TMI Blog2022 (11) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... al expenditure' and only allowed the two-thirds of the said amount as 'expenditure to the assessee'. The Tribunal held that there was a direct nexus between the advertising expenditure and the business of the assessee and that the assessee had to incur such expenditure to meet the competition in the Indian market for selling its products in India. It, therefore, allowed the assessee's claim. The High Court upheld the order of ITAT and held that advertisement expenditure for launching products is revenue expenditure. We are of the considered view that CIT(Appeals) has not erred in facts and in law in allowing the assessee s appeal and holding that the advertisement expenditure claimed by the assessee as revenue expenditure in the revised return of income is, allowable in the instant set of facts. Appeal of the Department is dismissed. - ITA No. 1047/Ahd/2015 - - - Dated:- 4-11-2022 - Shri P.M. Jagtap, Vice President And Shri Siddhartha Nautiyal, Judicial Member For the Assessee : Shri Mukund Bakshi, A.R. For the Revenue : Shri Sudhendu Das, CIT-D.R. ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This is an appeal filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O disallowed the advertisement expenditure, with the following observations: 5.9 In light of the above facts and circumstances of the case and after duly considering all the submissions of the assessee, the undersigned finds no reason to allow the assessee the expenditure of Rs. 21,28,55,537/- as sought by the assessee in its revised computation of income. This entire amount of Rs. 21,28,55,537/- is disallowed as revenue expenditure u/s 37 as it has itself been claimed by the assessee as CWIP. During the course of assessment proceedings, the assessee has made the alternate plea that even if it is treated as a capital expenditure, then it should be allowed to seek depreciation at the rate of 25% on the same. However, since the assessee had itself classified it as Capital Work in Progress, it is most certainly an asset that was never put to use during the year under consideration. There is no indication in any of the submissions made by the assessee whether the said asset was put to use for more than 180 days or less than that. In fact, it is clear that the said capital asset remained as CWIP throughout the year because even in the Balance Sheet for F.Y. 2009-10 i.e. subsequen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which had confirmed the order of the CIT(A) who had held that there is no concept for deferred revenue expenditure in the Income Tax Act,1961. Also relied upon the judgment of the Supreme Court in the cases of Calcutta Co. Ltd. v. CIT [1959] 37 ITR 1 (SC), CIT v. Associated Cement Companies Ltd. [1988] 172 ITR 257 (SC), Empire Jute Co. Ltd. v. CIT [1980] 124 ITR 1 (SC) and the judgment of this court in CIT v. Salora International Ltd. [2009] 308 ITR 199 (Delhi). In the case of DCIT vs. Core Healthcare Ltd. 308 ITR 263 (Guf.) gujrat high court has discussed the issue in detail as under The assesses carried the matter further in appeal before the Tribunal and succeeded. The Tribunal held that making of accounting entries in the books of account was not determinative of the character and/or nature of the claim. That the expenditure in question did not bring into existence any tangible asset and merely because the expenditure may bring some benefit of an enduring nature to the assessee, that factor alone was not sufficient to treat the expenditure as capital expenditure. The Tribunal has relied on the two apex court decisions in the case of Empire Jute Co. Ltd. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ossible to agree with the appellant-Revenue that the advertisement expenses incurred by the respondent-assessee at the time of installation of additional machinery in the existing line of business resulted in any enduring benefit, so as to be treated as capital in nature. 17. Question No. 1 is, therefore, answered in the affirmative, namely, advertisement expenses incurred by the assessee to create brand image is allow able as revenue expenditure. 2.2 On careful perusal of above order and in this light of facts and circumstances the of the present case, I am of the view that the main ground of the appellant in the present appeal is squarely covered in favour of the assessee and against the revenue by several decisions (supra) of jurisdictional High Court and ITAT. Relying upon the judgment of Hon'ble Gujarat High Court and various other courts, I am in agreement with the contention of appellant. Accordingly, I find no justification in the addition of the aforementioned amount to the income of the assessee which is hereby deleted. 5. The Department is in appeal against the aforesaid order passed by Ld. CIT(Appeals). The primary contention of the Department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... building expenditures are revenue nature and further there is no concept of deferment of revenue expenditure in the Income Tax Act. In the case of Salora International Limited[2009] 308ITR199 (Delhi) , the assessee claimed deduction of advertising expenditure of approximately Rs. 3.08 crores. According to the Assessing Officer, the expenditure was incurred for launching of its products. The Assessing Officer was of the view that such expenditure was of an enduring nature and, therefore, treated one-third as 'capital expenditure' and only allowed the two-thirds of the said amount as 'expenditure to the assessee'. The Tribunal held that there was a direct nexus between the advertising expenditure and the business of the assessee and that the assessee had to incur such expenditure to meet the competition in the Indian market for selling its products in India. It, therefore, allowed the assessee's claim. The High Court upheld the order of ITAT and held that advertisement expenditure for launching products is revenue expenditure. 7.1 In the case of Dy. CIT v. Core Healthcare Ltd. [2009] 308ITR 263 (Guj.) , the claim of the assessee for deduction of advertiseme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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