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2018 (3) TMI 790 - AT - Income TaxReopening of assessment - addition of expenses with ‘deferred revenue expenses’ - Held that:- We agree with the submissions advanced by DR that under Income Tax Act there is no concept of “deferred revenue expenditure” and the nature of deferred revenue expenditure in the present case could have been otherwise shown as revenue or capital expenditure by assessee as the case may be. Thus it is difficult to accept the contentions of Ld.Counsel on this issue regarding ‘change of opinion’ by assessing officer while initiating the reassessment proceedings. Argument of Ld.DR regarding application of sub clause (c) to Explanation 2 to section 147. Thus to reasons recorded to form basis for initiating reassessment proceedings as it falls under (i ), (iii) and (iv) of sub clause (c) to Explanation 2 to section 147. Thus respectfully following the decision of Hon’ble Supreme Court in the case of Calcutta Discount Company Ltd versus ITO (1960 (11) TMI 8 - SUPREME Court), we hold reopening of the assessment to be valid. Disallowance of expenses made by assessee under ‘Legal and Professional head’ treating the same as capital in nature - Held that:- It is very much relevant for assessee in its type of business to register its brand with the Trademark Registry as there would be many other pharmaceutical companies coming out with a similar type of products which could infringe the rights of assessee in case the same is not properly registered with the appropriate authority. No reason to confirm this addition, as these are genuine expenditure incurred by assessee for the purposes of business. Further section 32 (1) (ii) now categorically considers trademark to be an eligible expenditure in the category of intangible assets. Thus in our considered opinion the addition made by AO deserves to be deleted. Disallowance of towards the expenditure incurred under the head ‘Fees and Subscription’ - Held that:- As assessee is into manufacturing and marketing of pharma products, it has to have a license to trade in the products which is to be obtained from appropriate authority in the state. We do not find any contrary observation made by authorities below in respect of the nature of payment which assessee has to incur time and again for the purposes of carrying on its business. These expenses do not categorise to be in the nature of enduring benefit arising to assessee as the licenses issued by the State Government are for a fixed period of time which are revoke a will upon violation of the conditions stipulated there. Thus in our considered opinion these expenses incurred by assessee would be eligible for deduction under section 37 (1). Advertisement Expenses disallowance - Held that:- CIT(A) deleted the addition as it is incurred wholly and exclusively for the purposes of business. It is observed that assessee has already claimed advertisement expenses under the head ‘selling and distribution expenses’ being schedule 19 to the statement of accounts amounting to ₹ 21,95,824/-. Thus we do not find the reason as to why assessee considered advertisement expenses amounting to ₹ 19,94,690/-under the head ‘deferred revenue expenses’. This amounts to double deduction as claimed by assessee. Therefore the disallowance of advertisement expenses stands upheld. Depreciation claimed on computer peripherals such as UPS, battery etc. - Held that:- In our considered opinion this issue now squarely stands covered in favour of assessee by order of jurisdictional High Court in the case of CIT vs. BSES Yamuna Powers Ltd [2010 (8) TMI 58 - DELHI HIGH COURT] wherein it has been held that computer accessories and peripherals such as printers, scanners and servers etc. form an integral part of computer system and cannot be used without the computer, thus these are part of the computer system and eligible for depreciation at the rate of 60%. Addition on excess provision made under the head Fringe Benefit Tax (FBT) - Held that:- CIT(A) there is a categorical observation that from the computation of income and profit and loss accounts submitted by assessee it has been observed that no such provision for excess FBT has been claimed as deduction by assessee. In view of the above observation Ld. CIT (A) correctly deleted the addition made by Ld. AO.
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