9911796707
TMI Blog2009 (9) TMI 918X X X X Extracts X X X X X X X X Extracts X X X X ..... any. It is joint venture of M/s. Magnum International Trading Co. Ltd. as well as M/s. Adidas A.G. Germany. German Company had 80 per cent shareholding in the Indian company at the time of setting up of joint venture. Ultimately, the German company acquired 100 per cent shares holding in the Indian company. 2. Technical Assistant agreement dated 14-2-1997 was entered into between the Indian company and M/s. Adidas A.G., Germany represented by its 100 per cent subsidiary company M/s. AIPL. As per this agreement M/s. AIPL was to provide exclusive, non-transferable, non-assignable right to manufacture, distribute and sell the licensed products in India, Nepal and Bhutan on payment of royalty at the rate of 5 per cent of the sales effective of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 per cent to M/s. AIPL would not mean that the assessee could not incur the expenditure on advertisement to popularize the products dealt with by it in Indian market. No doubt, brand name of 'Adidas' is already a well-known brand which belongs to the parent company of the assessee. However, to popularize the said product in India and to promote its sale in the Indian territories, it became essential for the assessee to incur expenditure on advertising to propagate the aforesaid brand name. The benefit thereof had to necessarily accrue to the assessee as well as the main purpose of the advertisement is to augment the sales. The contention of the assessee that it was a commercial practice and commercial expediency has rightly been accepted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t different outlets as per assessee's business strategy. To promote business and commerce by any businessman would certainly come within the expression of commercial expediency and no label of any oblique motive with a view to reduce tax incidence can be fastened. The activity to promote ones sales by advertising the product which were being sold by him are certainly to come within the expression "wholly and exclusively incurred for the purpose of business", which is to be considered and looked into having regard to the realities of business from the point of view of a prudent businessman and not from the point of view of a tax collector. 20. In the light of the discussions made above and having found that since the assessee had incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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