Styler India (P) Ltd v. Jt CIT

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The Tax Publishers2008 TaxPub(DT) 1885 (Pune-Trib) : (2008) 024 (II) ITCL 0002 : (2008) 302 ITR 0001 : (2008) 113 ITD 0055 : (2008) 116 TTJ 0333 : (2008) 008 DTR 0087 Styler India (P) Ltd. v. Joint CIT INCOME TAX ACT, 1961 Business expenditure - Allowability -Exhibition and launch expenses incurred for set up of business Assessee, subsidiary of foreign company, rendered technical design and consultancy services to automobile industry in India. It claimed certain expenses under the head Building, repair and renovation and Exhibition/launch expenses. Assessee submitted that expenses incurred on repairs and renovations were in respect of premises, obtained on long lease for carrying out business, and in regard to exhibition and launch expenses, it claimed that after the commencement of business, to promote its business interest in automobile sector, it participated in AutoExpo exhibition. AO disallowed said expenses on the ground that the details of said expenses showed that the same were launching expenses incurred prior to setting-up of business. *Held:* Since assessee had participated in Auto Fair and objective of said fair was to advance the assessees business of consultancy. It had a place of business, employed qualified people, and contacted various clients who had entered into agreement with the assessee in the subsequent years and paid fees for consultation, therefore, merely actual receipts were not shown, it could not be said that the assessee did not set-up its business, hence, expenses was allowed. On the question, regarding expenses claimed as building, repair and renovation expenses, assessee had not placed any material on record to show that repair and renovation could be treated as current repairs, therefore, it could not be allowed on account of capital nature. Income-tax Act, 1961, Section 37(1) A.Y. : 1998-99 Decision: In partly favour of assessee. Case Law Analysis:Western India Vegetable Products Ltd. v. CIT [1954] 26 ITR 151 (Bom.) (para 7), CWT v. Ramaraju Surgical Cotton Mills Ltd. [1967] 63 ITR 478 (SC) (para 7.2) and Sarabhai Management Corpn. Ltd. v. CIT [1976] 102 ITR 25 (Guj.) (para 7.6) SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2008 TaxPub(DT) 1885 (Pune-Trib) : (2008) 024 (II) ITCL 0002 : (2008) 302 ITR 0001 : (2008) 113 ITD 0055 : (2008) 116 TTJ 0333 : (2008) 008 DTR 0087

Styler India (P) Ltd. v. Joint CIT

INCOME TAX ACT, 1961

Business expenditure - Allowability -Exhibition and launch expenses incurred for set up of business

Assessee, subsidiary of foreign company, rendered technical design and consultancy services to automobile industry in India. It claimed certain expenses under the head Building, repair and renovation and Exhibition/launch expenses. Assessee submitted that expenses incurred on repairs and renovations were in respect of premises, obtained on long lease for carrying out business, and in regard to exhibition and launch expenses, it claimed that after the commencement of business, to promote its business interest in automobile sector, it participated in AutoExpo exhibition. AO disallowed said expenses on the ground that the details of said expenses showed that the same were launching expenses incurred prior to setting-up of business. Held: Since assessee had participated in Auto Fair and objective of said fair was to advance the assessees business of consultancy. It had a place of business, employed qualified people, and contacted various clients who had entered into agreement with the assessee in the subsequent years and paid fees for consultation, therefore, merely actual receipts were not shown, it could not be said that the assessee did not set-up its business, hence, expenses was allowed. On the question, regarding expenses claimed as building, repair and renovation expenses, assessee had not placed any material on record to show that repair and renovation could be treated as current repairs, therefore, it could not be allowed on account of capital nature.

Income-tax Act, 1961, Section 37(1)

A.Y. : 1998-99
Decision: In partly favour of assessee.

Case Law Analysis:Western India Vegetable Products Ltd. v. CIT [1954] 26 ITR 151 (Bom.) (para 7), CWT v. Ramaraju Surgical Cotton Mills Ltd. [1967] 63 ITR 478 (SC) (para 7.2) and Sarabhai Management Corpn. Ltd. v. CIT [1976] 102 ITR 25 (Guj.) (para 7.6)