2011 (5) TMI 1108 - HC - Income Tax

Summary

Issues involved: Interpretation of expenses as deferred revenue expenditure u/s 260A of the Income Tax Act, 1961.

Issue 1: Differential expenses on account of trade fair and exhibition, advertising and publicity, and sales promotion

The appellant, a marketing company, claimed expenses for organizing a trade fair, advertising, and sales promotion for the assessment year 2003-04. The Assessing Officer treated these expenses as deferred revenue expenditure, estimating benefits over two years. The Commissioner of Income Tax (Appeals) affirmed this decision. However, the Tribunal allowed the appeal, stating that the expenses were revenue in nature and should be fully allowed in the year of incurring. The Tribunal found no evidence to support the benefit accruing over two years. The Tribunal cited relevant case laws to support the decision that the expenses were revenue in nature and should be allowed in full in the year of incurring. The High Court upheld the Tribunal's decision, dismissing the appeal by the revenue as devoid of merit.

Conclusion: The High Court upheld the Tribunal's decision that the expenses incurred by the appellant were revenue in nature and should be fully allowed in the year of incurring, dismissing the appeal by the revenue.