9911796707
|
Home
Issues involved:
1. Allowance of expenses incurred for advertisement film as revenue expenditure. 2. Disallowance of penalty paid under the Provident Fund Act. Issue 1: Allowance of expenses for advertisement film: The Revenue appealed against the relief of Rs 21,741 allowed by the CIT(A) for expenses incurred on an advertisement film. The CIT(A) directed the ITO to allow the expenses as revenue expenditure based on expert opinion that the film became useless in less than two years. The Revenue contended that preparing the advertisement film is a capital expenditure, citing relevant case laws. The assessee argued that the entire expenditure of Rs 61,383 should be allowed as revenue expenditure, emphasizing the film's short lifespan. The ITAT held that the film's short duration and lack of enduring benefit indicated it was a revenue expenditure, in line with the principles established by the Supreme Court. Issue 2: Disallowance of Provident Fund penalty: The Revenue challenged the deletion of Rs 4,524 penalty paid under the Provident Fund Act. The Deptl. Representative cited a Gujarat High Court case to support disallowance of such penalties. The assessee referred to a Supreme Court judgment to argue that the penalty was more in the nature of interest/compensation for delayed payments, not a penalty. The ITAT noted conflicting judgments but held that damages paid under the Provident Fund Act were inadmissible expenditure based on the jurisdictional High Court's ruling. Consequently, the disallowance of Rs 4,524 on account of Provident Fund penalty was restored, partially allowing the appeal.
|
