2012 (9) TMI 973

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....xpenses of Rs. 8,06,509/- as Brand Development expenses and Rs. 4,47,732/- paid as professional fees for Brand Development. 3. Briefly stated the facts of the case are that the assessee is a partnership firm , filed its return of income on 27.6.2008 declaring total income at Rs. 31,81,64,230/-. The assessee is a manufacturer, exporter and importer of Diamonds and Generation of Power. During the course of assessment proceedings, the Assessing Officer observed that the assessee has given various loans and advances on which no interest has been charged by it. At the same time, the assessee has huge interest bearing funds on which interest is being paid by assessee therefore an explanation was called for from the assessee to explain why propor....

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....ree parties were only Rs. 21.95 crores , which means the firm had lent money out of its own capital. To further substantiate, the Ld. Counsel pointed out that for the year under consideration, the assessee's net profit available for appropriation is to the tune of Rs. 30.41 crores which in itself is higher than the total amount of advances given to three parties at Rs. 21.95 crores. The Ld. Counsel argued that the assessee has given interest free loans out of its own capital and net profit therefore there cannot be any disallowance of interest paid on its own borrowings. The Ld. Counsel relied upon the decision of the Tribunal in the case of DCIT Vs M/s. Mohit Diamond Pvt. Ltd. in ITA No. 2097/Mum/2011 wherein on identical facts the Tribuna....

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.... expenses amounting to Rs. 8,06,509/- under the head "Brand Development Expenses" which were paid to M/s. Suraah Associates and M/s. S. Majumdar & Co. The AO sought explanation from the assessee in respect of the claim of these expenses. The assessee furnished copy of account and also the copy of bills of the respective parties. The AO observed that the assessee has incurred these expenses for registering its brand ' Kiah' and related logos. The AO was of the opinion that these expenses were incurred for registration and development of the brands in various places/countries by which the assessee has derived enduring benefits. As these expenses are not regular expenses therefore the AO went on to disallow the sum of Rs. 8,06,509/- and added ....