TMI Blog2013 (12) TMI 1353X X X X Extracts X X X X X X X X Extracts X X X X ..... ltancy fee for office space – Held that:- The brokerage has been paid for arranging the office space - The premises were not purchased during the year - It was only a case of rental of office space for a limited period – Decided against Revenue. Advertisement and sales promotion – Held that:- Following C.I.T. vs. Salora International [2008 (8) TMI 138 - DELHI HIGH COURT] - There is no element of brand building or acquisition of brand by incurring such expenses - The concerned brands were not owned by the assessee, but it belongs to the assessee's overseas group entity - Assessee has been reimbursed the entire advertisement and sale promotion expenses by the overseas group entity on cost plus basis – The total expenditure works out approx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture should be treated as revenue expenditure as the same provided enduring benefit to the assessee. Assessing Officer was not satisfied with the assessee's response. He held that 20% of total expenses i.e. Rs.1152915/- was allowable as revenue expense and balance amount i.e. 80% of total expense (Rs. 46,11,658) was disallowed added to the assessee's income. 4. Upon assessee's appeal Ld. Commissioner of Income Tax (A) observed that assessee's business model providing various support services to its parent company located in USA. The concerned Services Agreement clearly provides that the assessee company would be reimbursed the expenditure incurred with a markup of 8%. That in the course of service provided to the parent company which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no doubt that brokerage paid for arranging office does not create any enduring benefit. Ld. Commissioner of Income Tax (A) observed that it was not a case of the Assessing Officer that the impugned premises was purchased during the year. It was only a case of rental of office space for a limited period. Therefore, he held that expenditure would qualify as revenue expenditure and the same should be allowed in the year of incurrence. 5. Against the above order the Revenue is in appeal before us. 6. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that in this case assessee business model is concerned of providing various support services to its parent company located in USA. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same created enduring benefit. Accordingly, we do not find any infirmity in the order of the Ld. Commissioner of Income Tax (A) on this issue and accordingly we uphold the same. Apropos ground no. 2 8. On this issue Assessing Officer observed that advertisement expenses incurred by the assessee were prima-facie capital in nature. Assessee submitted that this was a routine expenditure incurred on the marketing, sale and distribution of its services. It was submitted that no capital asset or right or benefit of enduring nature was created out of this expenditure. However, Assessing Officer opined that the same expenditure was capital in nature. He held that the aforesaid expenditure amounting to Rs. 26,84,488/- was capital in nature. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced reliance upon the decision of the Hon'ble Delhi High Court in the case of C.I.T. vs. Salora International 306 ITR 199, C.I.T. vs. Citi Financial Consumer Fin. Ltd. 335 ITR 29 and C.I.T. vs. Casio India Ltd. 335 ITR 196. In light of the above, Ld. Commissioner of Income Tax (A) held that Assessing Officer's action to treat the expenditure incurred under advertisement and sales promotions as capital in nature cannot be sustained. Therefore, he directed the Assessing Officer to allow the expenditure amounting to Rs. 20,13,366/- as revenue expenditure. 10. Against the above order the Revenue is in appeal before us. 11. We have heard the rival contentions in light of the material produced and precedent relied upon. We find that the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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