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2015 (7) TMI 560 - AT - Income TaxDisallowance of brand registration expenses - revenue v/s capital - Held that:- Respectfully following the decision of this Tribunal in the appellant’s own case for the assessment year 2002-03, we allow this ground of appeal filed by the assessee wherein CIT(Appeals) noted that these expenses were for fees required to be paid for as per state excise law for registration of the brand and allowed it by holding the same as revenue in nature. - Decided in favour of assessee. Disallowance of provision for transit breakages - Held that:- The Tribunal confirmed the disallowance only on the ground that there was no basis for making provision for transit breakages as had no benefit of the decision of Hon’ble Supreme Court in the case of Rotrok Controls (India) Pvt. Ltd. Vs., [2009 (5) TMI 16 - SUPREME COURT OF INDIA]. It is undisputed that the provision was made based on the dispatch of goods to various destinations on the basis of past experience. The crucial facts to be taken into consideration that the provision made on the dispatch of goods is reversed the moment the goods reached the destination only actual breakages are charged to P&L account. It is only in respect of the goods which are under dispatch at the year end the provision was created. This shows that the amount debited to P&L account represents mostly actual breakages and this system of accounting is being followed continuously by the appellant. The provision is made on scientific basis and can be estimated such provision can be allowed as a deduction. Applying this principle to the facts of the case, even in this case the provision was made based on past experience and the actual damages were taken into account immediately after the goods reached the destination which means that the provision was made only in respect of goods which were under dispatch as at the end of the year. This provision was made based on the past experience. Therefore, the provision had been made on some basis. Therefore, based on the ratio laid down in the above cases, the provision is allowable as a deduction.- Decided in favour of assessee. Restricting the allowance of brand expenses to only 1/5th of such expenses - Held that:- From the details, it is clear that the expenditure is incurred only towards sales promotion and on advertisement issued. As decided in case of CIT Vs. Monto Motors [2011 (12) TMI 50 - DELHI HIGH COURT] advertisements and sales promotion are conducted to increase sale and their impact is limited and felt for a short duration. No permanent character or advantage is achieved and is palpable, unless special or specific factors are brought on record. - Expenditure are revenue in nature - Decided in favour of assessee. Addition on account of excessive depreciation claimed - CIT(A) deleted the addition - Held that:- The issue is no longer res integra as the Hon’ble Delhi High Court in the assessee’s own case in the preceding year by holding that the approach of the authorities below is correct having regard to the judgment of the Supreme Court in the case of ITR Vs. Mahendra Mills, [2000 (3) TMI 3 - SUPREME Court ] holding that since the depreciation for the assessment year 2001-02 was not actually claimed, there was no justification to reduce the written down value by the amount on hypothetical depreciation. Matter would have been different had the Assessing Officer in the assessment proceedings for the assessment year 2000-01 actually granted depreciation to the assessee, may be forced depreciation without there being a claim by the assessee. Without giving such a benefit to the assessee by allowing depreciation in the previous year, there was no justification in reducing the value on the fixed assets. - Decided in favour of assessee.
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