| The Tax Publishers2020 TaxPub(DT) 2179 (Del-Trib) INCOME TAX ACT, 1961
Section 37(1)
Brand expenses comprising of expenditure on event management, business promotion, merchandising, printing of brochures/mailers, market research, etc., to determine the consumer reaction to company's products were required to refresh memory of consumer of the products manufactured by assessee and hence such expenses did not result in any enduring benefit and were allowable as revenue under section 37(1) in entirety.
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Capital or revenue expenditure - Brand expenses - No enduring benefit -
Assessee-company claimed deduction of brand expenses compising of expenditure on event management, business promotion, merchandising, printing of brochures/mailers, market research, etc., to determine the consumer reaction to company's products held 20% thereof as capital in nature. on the premise that benefit of such expenditure was enduring in nature and available to assessee over a period of time than being restricted to the relevant previous year alone in which it was incurred, thereby leading to creation of a tangible asset being goodwill, reputation and credibility. Held: Brand expenses in question were required to refresh memory of consumer of the products manufactured by assessee and hence such expenses did not result in any enduring benefit and, therefore, expenses in entirety were allowable as revenue expenditure.
Followed:Hindustan Aluminium Corporation Limited v. CIT (1986) 159 ITR 673 (Cal) : 1986 TaxPub(DT) 1178 (Cal-HC), CIT v. Berger Paints (India) Ltd. (2002) 254 ITR 503 (Cal) : 2002 TaxPub(DT) 1198 (Cal-HC), CIT v. Salora International (2009) 308 ITR 199 (Del.) : 2009 TaxPub(DT) 751 (Del-HC), CIT v. Casio India Ltd. (2011) 335 ITR 196 (Del) : 2011 TaxPub(DT) 2035 (Del-HC) and CIT v. Adidas India Marketing Ltd. 195 Taxman 256 (Del.).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2012-13
INCOME TAX ACT, 1961
Section 92B
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