Topic
ITAT Bangalore rules that expenses incurred for shifting a factory from rented to owned premises qualify as revenue expenditure under Section 37(1), rejecting the 'enduring benefit' test. The ruling clarifies that such costs are deductible as business expenses, impacting tax assessments for manufacturing entities undergoing relocation.
ITAT Delhi rules that advertisement, marketing, and sales promotion expenses incurred by a subsidiary are revenue in nature, even if they enhance the parent company’s brand. The ruling dismisses the Revenue’s appeal, reinforcing that such expenses cannot be capitalized under transfer pricing norms, offering clarity for multinational corporations on tax treatment of AMP costs.
Madras High Court ruled that expenditure on replacing independent machinery-even if labeled as 'repairs'-constitutes capital expenditure under Section 37 of the Income Tax Act, 1961. The court set aside the ITAT’s order, emphasizing that such replacements enhance asset value and cannot be deducted as revenue expenses. Taxpayers and advisors must now reassess similar claims to avoid disallowance risks.
ITAT Pune holds that deductions under Section 35(1)(iv) of the Income Tax Act for capital expenditure on scientific research are allowable only after the assessee's business has commenced. The ruling clarifies that pre-commencement R&D expenses, even if substantial, do not qualify for tax relief, impacting biotech and pharmaceutical startups.