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TMI Blog2014 (6) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;s appeals contesting its assessments for the said two consecutive years respectively. The appeals being in relation to the same issue, were posted for and, accordingly, taken up for hearing together, and are being disposed of vide a common, consolidated order. 2.1 Opening the arguments for and on behalf of the assessee, a manufacturer and exporter of jewellery, it was contended by the ld. Authorized Representative (AR), the assessee's counsel, that the issue under consideration, i.e., the allowability of expenditure on brand building - of a brand of jewellery by the name 'Nirvana', as incurred by the assessee, must be treated as a covered issue in the assessee's favour in view of the Tribunal's order for A.Y. 2006-07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s incurred by the assessee has resulted in any kind of addition or augmentation of any profit making asset. Thus the view taken by the A.O. is prima facie correct view and, therefore, we do not find any reason to hold that such an order is erroneous or it is prejudicial to the interest of the Revenue. Thus the conclusion drawn by the Ld. CIT in the impugned order is not tenable both in law and on facts and accordingly we cancel the impugned order passed u/s.263. In the result, the grounds taken by the assessee are allowed and the appeal of the assessee is also treated as allowed.' Clearly, the tribunal had only expressed a prima facie view; holding that in its view the A.O.'s view is, prima facie, a correct view, so that his order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its, which we would have abstained from if the tribunal had in our view expressed its' final view on merits upon examination of the facts; the matter being primarily factual. While the Revenue's case is that the expenditure has admittedly been incurred in creating a product brand 'Nirvana', a capital asset, albeit intangible, the assessee claims that no capital asset - tangible or intangible, had come into existence thereby. It is only where a benefit or advantage of an enduring nature comes into being as a result or in consequence of such expenditure, and which is in the capital filed, that a capital asset can be said to have been acquired. 3.2 We have examined the expenditure profile, i.e., for the three years - being A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incurred is 'revenue' in nature. Expenditure is not 'capital' or 'revenue', but gets so classified on the basis of the purpose for which it is incurred. Expenditure on the same 'goods' and 'labour, for example, would be construed as of 'revenue' or 'capital' nature where incurred for a trading asset or, as the case may be, a capital asset. As such, what is to be seen is whether any capital asset stands acquired by the assessee through its concerted advertisement campaign. No evidence in this regard has been brought on record. Though ordinarily, the onus to prove its return, and the claims preferred thereby, is only on the assessee (refer: CIT v. Calcutta Agency Ltd. [1951] 19 ITR 191 (SC)) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no such advantage had actually come into existence, it cannot possibly be called upon to prove a negative. 3.3 It may be argued that the assessee having admittedly incurred the expenditure on brand building, it cannot retract from the same; its books of account, reflecting its understanding, represent its' correct state of affairs. That is, the onus is on the assessee to show that its accounts - duly audited, with the Auditors expressing an expert opinion thereon, do not, despite being so, represent a true state of its affairs. True, and for which we may refer to the decision by the hon'ble apex court in the case of Pullangode Rubber Produce Company Ltd. vs. State of Kerala & Anr. [1973] 91 ITR 18 (SC). However, the assessee has n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the expenditure having yielded an enduring advantage in the capital field, would in the absence of any objective material, be merely a hypothesis or a surmise. In fact, expenditure on product launch, product display, staff recruitment, exhibition, legal and professional expenses (nature unknown), also treated as part of the capital asset, have a much lesser degree of direct, or only a tenuous relationship, i.e., than the advertisement expenditure, with brand building. Apart from the coming into existence of a brand value, there are issues with regard to its valuation and cost. We say so as a relationship between the expenditure and the asset, assuming its existence, has to be direct for it to be considered as forming part of its cos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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