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2015 (5) TMI 643 - AT - Income TaxReusable artwork expenses - revenue v/s capital expenditure - Held that:- . It is an admitted fact that similar claim of the assessee was allowed in the past by the Revenue without making additions. It is only in this year, based on artificial criteria, this expenditure was considered 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 as expenses claim under the head artwork is to be allowed as business expenditure. - Decided in favour of assessee. Disallowance of foreign travel expenses - CIT(A) deleted the disallowance which were on account of business conference held in Singapore and Trade Fair in China - Held that:- he business and commercial expediency has to be seen from the businessman's point of view and if proper explanation with supporting evidence has been given, then disallowance cannot be made on some flimsy ground. The entire explanation and evidences have been negated by the CIT (A) on the ground that no concrete evidence has been given. However, what evidences are lacking have not been specified. It appears that CIT(A) has confirmed the expenses mainly on the ground that travel expenses was more than one lakh. Whatever expenditure was less than one lakh has been deleted by him holding it to be so for business purpose and other for non-business purpose, without pointing out any personal uses. Thus, we do not find any reason to affirm such a finding in the conclusion of the learned Commissioner of Income-tax (Appeals) based on such a dichotomy. Accordingly disallowances made on account of foreign travel expenses for sums aggregating ₹ 7,10,160 is deleted. - Decided in favour of assessee. Disallowance of market research expenses - Held that:- Such an expenditure which are regularly to be undertaken for sustaining the market and to push up sales are not in capital field but are essential and are incurred in the ordinary course of business for promoting the existing brands. We also find that in immediately preceding assessment year, that is, in 2007-08, while deciding the Revenue's appeal this issue has been decided in favour of the assessee. Accordingly, consistent with the same precedence on similar facts which are permeating through in this year also, we allow the said expenses - Decided in favour of assessee. Disallowance of "product development expenses" which includes design charges - Held that:- So far as the expenditure incurred on product development and design charges, we delete the disallowance as these are purely revenue expenditure. So far as the finding of the learned Commissioner of Income-tax (Appeals) that certain expenditure has been claimed on the last date of the accounting year, we find that learned senior counsel has pointed out that, the assessee was issuing various product ingredients to its manufacturing unit/factory for testing purpose during the year and same has been accounted for after receiving the details of consumption. Whatever has been consumed, is accounted for in the books of account and claimed as expenditure. Certain advances of products given in the later half of the accounting year has been debited on the last day. So far as the factum of incurring the expenditure, the same has not been doubted.- Decided in favour of assessee. Disallowance of claim of deduction under section 80-IB - there would be no carried forward of losses, hence, will result into positive income and then deduction under section 80-IB has to be allowed as per assessee - Held that:- As decided in assessee's own case in the assessment year 2007-08 on the same line of issue that being a legal plea based on statutory provision, we direct the Assessing Officer that in case, as a result of any order passed by the High Court, resulting into setting aside of the Tribunal order or denying the claim of carried forward of losses, then the Assessing Officer while computing the positive income of the assessee for this year, shall examine the claim of deduction under section 80-IB. - Decided in favour of assessee for statistical purpose.
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