TMI Blog2012 (9) TMI 973X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) and direct the AO to delete the addition Disallowance of expenses as Brand Development expenses and professional fees for Brand Development - Held that:- We find that the assessee has not created any tangible or intangible assets of enduring nature by incurring such Brand development expenses. In our considerate view, such expense is an integral part of the profit earning process of the assessee firm and not for an acquisition of an asset or a right of permanent in nature. Respectfully following the ratio laid down by the Hon’ble Supreme Court in the case of Empire Jute Co. (1980 (5) TMI 1 - SUPREME Court), the Brand development expenses incurred by the assessee firm are revenue in nature therefore we direct the AO to allow the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y stating that the loans have been given for the purpose of business. However, the submissions made by the assessee were rejected by the AO who was of the opinion that the assessee has given the interest free loans to the three parties and the advancement of loans are not related to the business of the assessee firm. The AO concluded that the assessee failed to establish commercial expediency for giving these loans. Thereafter the AO went on to compute the interest cost of the funds diverted as interest free loans and computed the same at ₹ 18,26,075/- which was added to the income of the assessee. 4. The matter was agitated before the Ld. CIT(A) but without any success. The Ld. CIT(A) while dismissing the appeal observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of CIT Vs Reliance Utilities Power Ltd., (2009) 313 ITR 340(Bom) wherein the Hon ble High Court has held that if there are interest free funds available to an assessee sufficiently in excess of its investment and at the same time the assessee has also raised a loan, it can be presumed that the investments were from interest free funds available. Per contra, the Ld. DR strongly supported the findings of the AO. 6. We have considered the rival submissions and perused the orders of lower authorities and the decision of the Tribunal in the case of M/s. Mohit Diamond Pvt. Ltd., in ITA No. 2097/Mum/2011 (supra). It is not disputed that the assessee firm has a total capital of ₹ 212 crores. It is also an undisputed fact that for the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as capital in nature. The AO further observed that the assessee has paid professional fees to the aforementioned two parties amounting to ₹ 4,43,732/-. According to the AO, these expenses are also similar to Brand development expenses and treated them as capital expenses. 9. The matter was agitated before the Ld. CIT(A) but without any success. Before us, the Ld. Counsel for the assessee pointed out that the assessee has incurred a sum of ₹ 8.06 lakhs under the head Brand Development expenses whereas in the immediately preceding year under the same head the assessee had incurred ₹ 23.07 lakhs which has been allowed under scrutiny assessment u/s. 143(3) of the Act. The Ld. Counsel further submitted that the expenses ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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