AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2022 (10) TMI 838
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....Officer on account of disallowance of brand promotion expenses? 2. Whether Ld. CIT(A) was correct on facts and circumstances of the case and in law in deleting the addition of Rs.1,92,319/- made by the Assessing Officer on account of late deposition of employees contribution fund ignoring the fact that there are divergent view amongst different court?" 3. Ground No.1 concerns disallowance of brand promotion expenses. 4. Briefly stated, the assessee is engaged in the business of manufacture and sale of country liquor and Indian made foreign liquor (IMFL). The assessee filed its return of income for Assessment Year 2009-10 under Section 139(1) of the Act declaring taxable income at Rs.11,00,40,460/-. A revised return was filed thereafter by the assessee revising the taxable income at Rs.7,39,31,880/-. The case was selected for scrutiny assessment. The Assessing Officer inter alia observed that the assessee has claimed brand promotion expenses of Rs.4,57,61,241/- as revenue expenses in contrast to the fact that the assessee itself had capitalized such expenses under the head intangible knowhow and New Brand Development in its books of account. The Assessing Officer acco....
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.... incurred were capital in nature. Heavy expenses were incurred on brand building. The action of the Assessing Officer, thus cannot be held erroneous in treating said expenses as capital in nature on the ground that these expenses give benefit of enduring nature and further the assessee itself had recognized the same to be on capital account in its books of account. 4.2 The Id. AR, on the other hand, placed reliance on the first appellate order. He submitted that assessee is in the business of manufacture and sale of country liquor and Indian made foreign liquor (IMFL). In the course of its existing business of sales and marketing of liquor products, in addition to existing brand and in existing States, during the year the assessee who has to increase the sale of its products had introduced some new brands and also entered and increase focus on new States. As per the Excise Policy of States various registrations / license fees are required to be paid in every State for manufacture and sale of liquor products which are annual fees and are paid year to year on their renewal. During the year the assessee company as an accounting policy matter, instead of debiting the said expe....
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....pitalized under the head intangible assets / brand development. 4.4 On the basis of above material facts, the Id. CIT (Appeals) has come to the conclusion that the expenses claimed as Revenue expenses in this year are routine business expenses required to be incurred in the course of business. The marketing and brand promotion is an integral part of business activity of the assessee company and the entire expenses are of routine business expenses and have been incurred in the course of running the existing business. The Assessing Officer has not pointed out any specific expense, which is of enduring benefit or has been incurred to acquire any capital asset. Such expenses in respect of on-going business are undisputedly Revenue in nature. Under the above facts, we fully concur with the findings of the Id. CIT (Appeals) also because similar recurring expenses incurred in earlier years have been allowed as Revenue expenses. The decisions relied upon by the Id. CIT (Appeals) also strengthen the finding arrived at by him under the facts and circumstances of the present case on the issue. The Hon'ble Supreme court in the case of Empire Jute Company Vs. CIT (supra) has b....
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.... deleting the addition ofRs.2,70,54,194/- made on account of capitalization of Brand Promotion expenses. 2. Whether on the facts and circumstances of the case, the Ld. CIT(A) erred in deleting the addition of Rs.52,32,991/- made on account of short term capital gain on sale of mutual funds ignoring the fact that it was not claimed either in original return or revised return filed." 14. Ground No.1 is identical to Ground No.1 of ITA No.2275/Del/2015 except for the change in the quantum of disallowance. In parity with the principles appreciated in ITA No.2275/Del/2015, we see no merit in the grievance of the Revenue. In our view, The CIT(A) has not committed any error which may warrant interference. 15. Ground No.1 of the Revenue's appeal is dismissed. 16. Ground No.2 concerns addition on account of short term capital gain. 17. The CIT(A) has dealt with the issue as under: "5.5 Regarding the Ground No.5 of the appeal, the Ld. Counsel submitted that by an inadvertent mistake, the appellant company had offered an amount of Rs.52,32,991/- as short term capital gain, whereas the same was in the nature of exempt dividend income. It was submitted that during t....
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.... Investment made out of proceeds of redemption of Reliance Mutual Fund SBI Mutual Fund. Invested from SBI, CC account. 31.3.2011 1,00,00,000 NA 0 NA 0 0 10,000,000 received 1 day TOTAL 26,44,688 10,558,052 Total Dividend received = 31,46,355 (in AY 2010-11) +26,44,688 (in AY 2011-12)=57,91,043 5.5.3 The Ld. Counsel relied upon the CBDT Circular No.14, dated 11.4.1955, in which it was held that the department should not take advantage of the assessee's ignorance to collect more tax out of him than the liability due to him. Reliance was placed on the Bombay High Court in the case of Balmukund Acharya v. DCIT 310 ITR 310, in which it was held that the authorities under the Act are obliged in accordance with law. Reliance was also made on the following cases: (i) Nirmala L Mehta v. A. Balasubramaniam, CIT (2004) 269 ITR 1 (Bom); (ii) ACIT v. Technofab Engg. Ltd. 2009 TIOL, 664 ITAT (Del); and (iii) CIT v. Ramco International, 332 ITR ....