basic design is approved by the assessee, the design is given a stricture based on the size and colour specifications for making the images. The images are then prepared and other mandatory details like cut-marks, bleed areas, etc., are placed in it. Thereafter, the master artwork is finally approved to be used by the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds, gift wraps, etc. Screen printing is used to create sharp edged images using a stencil. The artwork is used for printing posters and display stands, the assessee contended. 5. On the enduring nature of the issue, the submissions of the assessee have given in para 8 of the impugned order which are as under : In response the assessee replied to the Assessing Officer that before releasing an advertisement, the artwork has to be handed over to the printer to make a copy of the artwork material. The assessee replied that sometime the artwork is used only for special events like diwali or cricket events or new year and hence the artwork has a one time use. Sometimes, the artwork is used for some sales promotion even which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellate authority. 7. During the proceedings before the Commissioner of Income-tax (Appeals), the assessee reiterated the submissions made before the Assessing Officer and mentioned that the artwork does not have enduring benefit as the life of the said artwork is lesser than six months and he furnished a break-up of the artwork and other expenses. The Commissioner of Income-tax (Appeals) segregated the said artworks made for special occasions with reusable value and usable only for a short period. On this basis, the Commissioner of Income-tax (Appeals) held certain artworks are made for special occasions which can be used only once or for a very short period worked out to ₹ 4,58,425 and rest of the amount, i.e., (Rs. 6,11,234 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red as capital in nature. The criteria adopted by the Commissioner of Income-tax (Appeals), in our opinion, is not proper and any artwork which has a life of six months or less, by no reasoning, can be considered as capital expenditure. Considering the average life span of such artwork, which is only less than six months, it cannot be inferred that any capital apparatus has come into existence which can be the source of income generation for the assessee. It is not justifiable that the artworks fall in the capital field. Accordingly, we direct for deleting the addition of ₹ 1,52,809 and allow the ground raised by the assessee. 11. In the result, the appeal of the assessee is allowed. The order pronounced in the open court on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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