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2012 (10) TMI 125 - AT - Income TaxOrder u/s 263 by CIT(A) - Non application of mind by AO - brand building expenditure not inquired by AO - Held that:- It is seen that the A.O. has not only raised the query regarding the details of brand building expenses, but has also sought clarification on two occasions and had examined them also. Further on examination of these details he has reached to a conclusion that sum of Rs..17,98,482/- is a capital expenditure. It is further noticed that the assessee has deferred these expenses and claimed it as revenue expenditure in equal amount in the A.Y’s 2006-07, 2007-08 and 2008-09. Thus there was a complete application of mind by the A.O. while examining the expenditure under brand promotion and brand building. The expenditure incurred by the assessee is not creating any enduring benefit of an asset but is rather helping the assessee in augmenting its sales and resultantly its profit. Even if it is presumed that the building of brand image of “Nirvana” is giving advantage of enduring benefit to the assessee, still it would be on revenue account as there is no creation of a tangible or intangible asset of enduring nature to the assessee. Thus from the facts of the case it can be concluded that these expenses incurred by the assessee has not resulted in any kind of addition or augmentation of any profit making asset. Thus the view taken by the A.O. is prima facie correct view and, therefore, no reason to held that such a order is erroneous or it is prejudicial to the interest of the Revenue - in favour of assessee.
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