High Court affirms CIT(A) and ITAT, dismissing appeal on management fee and advertising expenditure.

The High Court upheld the decisions of the CIT(A) and ITAT, dismissing the appeal on both issues. The disallowed management fee was accepted as genuine business expenditure, emphasizing commercial expediency. Regarding the advertising expenditure, relief was granted based on legal precedents, with the court finding no substantial question of law to overturn the decision.

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Issues:
1. Disallowance of management fee by the AO
2. Reasoning behind disallowance of advertising expenditure by the ITAT

Analysis:
1. The first issue revolves around the disallowance of management fee by the AO. The assessee claimed a deduction under Section 37 of the Income Tax Act for management fee expenditure. The AO doubted the genuineness of the expenditure due to lack of supporting documents. However, the CIT(A) accepted the expenditure after considering detailed submissions from the assessee, which demonstrated the necessity and business purpose of the management fee. The ITAT upheld the CIT(A)'s decision, emphasizing that the expenditure was incurred for genuine business purposes. The High Court concurred with the ITAT's view, stating that the business activity and expenditure should not be judged narrowly by revenue officers, and commercial expediency should be considered. Therefore, the appeal on this issue was dismissed.

2. The second issue pertains to the disallowance of advertising expenditure by the AO. The AO allowed only 25% depreciation on the total amount of expenditure and disallowed a significant portion. The CIT(A) referred to relevant judgments, including the Supreme Court's decision on the treatment of capital expenditure, and granted relief to the assessee. The ITAT upheld the CIT(A)'s decision, stating that the relief claimed was justified based on legal precedents. The High Court found no substantial question of law in this regard and dismissed the appeal, affirming the ITAT's decision.

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