Law:

Section:

JUDGMENT 1. This appeal under Section 260A of the Income-tax Act, 1961 (the Act) challenges the order dated 31.7.2012 passed by the Income Tax Appellate Tribunal (the Tribunal). The Assessment Year involves is AY 2006-07. 2. The Revenue has raised the following questions of law for our consideration:- "(1) Whether, on the facts and in the circumstances of the case and in law, the Tribunal is justified in quashing the order under Section 263 of the Income-tax Act, 1961 as undoubtedly, the expenditure of Rs. 2.94 crores was incurred to create the brand "Nirvana" - an intangible asset ? (2) Whether on the facts and in the circumstances of the case and in law, the Tribunal erred in taking the view that the expenditure incurred by the assessee did not result in any kind of addition or augmentation of any profit making asset, when the assessee company itself has admitted that the expenditure was incurred for the creation of a brand 'Nirvana' that is an intangible asset ? (3) Whether on the facts and in the circumstances of the case and in law, the Tribunal erred in coming to the finding that the said expenditure was related to the conduct of the business whereas the expenditure in question related to the building up of the brand which was of a permanent character and not of routine revenue nature ?" 3. The question Nos. 2 and 3 framed by the Revenue are mere facets of the issue raised in question No. 1. 4. The respondent - assessee is in the business of manufacturing and export of jewellery. During the course of assessment proceedings, the respondent - assessee had claimed deduction under head "miscellaneous expenses" an aggregate sum of Rs. 2.94 crores. This was essentially to create brand "Nirvana". The Assessee submitted the details and nature of the expenditure and pointed out that expenses are revenue in nature, being in the nature of advertisement expenses, training fees, legal and professional fees, exhibition expenses, product supply expenditure etc. Besides, it was pointed out that an amount of Rs. 1.96 crores was treated as deferred revenue expenditure and was written off over a period of three years i.e. Assessment Years 2006- 07, 2007-08 and 2008-09.…

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