Expenditure on advertisement and brand promotion allowed in the year in which incurred

Expenditure on advertisement and brand promotion allowed in the year in which incurred wholly and exclusively for the purposes of business

ABCAUS Case Law Citation:
ABCAUS 2907 (2019) (05) ITAT

Important Case Laws Cited/relied upon by the parties
Madras Industrial Investment Corporation Ltd. v. CIT 225 ITR 802
Amar Raja Batteries Ltd. v. ACIT 91 ITD 280
Taparia Tools Ltd. v. JCIT [2015] 372 ITR 605

In the instant appeal, the assessee had challenged the Order of the Commissioner of Income Tax (Appeals) in confirming the disallowance of the expenses relating to the advertisement and brand promotion which had been claimed by the assessee in the year in which it was incurred.

The Tribunal observed that in the assessee’s own case the co-ordinate Bench had considered the issue.

The Coordinate Bench relying on the judgment of the Hon’ble Supreme Court had opined that though the assessee may have written off the expenditure in its books of account over a period of five years, it must be allowed in its entirety in the year in which it was incurred, if it is revenue expenditure, and if it is wholly and exclusively incurred for the purposes of business.

The Bench was of the view that there was nothing to suggest that with alike expenditure, any asset, tangible or intangible, had been created. There was no evidence on record regarding accrual of any specific revenue in the years under consideration or subsequently over a defined period with the incurring of said expenditure.

In view of the above, the Tribunal opined that the case was squarely covered by the decision of the co-ordinate Bench of the Tribunal, in the assessee’s own case on identical reasoning.

Accordingly, the AO was directed to allow the assessee’s claim of expenditure incurred towards advertisement and brand promotion as Revenue in nature.

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