Case Law Details
Qyuki Digital Media Private Limited Vs DCIT (ITAT Mumbai)
ITAT Mumbai held that a start-up company incurring cost for branding of the company and other relevant expenditure which creates popularity which helps promotion of contents at the time of its product launch is allowable expenditure.
Facts-
The assessee filed ROI declaring loss of Rs. 13,04,62,517/-. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued. During the course of assessment, AO observed that assessee has not carried out its regular business activities during the F.Y. 2012-13 and no income has been credited to the P & L account except interest earned on bank deposit of Rs. 1,16,20,005/- and noticed that assessee has debited various expenses totaling to Rs. 13,59,72,075/- to P&L account. After adjusting interest income the assessee has computed loss for the year under consideration at Rs. 13,04,62,517/-.
AO rejected assessee’s submission and observed that assessee had not carried out any business activity during the year under consideration and no income has been derived by it from its regular business activity. Therefore, loss claimed by the assesse company at Rs. 14,20,82,522/- was disallowed and business income was computed at Rs. NIL. The interest income credited in P&L account was assessed under the head income from other sources.
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