Background of ITA No. 6788/DEL/2019
This case involves the ACIT, Special Range-6, New Delhi appellant and Moet Hennessy India Pvt. Ltd., Mumbai as the respondent, concerning the assessment year 2015-16. The appeal, part of a set of three related appeals, was pronounced by the Income Tax Appellate Tribunal, Delhi ‘E’ Bench on September 5, 2022.
Details of the Proceedings
The tribunal considered the appeals against the orders of the ld. CIT(A) – 37, New Delhi dated May 13 and 28, 2019. The primary issue in the appeal was the treatment of advertisement and sales promotion expenses. The Revenue argued that these expenses were capital in nature due to their enduring benefit, while the ld. CIT(A) deemed them revenue expenses, following previous tribunal decisions.
Tribunal’s Decision
The Tribunal rejected the Revenue’s appeal, upholding the ld. CIT(A)’s decision that treated the advertisement and sales promotion expenses as revenue expenses. This was based on prior decisions for AYs 2012-13 and 2013-14 which had established a precedent that these expenses do not confer an enduring benefit and are, therefore, revenue in nature.
Implications and Analysis
The decision reaffirms the stance that periodic advertisement and sales promotion expenses aimed at boosting sales should be treated as revenue expenses. This case is pivotal for similar disputes and helps in understanding the treatment of such expenses under the Income Tax Act.
