Business expenditure — Allowability — Advertisement expenses

Commissioner of Income Tax v Modi Olivetti Ltd,

Business expenditure — Allowability — Advertisement expenses — Assessee had capitalised expenditure incurred on advertisement expenses and debited part of amount to profit and loss account claiming same as deduction — In computation of income assessee added back debited amount to profit and claimed
deduction of entire sum as advertisement expenses — AO rejected assessee's claim on ground that since assessee had admittedly capitalised entire amount in balance sheet there was no justification for claiming it as a revenue expenditure — CIT(A) upheld disallowance — Tribunal allowed assessee's appeal recording finding of fact that advertisement expenses incurred by assessee were revenue expenditure — Held, neither AO nor CIT(A) disputed nature of advertisement expenses to be revenue expenditure — Merely because assessee had firstly shown entire amount in books of accounts as deferred revenue expenditure and thereafter debited certain sum in profit and loss account cannot be made a ground to disallow advertisement expenses — Tribunal had also recorded finding of fact that advertisement expenses incurred by assessee were revenue expenditure — Tribunal was justified in setting aside addition made by AO.