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TMI Blog2004 (4) TMI 280X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no way in which it can definitely be estimated that the benefit of the expenditure would last for a particular period of time, and on this count, we agree with the arguments of the learned counsel for the assessee. Reliance placed by the Revenue in the case of Shreyas Shipping Ltd.[ 2002 (5) TMI 203 - ITAT BOMBAY-H] does not come to its resuce, for in that case, dry dock and special survey expenses were incurred by the assessee and these expenses have to be incurred statutorily twice over a period of five years. That dry docking in the case of ships is mandatory. The benefit of the expenditure can be reasonably estimated over a period of 21/2 years. Moreover, there was a trade practice in that case and the assessee followed that tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an advertisement expenditure incurred for launching a new product and that this is revenue in nature and that the expenditure is laid out wholly and exclusively for the purpose of business. The CIT(A) at page 9 of his order stated that the expenditure has not brought into existence any tangible asset, which can be considered to be of an enduring nature. He goes on to add that such huge expenditure has been incurred by the assessee only to publicise the brand name and the product throughout the length and breadth of the country, so that it will remain in the minds of the customers and public. He considered that the advantage of the same for the assessee will last for a period of four/five years and that the disallowance of 4/5th is of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular expenditure is revenue expenditure incurred for the purpose of business must be determined on a consideration of all the facts and circumstances, and by the application of principles of commercial trading. The question must be viewed in the larger context of business necessity or expediency. If the outgoing or expenditure is so related to the carrying on, or conduct of the business, that it may be regarded as an integral part of the profit-making process and not for acquisition of an asset or a right of a permanent character, the possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure. Any liability incurred for the business of obtaining a loan would be revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urred heavy advertisement expenditure. The period for which the assessee can be said to have secured benefit by incurring this expenditure cannot be reasonably estimated. The undisputed fact is that the new product launched may fail to take off in the year of launch itself may have a long life as a product. There is no way in which it can definitely be estimated that the benefit of the expenditure would last for a particular period of time, and on this count, we agree with the arguments of the learned counsel for the assessee. Reliance placed by the Revenue in the case of Shreyas Shipping Ltd. does not come to its resuce, for in that case, dry dock and special survey expenses were incurred by the assessee and these expenses have to be incur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee by making one time payment had avoided paying interest on debentures in each of the next five years. The annual compulsorily incurable expenditure on interest has been discounted and paid upfront as a one time payment. In fact the entire expenditure of upfront payment in that case does not pertain to one year. Interest is a yearly commitment. Thus on facts the Hon'ble Supreme Court held that interest of that particular year only is to be allowed. Thus, this decision is also distinguishable from the facts of the present case. Thus, both in the case of Shreyas Shipping Ltd. before the Tribunal and in the case of Madras Industrial Investment Corpn. Ltd. before the Hon'ble Supreme Court, the period for which the assessee secured the benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of the Hon'ble Supreme Court in the case of Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 and in the case of CIT v. Indian Discounts Co. Ltd. [1970] 75 ITR 191 (SC) are clear on the issue. If the argument of the learned Departmental Representative that the entries in the books of account are sacroscent and have to be accepted is to be valid, then in the case of depreciation also, the claim of the assessee is to be disallowed, as the depreciation depicted in the books of account is something different from what is claimed and allowed, while computing the income under the Income-tax Act. In the circumstances, this argument of the learned Departmental Representative has necessarily to be rejected. We agree with the submissions o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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