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2015 (9) TMI 4 - AT - Income TaxAllowability of expenditure incurred by the assessee on “brand building” - revenue v/s capital expenditure - Held that:- There is no force in the argument of the ld. DR that the brand building expenditure shall be always treated as capital expenditure. As the expenditure has not resulted in capital asset, so has to be recorded as expenditure in capital field. It should be noted that the assessee had to incur this kind of expenditure year after year so as to keep the product in market otherwise when the advertisement was not followed up subsequently even the advantage secured from earlier advertising would get dissipated . Just because an expenditure is debited in books towards brand building, which it purportedly is, and statutory recognition has since been accorded to such an intangible asset, as a “brand” would not by itself imply that an advantage in the capital field, or of enduring value to the business has, arisen to the assessee upon incurring the expenditure. Rather, the business being competitive and prudence and conservatism being fundamental accounting assumptions, capitalization of such expenses or ascribing lasting abiding value to such expenses, could only be done on sound footing and cogent basis.( Alembic Chemical Works vs. CIT (1989 (3) TMI 5 - SUPREME Court). In our opinion the expenditure cannot be attributed to capital expenditure on brand building. Accordingly, we are inclined to uphold the order of the CIT(A) and dismiss the grounds taken by revenue. - Decided in favour of assessee.
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