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| The Tax Publishers2020 TaxPub(DT) 2082 (Del-Trib) INCOME TAX ACT, 1961
Section 37(1)
Disallowance of expenditure for advertisement on sale promotion treating the same as expenditure for future benefits, was unjustified because public memory is very short and companies have to incur advertisement expenditure year after year to keep products fresh in minds of the public, therefore such expenditure cannot partake the character of giving any enduring benefit.
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Business expenditure - Allowability - Disallowance of expenditure for advertisement on sale promotion treating the same as expenditure for future benefits -
Issue was as regards disallowance of advertisement expenditure incurred on brand building claimed under section 37. Revenue disallowed expenditure for advertisement on sale promotion treating the same as expenditure for the future benefits and enduring in nature. Held: As decided in assessee's own case for assessment year 2010- 2011, public memory is very short and, therefore, companies have to incur advertisement expenditure year after year to keep products fresh in minds of the public. Therefore, such expenditure cannot partake the character of giving any enduring benefit. AO grossly erred in treating such expenditure as intangible asset.
Followed:D.C.I.T. v. Miele India Pvt. Ltd. [ITA.No.724/Del./2016, dated 11-4-2019] : 2019 TaxPub(DT) 4233 (Del-Trib)
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
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