Full News
High Court held sales propomtion expenses were revenue in nature.
High Court held sales propomtion expenses were revenue in nature.
Adani Retail Ltd filed its tax return claiming deduction of Rs.1.70 crore towards expenditure for sales promotion. AO denied it holding that expenditure was not a revenue expenditure and assessee had spread the claim over three years in its books of account. CIT(A) & ITAT allowed assessees appeal. High Court held expenses were revenue in nature.-500272
1. Adani Retail Ltd had filed its tax return for AY 20042005 in which it had claimed deduction of Rs.1.70 crores towards expenditure for sales promotion and publicity and setting up of various stores.
2. In the reopened assessment, AO questioned such income.
3. AO held that the expenditure was not a revenue expenditure and that in the books of account itself assessee had spread the claim over three years.
4. The expenses were held to be residual balances of sales promotion & publicity and stores setup expenses, and thus were disallowable.
5. CIT(A) allowed assessee’s appeal.
6. Tribunal held that expenditure was revenue in nature.
On appeal, the High Court held as under:
7. This Court in case of Core Healthcare Ltd.(supra), held that advertisement expenses to create brand image is revenue in nature.
8. It is by now well settled by series of decisions of the Supreme Court and this Court that the treatment accorded to a certain expenditure in the books of account of the assessee would not be conclusive of its true nature and on valid grounds, it would be open for the assessee before the Income Tax authority to claim a different treatment.
9. In the result, tax appeal is dismissed.
