TMI Blog2018 (6) TMI 1555X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee has not inflated the expenses and the same is determined by the Assessing Officer at 5% is also in higher side. Accordingly, we direct the Assessing Officer to adopt 2.5% of the total turnover may be disallowed towards inflated expenses. - Decided partly in favour of revenue Nature of expenditure - Disallowance of exhibition expenses - Revenue or capital expenditure - Held that:- The corporate advertisement expenses, exhibition expenses, public relation expenses, cultural programme expenses, quota expenses and sales promotion expenses are revenue in nature and cannot be held as capital. Moreover, in the present case, the Assessing Officer has not recorded any findings that there was revenue generation against the exhib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer noticed from the financials submitted by the assessee that the profit for assessment year 2013-14 was 26.80% of the total turnover, whereas, it was declared at 19.82% for the assessment year 2014-15. The Assessing Officer observed that the profit was declared by inflating the expenses. The purchases and clearing Forwarding was 1.4164% of the turnover for the assessment year 2013-14 and it was @ 1.50% for the assessment year 2014-15. Similarly, packaging expenses was @ 4.5928% of the turnover for the assessment year 2013-14 and the same was @ 4.9867% for the assessment year 2014-15. Since the assessee could not furnish any convincing reply against the query raised, the Assessing Officer estimated the gross profit 5% o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year under consideration and previous assessment year, the Assessing Officer was of the opinion that the assessee has exaggerated the expenses since the assessee could furnish proper explanation for the inflated expenses and accordingly, addition was made. No details of financials of the assessee were filed before the Tribunal. While summarising the facts in the Cross Objection, the submission of the assessee is that the Assessing Officer made addition of ₹.6,41,04,662/- being 5% of the turnover is also factually wrong since 5% of the total turnover is only ₹.6.1 crores [₹.122 crores x 5%]. Since there is variation in the profit declared by the assessee in the assessment year under consideration compared with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the assessee submitted that the issue is squarely covered in favour of the assessee and prayed for similar directions on this issue. 10. We have heard rival contentions. The point at issue is whether the exhibition expenses incurred by the assessee are revenue in nature or capital. By following the decision in the case of ACIT v. Ashima Syntex Ltd. (2009) 117 ITD 1 (Ahd)(SB), in the case of ACIT v. Dorcas Market Makers P. Ltd. (supra), the Coordinate Benches of the Tribunal held as under: 6. We have heard both the sides, perused the records and gone through the orders of the authorities below. The issue involved in this appeal is whether the expenditure incurred by the assessee has to be allowed in the year under consideration, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. (supra) dismiss this ground of appeal raised by the Revenue. From the above, it is clear that the corporate advertisement expenses, exhibition expenses, public relation expenses, cultural programme expenses, quota expenses and sales promotion expenses are revenue in nature and cannot be held as capital. Moreover, in the present case, the Assessing Officer has not recorded any findings that there was revenue generation against the exhibition expenses or such expenses created any tangible or intangible asset to the assessee. Accordingly, the ground raised by the Revenue is dismissed. 11. In the cross objection, the assessee strongly supported the order passed by the ld. CIT(A) on both the issues. However, since, we have directed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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