CIT Vs Bonanza Portfolio Ltd. (Delhi High Court )
Decided on: 10 August 2011.
Appeal No. ITA 833/2011
The expenditure was incurred by the assessee on ad films in respect of an ongoing business and there was no enduring benefit on the same. Hence, it was asses-sable as revenue expenditure, An expenditure incurred on advertisements and websites for sales promotion is revenue in nature. Computer peripherals are entitled to depreciation at 60%.
In the assessment proceedings carried out by the Assessing Officer, he disallowed the expenses on advertisement holding the same was to be amortised over a period of five years and thus made an addition of Rs. 92,13,102/-. The expenditure was incurred on advertisement, ad film and website expenses. As far as expenditure on advertisement is concerned, such an expenditure on account of advertisement and sale promotion by this Court is held to be revenue in nature by answering this question in batch of appeals with lead case being ITA No. 1820 of 2010 entitled The Commissioner of Income Tax Vs. Citi Financial Consumer Fin. Ltd. (decided on 30.03.2011). Likewise, the website is held to be revenue in nature by another judgement of this Court in Commissioner of Income Tax Vs. Indian Visit. Com (P) Ltd. 219 CTR (Del) 603.
Expenditure incurred on ad film is to be treated as capital or revenue in nature. We may record here that the learned counsel for the appellant has relied upon the judgement of the Bombay High Court in Commissioner of Income Tax Vs. Patel International Film Ltd. 102 ITR 219 (Bom) holding such an expenditure to be capital in nature. High Court held that expenditure was incurred by the assessee on ad films in respect of an ongoing business and there was no enduring benefit on the same. Hence, it was asses-sable as revenue expenditure.
Though there is another issue raised which pertains to depreciation allowed by the Tribunal @ 60% on computer peripherals, we are of the view that no substantial question of law arises in this behalf as this Court in Commissioner of Income Tax Vs. Citi corp Maruti Finance Ltd. (ITA 1712/2010 and 17114/2010 decided on 9th November, 2010) has taken the view that the computer peripherals are entitled to depreciation @ 60%.