Jewellery Design Charges are revenue in nature

[Kamal Agarwal]

The assessee is a in the business of manufacturing of Jewellery. The charges paid for the designing of the jewellery were held as Capital Expenditure so disallowed. Whereas, the assessee is in the business, where designing of the product kept changing very frequently. No enduring nature of the expenses of the assessee, nor any asset is came into being

[Ganeshan Kalyani]

It is a revenue expenditure.

[DR.MARIAPPAN GOVINDARAJAN]

Jewelly is not a capital to the assessee. The jewels are to be sold to the ultimate consumers. Therefore the charges paid for the designing of the jewellery are only revenue expenditure.

AI Summary

Design charges treated as revenue expenditure where no enduring asset arises and costs relate to goods made for resale. Design charges for jewellery that change frequently and do not create any enduring asset are revenue expenditure incurred in the ordinary course of manufacturing for resale and should be treated as deductible business expenses rather than capitalised.