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The Pri. Commissioner of Income Tax-1 Versus M/s Adani Reatil Ltd.

2015 (12) TMI 908 - GUJARAT HIGH COURT

Expenditure incurred for sales promotion and publicity and setting up of various stores - revenue v/s capital expenditure - CIT(A) deleted the addition confirmed by ITAT - Held that:- This Court in case of Core Healthcare Ltd.(2008 (10) TMI 74 - GUJARAT HIGH COURT ) held that advertisement expenses to create brand image is revenue in nature

The treatment accorded to a certain expenditure in the books of account of the assessee would not be conclusive of its true nature and on valid gr .....

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ce Akil Kureshi ) 1. Revenue has challenged the judgement of Income Tax Appellate Tribunal dated 24.4.2015 presenting the following question for our consideration : "Whether the Appellate Tribunal has substantially erred in law in upholding the CIT(A)'s order deleting the disallowance/additions of deleted revenue expenditure?" 2. Brief facts are that the respondent assessee had filed the return of income for the assessment year 2004-2005 in which the assessee had claimed deduction .....

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e and it was incurred wholly and exclusively for the purpose of business, must be allowed in its entirety for the year when it was incurred. Same cannot be spread over others years even though assessee might have in his books of account written off the said over a longer period. The Assessing Officer however, rejected the contention observing as under: "The above submission of the assessee has been perused. The submission of the assessee dtd. 21/11/2009 and 26/08/2009 have also been perused .....

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romotion & publicity leads to creation of sales network, development of goodwill among the customers and therefore the benefits accruing out of such expenses are clearly available to the assessee over the period of time. Similarly, stores set up expenses given enduring benefit in the sense that their value essentially go into the stores so setup and can be taken to be yielding benefits over the life of the stores. The fact that the assessee itself is writing off the expenses over various yea .....

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l of the assessee. He was of the opinion that differed revenue expenditure denotes an expenditure for which a payment has been made or a liability has been incurred which is essentially revenue in nature but due to various reasons, it is written off over a period of time. For the purpose of allowing expenditure under the Income Tax Act what is material is the classification between the capital and revenue expenditure and it does not recognize any concept of deferred revenue expenditure. The term .....

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lowing the decision in case of Taparia Tools Ltd. v. Joint Commissioner of Income-tax reported in (2015) 372 ITR 605 (SC) and also referring to Kedarnath Jute Manufacturing Co. Ltd. v. Commissioner of Income Tax reported in (1971) 82 ITR 363(SC). 5. We do not see any question of law arising. This Court in case of Core Healthcare Ltd.(supra), held that advertisement expenses to create brand image is revenue in nature. Following observations were made : "14. In relation to the first item, nam .....

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as the Income Tax Act is concerned, there is no such category of deferred revenue expenditure. Similarly, making of an entry or absence of an entry does not determine the allowability or otherwise of the item of expenditure and the same cannot be considered to be a factor adverse, if the expenditure is otherwise of allowable nature. Every expenditure incurred by a business concern, if incurred for the purposes of business, is bound to result in some benefit, direct or indirect, immediate or aft .....

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