Tribunal allows 80IB deduction for adhesive units, deems ad-film expenses revenue post-June 2005

The Tribunal upheld the CIT(A) order allowing deduction u/s 80IB for the adhesive and Epoxy M-Seal units based on prior decisions. Ad-film expenses were deemed revenue expenditure due to the lack of enduring benefit post-June 2005. The department's appeals were dismissed as the Tribunal found no flaws in the CIT(A) decisions, supported by consistent Tribunal rulings and unchallenged findings.

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Issues involved: Appeals by the department against CIT(A) order for assessment years 2004-05 & 2005-06. Grounds related to deduction u/s 80IB for adhesive unit at Bhimpore, Daman and Epoxy M-Seal unit at Kadaiya, Daman, and treatment of expenses on ad-film as revenue expenditure.

Deduction u/s 80IB: The Tribunal confirmed CIT(A) order allowing deduction u/s 80IB for both units based on earlier Tribunal decisions in favor of the assessee for AY 1998-99 to 2002-03. The Tribunal found facts identical and dismissed the department's appeal for AY 2003-04. No other grounds in appeal for AY 2004-05.

Treatment of Ad-film Expenses: AO treated ad-film production expenses as capital expenditure u/s 35D(2)(d), disallowing Rs. 73,90,067. Assessee argued the short lifespan of ad-films and no enduring benefit, supported by detailed explanations and case laws. CIT(A) found the expenses to be revenue in nature after considering evidence like telecast dates and TV channels, and personally viewing the ad-film. The Tribunal upheld CIT(A) decision, noting the absence of enduring benefit in telecasting the ad-film after June 2005.

Conclusion: The Tribunal found no infirmity in CIT(A) findings regarding the ad-film expenses, as telecasting did not provide enduring benefit. Previous Tribunal decisions favored the assessee, and CIT(A) findings remained uncontroverted. Therefore, the department's appeals were dismissed.

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