TMI Blog2021 (3) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT(A) on this issue. Accordingly, we do not find any reason to interfere with the order passed by Ld. CIT(A) on this issue in both the years under consideration. Disallowance of advertisement expenses - AO noticed that the assessee has incurred huge amount of expenses on these advertisement expenses - HELD THAT:- Assessee has incurred the advertisement expenditure according to its wisdom/strategy from the point of view of the businessman. It is a well settled proposition of law that the tax authorities cannot sit in the arm chair of the businessman and decide the manner of conducting the business of the assessee. We notice from the assessment order that it is not the case of the A.O. that advertisement expenses incurred by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e partly allowed. - ITA Nos. 2567 & 2568/Bang/2017 - - - Dated:- 8-3-2021 - SHRI N. V. VASUDEVAN , VICE PRESIDENTAND SHRI B. R. BASKARAN , ACCOUNTANT MEMBER Appellant by : NONE Respondent by : Smt. R. Premi, D.R. ORDER PER B. R. BASKARAN , ACCOUNTANT MEMBER : The appeals filed by the assessee are directed against the orders passed by the Ld. CIT(A)-3, Bengaluru and they relate to the assessment years 2011-12 2012-13. 2. None appeared on behalf of the assessee. We notice that the Registry has sent notice of hearing by registered post on an earlier occasion and the same has been returned back by the postal department with the noting left . Hence, the bench has directed the revenue to serve the notice. Ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s received. The Ld. CIT(A) noticed that the assessee could not establish commercial expediency in making the investment in WSIPL. Accordingly, he confirmed interest disallowance in respect of remaining amount of loans in both the years under consideration. 6. Before us, no material was placed by the assessee to contradict the findings recorded by Ld. CIT(A) on this issue. Accordingly, we do not find any reason to interfere with the order passed by Ld. CIT(A) on this issue in both the years under consideration. 7. The next common issue relates to disallowance of advertisement expenses in both the years. The A.O. noticed that the assessee has incurred huge amount of expenses on these advertisement expenses. In assessment year 2011-12, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorities. 9. We notice that the assessee has incurred the advertisement expenditure according to its wisdom/strategy from the point of view of the businessman. It is a well settled proposition of law that the tax authorities cannot sit in the arm chair of the businessman and decide the manner of conducting the business of the assessee. We notice from the assessment order that it is not the case of the A.O. that advertisement expenses incurred by the assessee are not genuine/bogus. The AO has formed the view that the advertisement expenses are huge vis- -vis its Sales revenue. In our view, it should not be the reason for making estimated disallowance. Under these set of facts, we are of the view that the A.O. was not justified in disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Business promotion and others 7,82,046 11. The assessee also furnished additional evidences in support of the above expenses. Hence, Ld. CIT(A) called for a remand report from A.O., wherein the A.O. expressed the view that item no.1 to 6 mentioned in the table aggregating to ₹ 5,25,894/- is revenue in nature. With regard to the remaining amount of ₹ 7,82,046/-, the A.O. submitted as under: 3. Regarding the busines promotion and others (item 6) of ₹ 7,82,046/-, the following facts are relevant. The assessee company had launched four season range only in 2008-09 and in a short span of 4 years, the company achieved considerable market share. Promotional expenses had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature. A part of the expenditure relates to purchase of assets and another part of the expenditure, which has been incurred for various business meetings can be said to have been incurred for business promotion. The expenditure on business promotion can partly be considered as of revenue nature and partly capital in nature. While discussing the issue of expenditure on advertisement, 25% of the expenditure has been treated as capital in nature. Since the appellant is in the initial stage of its business and admits (para 5.1) that it was incurring expenditure to make its presence felt in the market, an expenditure of 25% of ₹ 7,82,046/- is treated as capital in nature. So, an addition of ₹ 5,86,535/- is sustained and disallowanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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