2014 (3) TMI 953

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..... (Appeals) erred in confirming the addition made by the learned Assessing Officer for the claim of deduction towards market research expenses under section 37(1) of Rs. 14,03,000 by treating revenue expenditure as capital expenditure.               Ground No. 2 : Without prejudice to ground No. 1 the learned Commissioner of Income-tax (Appeals) erred in not giving deduction of 20 per cent. for net 5 years or depreciation on the capital expenditure. The appellant craves leave to add, amend, alter, modify or delete the above ground of appeal." 2. The brief facts of the case are that during the course of assessment proceedings under section 143(3) of the Income-tax Act, 1961 ( .....

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..... e assessee had indulged in market research through a consultant for bettering its business which would give enduring benefit to the assessee. The market research had come as a long-term benefit to the assessee by way of strategising its business so as to get greater turnovers in future years. He therefore held that the market research undertaken by the assessee had enduring benefit even though the issues in it were connected with the day-to-day business of the assessee. He therefore confirmed the addition so made by the Assessing Officer. Hence, aggrieved by the order, the assessee is in appeal before us. Our findings in respect of the matter are as under : Ground No. 1 3. Ground No. 1 of the appeal of the assessee is relating to the conf .....

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..... s of both parties and also have gone through the records. Admittedly, the assessee is not a manufacturer but a trader only. The activity of the assessee, being the purchase and further sale of equipment and earning of commission upon such sales cannot be said in any way to be manufacturing activity but a trading activity only. The market research was done by the assessee for the betterment and expansion of its trading business. The expenditure incurred on the market research by a trader cannot be said to have brought into existence anything of enduring benefit in the sense of a capital asset. In view of the settled position of law on this issue as laid down by the hon'ble High Courts of Bombay and Calcutta in the cases of CIT v. Glenmar .....

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