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TMI Blog2014 (3) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses of Rs.2,77,87,896/- holding the same as revenue expenditure. 2) On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.82,83,024/- made on account of shortage of closing stock of 3558 items reported in the tax audit report." 2. Brief facts of the case are that during the course of assessment proceedings, the A.O. asked the assessee to explain as to why the advertising expenses of Rs,3,47,34,870/- may not be capitalized as in his view such expenses appeared to be for brand building. The reply by the assessee that such expenses were for sales promotion and were in the form of advertisement and magazines, posters etc. and were routine operational expenses, which did not lead t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture was also submitted by the assessee. It was further contended that the A.O. had failed to appreciate that the expenditure incurred on advertisement and sales promotion are routine operational expenses, which has been incurred by the assessee with the sole intention to create the awareness of the products offered by the company in order to boost its sale and to earn better margins. This expenditure on advertisement and sales promotion has neither led to creation or acquisition of any capital asset nor resulted in any benefit of enduring nature. This expenditure has been incurred by the assessee only to carry out its business efficiently and effectively. It was also informed that h expenditure on advertisement and sales promotion is inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 558/- units in the closing stock, which was due to goods issued to distributors for display on free of cost basis or on account of goods damaged or lost in the normal course of business. It was informed that this explanation was duly given to the A.O. during the assessment proceeding also. Before me, the Ld. counsel for the assessee submitted that the shortage reported by the assessee in its financial statement was part of its internal control process. The assessee company furnished the further breakup of the items held as short as under: S.No. Particulars No. of units 1 Goods issued to distributors for training and display purposes 3,394 2 Goods damaged or lost in normal course of 164 business and identified on physical verificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eal and while relying upon the order of the A.O., it was pleaded for setting aside the order of Ld. CIT(A) and restoring that of the A.O's order. 7. Ld. counsel for the assessee while relying upon the order of Ld. CIT(A) has pleaded for its confirmation as just and appropriate view has been taken by Ld. CIT(A) in the light of the facts and circumstances and material on record. Neither any contrary material has been placed on record nor given in the appeal papers. It was thus pleaded for confirmation of impugned order. 8. We have heard both the sides and considered material on record and find that Ld. CIT(A) has discussed and concluded the issue NO.1 & 2 in para 6.2 and 6.3 of his order which read as under: "Regarding the First Ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r expenditure was incurred. The Hon'ble Jurisdictional High Court in the case of M/s Casio India ltd. (ITA No.10 of 2011) and CIT vs Citi Financial Consumer Fin. ltd. (ITA No.1S20 of 2010) has held that the expenditure on publicity and advertisement is to be treated as revenue nature allowable fully in the year, in which it was incurred. Keeping in view the useful test laid by the Hon'ble High Court in the case of M/s Empire Jute Co. Ltd. vs. CIT (124 ITR 1), I held that in incurring the above referred advertisement and sales promotion expenses, the appellant has not obtained advantage of enduring benefit and hence the above expenditure are held to be revenue in nature, which are allowable during the current year. The Ld. AO had dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tributors of the company are engaged in the business of sales of sanitary-ware manufactured by the appellant company, which is a well-known International Brand, it is in the business interest of the company to provide a few items to the dealers/distributors for display/training purpose. The appellant has furnished proper item-wise record of such items which were provided to the dealers for display/training. Keeping in view the same, the expenditure in relation to the above referred 3394 items for display/training is clearly held to be for the business purpose of the appellant company and hence held to be allowable. Regarding the balance 164 items, the details of which were also furnished before me, comprise off various sanitary-ware items w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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