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2017 (5) TMI 910 - ITAT DELHI

2017 (5) TMI 910 - ITAT DELHI - TMI - Capitalization of license fee and royalty expenditure - Held that:- Identical issue having similar facts was involved in the assessment year 2007-08 [2015 (9) TMI 898 - ITAT DELHI] which has been decided against the revenue wherein held that what is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If t .....

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of time and thus the same has to be held as revenue in nature - Decided in favour of assessee. - Addition on capitalization of brand development expenditure - Held that:- Similar facts was a subject matter of the departmental appeal for the preceding year i.e. assessment year 2009-10 [2015 (9) TMI 898 - ITAT DELHI] wherein held it is not possible to agree with the appellant-Revenue that the advertisement expenses incurred by the respondent-assessee at the time of installation of additional m .....

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e department against the order dated 29.05.2014 of ld. CIT(A)-XV, New Delhi. 2. Following grounds have been raised in this appeal: 1. On facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹ 51,69,792/- made by the AO on capitalization of license fee and royalty expenditure? 2. Whether Ld. CIT(A) was correct on facts and circumstance of the case and in law in deleting the addition of ₹ 1,39,720/- made by the AO on capitalization of bra .....

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in assessee s own case by the same bench of the ITAT (copy of the said order was furnished which is placed on record). 5. The ld. DR although supported the assessment order passed by the AO but could not controvert the aforesaid contention of the ld. Counsel for the assessee. 6. We have considered the submissions of both the parties and gone through the material on record, it is noticed that an identical issue having similar facts was involved in the assessment year 2007-08 which has been decide .....

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urt observed that there may be cases where expenditure, even if incurred for obtaining an advantage of enduring benefit, may, nonetheless, be on revenue account and the cost of enduring benefit may break down. What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital field that the expenditure would be disallowable on an application of this test. If the advantage consists merely in facilitating the assessee s trading op .....

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in mind the decisions of the Supreme Court as well as the Delhi High Court. In view of the above, we do not see merit in this ground of the departmental appeal. 7. Next issue vide Ground No. 2 relates to the deletion of addition of ₹ 1,39,720/- made by the AO on capitalization of brand development expenditure. 8. As regards to this issue, the ld. Counsel for the assessee submitted that an identical issue was involved in ITA No. 3689/Del/2013 for the assessment year 2009-10 in assessee s ow .....

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009-10 in ITA No. 3689/Del/2013 wherein vide order dated 08.09.2015, the issue has been decided against the department and the relevant findings have been given in para 25 of the aforesaid referred to order dated 08.09.2015 which read as under: 25. We have perused the records and submissions made by both the counsels and come to the conclusion that even that the assessee made for classified part of advertisement as Brand Development Expenses the real nature is no more than a normal advertisement .....

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s as well as the judgment of Gujrat High Court in case of DEPUTY COMMISSIONER OF INCOME-TAX v. CORE HEALTHCARE LTD. [2009] 308 ITR 263 (Guj) which held as under: 14. In relation to the first item, namely, advertisement expenses, it is not in dispute that the expenditure of ₹ 70 lakhs and odd was incurred on a special advertisement campaign. However, that by itself would not be sufficient to determine as to whether the expenditure in question is on revenue account or capital account. The ap .....

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nditure 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 after some time, but the benefit to the business cannot be termed capital or revenue only on the basis of the period for which the benefit is derived by the business. Any benefit resulting to a business need not be confined to the year of expenditure and this is an ordinary incident of a running .....

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