2014 (7) TMI 838

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..... essee that the payment of Rs. 20,35,380/- made to M/s J Sagar and Associates as Legal and Professional fees in connection with the acquisition of "Brand" from Blue foods company, is a revenue expenditure without appreciating that the AO had correctly treated the same as capital expenditure at par with other expenses incurred for the same purpose which have been capitalized by the assessee itself" 3. The assessee is in the business of chain of restaurants and food joints. From Schedule 17 of the Accounts it was noticed by the AO that out of total amount of expenditure of Rs. 2,39,84,260/- debited on account of legal and professional fees a sum of Rs. 20,35,380/- was shown to be incurred on consultation fees paid to M/s J Sagar Associates. F .....

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..... the fixed capital untouched. Reference was made to several decisions to contend that the expenditure incurred by the assessee was in the nature of revenue. Considering these submissions of the assessee, the ld. CIT(A) has observed that the expenditure was in relation to obtain feasibility report connected with the acquisition of brand from M/s Blue Foods Pvt Ltd and the expenditure was connected to the existing business of the assessee. The reliance was placed upon the decisions which interalia include the decision in the case of CIT V/s Kerala State Industrial Development Corporation (1990)182 ITR 62. The ld. CIT(A) has allowed the claim of the assessee by observing that expenses incurred in investigation, research and feasibility studies .....

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..... penditure as, by virtue of the consultancy, the assessee did not acquire the income earning asset and also it did not obtain any enduring advantage. Moreover, the expenditures were clearly relatable to the business of the assessee. 7. We have heard both the parties and their contentions have carefully been considered. The "brand" expenditure incurred by the assessee has been treated as capital expenditure. The expenditure incurred on the feasibility report paid to M/s J Sagar Associates constitutes legal expenses incurred by the assessee to ensure about the proper acquisition of the "Brand". This is in the nature of consultancy. The assessee is already in the line of chain of restaurants and food joints. The acquisition relating to "brand" .....

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