TaxTMI 
TaxTMI 
2022 (11) TMI 380
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....f the Ld. Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored." 3. The brief facts of the case are that the assessee filed its original return of income for assessment year 2009-10 declaring total loss of Rs. 5,21,64,446/- on 30-09-2009. Subsequently, the assessee revised its return of income on 28-09-2010 and claimed advertising expenses to the tune of Rs. 21,28,55,537/-. During the course of assessment, the Ld. Assessing Officer observed that the said advertisement expenses were not debited to the profit and loss account by the assessee. Instead, as per the balance sheet of the assessee, the said advertising expenses have been accounted as "capital work in progress (brand building expenditure)". In response to show cause notice issued by the assessing officer, the assessee submitted that the assessee had capitalised the above expenditure in the books of account, but since the expenditure was purely in the nature of revenue, the assessee claimed these expenses in the (revised) return of income as revenue expenditure. However, AO did not accept the assessee's contention and disallowed the above advertisement expenses claimed by the asses....
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.... have also gone through case records. In my considered opinion the appellant has rightly claimed advertisement expenses as revenue expenditure. The appellant has claimed it as revenue expenditure in its revised return, which is also filed timely. The approach of Ld. A.O is not proper in holding it as capital expenditure against claim of appellant as revenue expenditure. The Supreme Court in case of Empire Jute 124 ITR 1 (SC) has categorically observed that there may be cases where the expenditure even if incurred for obtaining as advantage of enduring benefit, may, nonetheless, be on revenue account and the test of enduring benefit may break down. It is not every advantage of enduring nature acquired by an assesses that brings the case within the principle paid down in this test. What is material to consider is the nature of the advantage in a commercial sense and it is only where the advantage is in the capital filed that the expenditure would be disallowable on an application of this test. Similarly the Hon'ble Delhi High Court in CIT vs Casio India Ltd. 335 ITR 196 referred to a bunch of appeals with the lead case being ITA 1820/2010 entitled CIT vs. City Finance Consumers F....
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.... a business concern, if incurred for the purposes of business, is bound to result in some benefit, direct or indirect, immediate or after some time,, but the benefit to the business cannot be termed capital or revenue only on the basis of the period for which the benefit is derived by the business. Any benefit resulting to a business need not be confined to the year of expenditure and this is an ordinary incident of a running business. In the case before the Allahabad High Court in Hindustan Commercial Bank Ltd., In re [1952] 21 ITR 353 the expenditure on advertisement had been incurred at the point of time when new branches of the bank had to be opened and inaugurated. It has been held by the Allahabad High Court that there is no proposition that the amount spent in a special campaign of advertisement must necessarily be capital expenditure. 15. The apex court decisions on which reliance has been placed by the Tribunal, namely, Empire Jute Co. Ltd. [1980] 124 ITR i(SC) and Alembic Chemical Works Co. Ltd. [1989]. 177 ITR 377 (SC) specifically lay down that the nature of advantage has to be considered in a commercial sense and the test of enduring benefit is not a certain o....
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....hat the AO has not doubted the genuineness/veracity of the expenses, but has only disallowed the same on the basis that in the original return of income, the assessee had treated the same as capital work in progress (CWIP), and accordingly, the assessee is not permitted to change the tax treatment to "revenue" in nature, once when the assessee has initially, looking into the nature of expenses, has treated the same as CWIP. He further placed reliance on various judicial precedents in support of his contention that advertisement/brand building expenses have been held by various Courts/Tribunals to be revenue expenditure, and accordingly the assessee is eligible to claim the same as revenue expenses. 7. We have heard the rival contentions and perused the material on record. In our view, from the facts placed before us, it is evident that the AO has not challenged the genuineness of expenses incurred by the assessee. During the course of assessment, the assessee placed copies of invoices/newspaper advertisements/other documentary evidence in support of the genuineness of advertisement expenditure incurred by the assessee. Therefore, the genuineness of the expenses has not been doub....