Addition for guarantee commission struck down due to unreliable comparables; advertising treated as revenue expenditure, allowable

HC upheld the Tribunal's findings: the addition for guarantee commission was unjustified because external bank comparables were unreliable (missing year and context) and internal comparables were not examined; prior tribunal deletions stood and Revenue had not contested them, so the addition could not be sustained. On advertising, HC held corporate/brand television advertising was revenue expenditure - aimed at maintaining corporate image and facilitating sales/profitability rather than creating enduring capital asset - and thus properly allowable as business expenditure.

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Issues:
1. Whether the Tribunal was justified in deleting the addition made on account of guarantee commission chargeable to Associate EnterprisesRs.
2. Whether the Tribunal was justified in deleting the disallowance made on expenditure for 'Corporate Brand' building, treating it as revenue in natureRs.

Analysis:

Issue 1: Guarantee Commission Chargeable to Associate Enterprises
- The Assessing Officer held that the Respondent charged 0.20% commission on guarantees to its Associate Enterprises, resulting in an upward adjustment of Rs. 2.42 crores.
- The Dispute Resolution Panel upheld this adjustment, but the Tribunal disagreed, stating that using external comparables like HSBC and Allahabad Bank was inappropriate due to lack of data specifics.
- The Tribunal noted that similar additions in earlier years were deleted by the Tribunal, and Revenue accepted those decisions.
- The Counsel for Revenue acknowledged the consistent Tribunal decisions on this issue, leading to the conclusion that no substantial question of law arose.

Issue 2: Expenditure on Corporate Brand Building
- The Respondent incurred Rs. 29.99 crores on TV advertisements, including Rs. 5.47 crores for corporate advertisements.
- The Assessing Officer disallowed the Rs. 5.47 crores, deeming it capital expenditure for building brand value with enduring benefits.
- The Tribunal reversed this, considering the expenditure as revenue in nature since it facilitated business, increased sales, and profitability.
- The Counsel for Revenue argued that brand-related expenses should be capital due to enduring benefits.
- Referring to a previous case, the Court clarified that ongoing business expenses are revenue, distinguishing between maintaining and creating a brand.
- The Court cited a test from a Supreme Court case, emphasizing that the nature of advantage obtained commercially guides the capital/revenue classification.
- The Tribunal's view that corporate advertisement enhances business, impacting sales and profitability, was considered reasonable based on the facts presented.
- Consequently, as no substantial question of law arose, the Court dismissed the appeal without costs.

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