Case Law Details
DCIT Vs Paramount Surgimed Ltd. (ITAT Delhi)
Advertisement expenditure is normally to be treated as revenue in nature because advertisements do not have long lasting effect on the general public. The Hon’ble Delhi High Court has also held that under the Income Tax Act there is only a reference to capital or revenue expenditure and there is no reference to deferred revenue expenditure. It has also been held that advertisement expenditure in the present day context should primarily be treated as revenue expenditure unless there are special circumstances and reasons to hold that the expenditure was capital in nature. It has also been held that where expenditure was incurred to popularise a product, it was for business promotion. AO has not demonstrated with cogent evidence, any special circumstances or reasons to hold that the impugned expenditure was capital in nature. In view of the same expenditure on Advertisement are allowed as revenue expenditure.
No Disallowance under section 14A if Assessee has not earned any exempt Income
Ld. CIT (A) has given a finding that the assessee did not have any exempt income during the year and that the investments being held by it were in the nature of strategic investments. Thereafter, the Ld. CIT (A) has placed reliance on the judgment of the Hon’ble Delhi High Court in the case of CIT vs. Holcim India Pvt. Ltd., wherein under identical circumstances, disallowance u/s 14A deleted by the ITAT was upheld by the Hon’ble Delhi High Court. On this issue also the department could not negate the findings of the Ld. CIT (A) that the assessee did not have any exempt income during the year under consideration. Therefore, we find that the Ld. CIT (A) has rightly applied the ratio of the judgment of the Hon’ble Delhi High Court in the case of CIT vs. Holcim India Pvt. Ltd. and we find no reason to interfere on this issue also.
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