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TMI Blog2021 (9) TMI 810X X X X Extracts X X X X X X X X Extracts X X X X ..... nd not claimed any marketing expenses in the P & L A/c. Further in the Significant Accounting Policies and Notes to Accounts the Auditor has given Note regarding marketing expenses as under : "Marketing Expenditure represents foreign travelling, Business Promotion, Printing & Stationery, Exhibition & Conference etc. incurred on development of agencies which will be written off over a period of five years beginning from the year next following in which it is incurred." 2.1. Since, from the Notes to Accounts, Balance Sheet and Profit & Loss A/c it is clear that the marketing expenses will be written-off from the year next following in which it is incurred and the assessee has claimed the same in the current year, the A.O. specifically asked the assessee to explain as to why the marketing expenses of Rs. 35 lakhs claimed in the year under consideration should not be disallowed and carried forward loss of Rs. 30,21,816/- caused due to claim of marketing expenses may not be disallowed. 2.2. The assessee in response to the same, replied as under : "The marketing expenses it is reiterated includes expenditure on travel, business promotion, conferences. These expenditure are run on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he A.O. made addition of Rs. 2460/- being interest payment of income tax demand and Rs. 88,979/- being 10% of adhoc addition on account of the following expenses : 1. Vehicle running & Maintenance expenses. Rs. 2,93,718/- 2. Depreciation on car Rs. 2,33,057/- 3. Telephone & Interest expenses Rs. 3,63,010/- Total Rs. 8,89,785/- 2.5. Thus, the A.O. determined the total income of the assessee at Rs. 46,36,440/-. 2.6. In appeal, the Ld. CIT(A) sustained the addition of Rs. 35 lakhs made by the A.O. by observing as under : "5.2.2. I have carefully considered the observations of AO and submissions of appellant. From perusal of the facts of the case, it is apparent that appellant has amortized the expenditure of Rs. 35,00,000/-. However, no new asset has come into existence. Further, during the course of remand proceedings, AO has submitted that the marketing expenses mainly included expenditure made on broachers, conference bags, stationery etc. and assessee has added back Rs. 7,00,000/- in the computation of income for both A.Y. 2016-17 & 2017-18. From perusal of the ledger of Deferred Revenue Expense, it is seen that the entire expenditure is on accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that the assessee had incurred day-to-day expenditure of exhibition and conference, printing and stationery, business promotion tour and travel (Foreign). In view of the working balancesheet leading to difficulties in dealing with Banks, Financial Institutions etc., the assessee had capitalised some of such expenditure in the balance sheet under the Head "Marketing Expenses" at Rs. 35 lakhs. However, in the computation of income this entire amount of Rs. 35 lakhs is claimed as revenue expenditure. 3.2. Referring to decision of Ahmedabad Special Bench of the Tribunal in the case of ACIT vs., Ashima Syntex Ltd., [2009] 117 ITD 1 (AHD) (SB), he submitted that the Tribunal has allowed such type of expenditure as revenue in nature. Referring to the decision of Hon'ble Delhi High Court in the case of CIT vs., Citi Financial Consumer Fin. Ltd., [2012] 20 taxmann.com 452 (Del.) he submitted that the Hon'ble Delhi High Court has held that expenditure on publicity and advertisement is to be treated as revenue expenditure in nature allowable fully in the year in which it is incurred. Referring to the decision of the Coordinate Bench of the Tribunal in the case of DCIT, Circle-12(1), New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtisement, conferences, exhibition etc., The Tribunal after examining the Law on the subject, had allowed the entire expenditure in the year in which it was incurred though in the books of account it was amortized over few years. 6.2. I find the Hon'ble Delhi High Court in the case of Commissioner of Income Tax vs., Citi Financial Consumer Fin. Ltd., (supra), has also dealt with an identical issue and has held that the expenditure on publicity and advertisement is to be treated as revenue expenditure in nature allowable fully in the year in which it is incurred. It has been held in the said decision that in the income tax Law there is no concept of deferred revenue expenditure. Once the assessee claimed the deduction for the whole amount of such expenditure even in the year in which it is incurred and the expenditure fulfils the test laid down under section 37, it has to be allowed. The relevant observation of the Hon'ble Delhi High Court reads as under: "Held, that there was no dispute that the expenditure was in fact incurred. It was also not in dispute that the expenditure was business expenditure incurred wholly for the purpose of the business of the assessee. The expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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