2014 (1) TMI 546

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....14A of the Act. (c) Disallowance of medical expenses incurred for staff. 3. The facts relating to the issues are stated in brief. The assessee is engaged in the business of dealing in shares/securities and it also working as the franchisee of "Ma Foi Management & HR Consultants". To become the franchisee of the above said company, the assessee paid a sum of Rs.6,61,200/- on 1.9.2005, which was valid for a period of 24 months. The assessee claimed the said amount in proportion to the period in the years relevant to the assessment years 2006-07, 2007-08 and 2008-09. The assessee had debited the franchisee fee under the head "Preliminary expenses". The AO disallowed the same with the general observation that there were insufficient details/in....

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....served that this expenditure does fall in the category of preliminary expenses as defined in sec. 35D of the Act. There should not be any dispute that the description given by the assessee as "Preliminary expenses" is not decisive or conclusive. The nature of the expenditure should be determined objectively. On a perusal of the agreement entered by the assessee with M/s Ma Foi Management Consultants Ltd, we notice that the assessee has only acquired the license to act as the franchisee of the above said company. Thus, it is not a case of acquiring a trade name, which would fall in the category of Capital expenditure. Accordingly, in our view, the same is allowable as expenditure u/s 37(1) of the Act as it satisfies all the condition prescri....