Case Law Details

Case Name : Pr. Commissioner of Income Tax Vs Zydus Wellness Limited (Gujarat High Court)
Appeal Number : Tax Appeal No. 139 of 2017
Date of Judgement/Order : 14/03/2017
Related Assessment Year : 2009-10
Courts : All High Courts (6128) Gujarat High Court (610)

1. Now, so far as proposed question No. D is concerned, the same relates to the dis allowance of Rs. 53,25,263/regarding web designing charges, trade mark expenses and survey expenses claimed by the assessee. The AO disallowed the said expenditure by treating the same as capital expenditure. On an appeal, learned CIT(A) relying upon the decision of the Delhi High Court in the case of CIT vs. Indian Visit Com Pvt Ltd (176 Taxman 164) held that in case of expenditure on website, there is no change in the fixed assets of the assessee and no asset has been created but it is a tool for facilitating the business of the assessee and therefore, held expenditure of website to be of revenue nature.

2. With respect to trade mark expenses, also and following decision of the Honourable Supreme Court in the case of Finlay Mills Ltd (20 ITR 475(SC), the learned CIT(A) held that the trade mark expenses is of revenue in nature as the same does not created any assets or it does not result into any advantage of enduring nature.

3. So far as survey expenses is concerned, the learned CIT(A) also observed and held that expenditure incurred on survey number treated as revenue in nature as the survey expenses has been incurred to improve the efficiency of the business by finding out customers preference for sugar substitute, market research for butter margarine evaluation of cosmetic product, software support and maintenance etc. The learned CIT(A) also observed that looking to the nature of the business of the assessee to keep their products constantly updated keeping in view the customer preferences and the market demand and requirement trends, such survey is required. Therefore, the learned Tribunal held survey expenses as revenue in nature. Consequently, learned CIT(A) deleted the dis allowance made by the AO with respect to the web designing charges, trade mark expenses and survey expenses. Having heard the learned advocate for the Revenue and the purpose for which aforesaid expenses were made by the assessee and that by the aforesaid expenses no new asset has been acquired and/ or there is no change in the fixed asset of the assessee, we are of the opinion that no error has been committed by the learned Tribunal and/ or learned CIT(A) treating the aforesaid expenses as revenue in nature. We confirm the finding recorded by the learned CIT(A) as also learned Tribunal treating the aforesaid expenses as revenue in nature.

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