ITAT Delhi Upholds Revenue Expenditure on Ads & Depreciation Rate for Printers

The ITAT Delhi upheld the decisions of the Commissioner of Income-tax (Appeals), allowing advertisement expenses as revenue expenditure and confirming a higher depreciation rate on printers and scanners as part of the computer system. The Revenue's appeal was dismissed in both instances.

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Issues:
1. Disallowance of advertisement expenses.
2. Disallowance of depreciation on printers and scanner.

Disallowance of Advertisement Expenses:
The Revenue appealed against the deletion of Rs. 8,76,435 disallowance made by the Assessing Officer on account of advertisement expenses. The Assessing Officer considered the advertisement and marketing expenses claimed by the assessee as revenue expenditure, incurred for brand building. The Assessing Officer spread the benefit over five years, allowing only one-fifth in the current year. However, the learned Commissioner of Income-tax (Appeals) noted that advertisement expenses are revenue expenditure if wholly and exclusively for business purposes, with no concept of deferred revenue expenditure under the Income-tax Act. The ITAT Delhi concurred, citing that expenditure is either capital or revenue in nature, and allowed the claimed amount as revenue expenditure, dismissing the Revenue's appeal.

Disallowance of Depreciation on Printers and Scanner:
Regarding the disallowance of Rs. 1,57,665 depreciation on bar-code scanners and printers, the Assessing Officer allowed only 15 percent depreciation, contrary to the claimed 60 percent. The learned Commissioner of Income-tax (Appeals) referred to precedents and held that printers, UPS, and scanners are integral parts of a computer system, entitled to depreciation at 60 percent. The ITAT Delhi upheld this decision, citing the judgment in CIT v. BSES Yamuna Power Ltd., where computer accessories like printers and scanners were deemed part of the computer system, justifying the higher depreciation rate. Consequently, the appeal filed by the Revenue was dismissed, affirming the Commissioner's order.

In conclusion, the ITAT Delhi upheld the decisions of the Commissioner of Income-tax (Appeals) in both issues, allowing the advertisement expenses as revenue expenditure and confirming the higher depreciation rate on printers and scanners as part of the computer system.

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