TIGRE SAS LIQUORS INDIA PVT. LTD.,NEW DELHI V. DCIT, CIRCLE-25(1), NEW DELHI

ITA 7969/DEL/2018

AI Insights

The case involves Tigre SAS Liquors India Pvt. Ltd., which appealed against the orders of the CIT(A) concerning disallowances made by the Assessing Officer (AO) under various heads such as legal and professional expenses, table registration fees, and marketing expenses for the Assessment Years 2013-14 and 2014-15. The main contention was whether certain expenses should be treated as revenue or capital in nature. The Tribunal examined the nature of the expenses and the relevant provisions of the Income Tax Act, particularly focusing on whether the expenses incurred for trademark registration and marketing were to be capitalized or could be claimed as revenue expenditures. The Tribunal also addressed the issue of carrying forward losses from the previous assessment year.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 771936 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2014-2015
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR HANSRA
• Assessee Lawyers: VINOD KUMAR BINDAL; RINKY SHARMA; ITP; ANMOL JHA
• Keywords: Revenue expenditure; Depreciation; TDS
• Section: 234B; 37; 40A(3)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘F’’ : NEW DELHI) BEFORE SHRI ANUBHAV SHARMA, JUDICIAL MEMBER AND SHRI KRINWANT SAHAY, ACCOUTANT MEMBER ITA No. 7968/Del/2018 (AY 2013-14) AND ITA No. 7969/Del/2018 (AY 2014-15) Tigre SAS Liquors India Pvt. Ltd. vs. DCIT, Circle-25(1), 406, 4th floor, Elegance New Delhi Tower, Jasola, New Delhi – 25, (PAN: AAECT2925Q) (Appellant) (Respondent) Appellant by : Sh. Vinod Kumar Bindal, CA & Ms. Rinky Sharma, ITP & Sh. Anmol Jha, Adv. Respondent by : Ms. Harpreet Kaur Hansra, SR. DR. Date of Hearing 19.08.2025 Date of Pronouncement 28.08.2025 ORDER PER KRINWANT SAHAY, AM: These appeals by the assessee are directed against the separate orders of the Ld. CIT(A)-9, New Delhi both dated 18.09.2018 pertaining to Assessment Years 2013-14 & 2014-15. Since some of the issues are inter-connected, hence, the appeals were heard together and are being disposed of by this common order for the sake of convenience, by dealing first with ITA No. 7969/Del/2018 (AY 2014-15) and discussing the facts of the instant case only, wherein the following grounds have been raised. 1. That on the facts and circumstances of the case, the order passed By the Ld. CIT(A) under section 250 of the Act is bad in law. Printed from counselvise.com 2 2. The Ld. CIT(A) has erred both in law and on the facts of the case in confirming the adhoc disallowance on account of legal and professional expenses amounting to Rs. 35,52,173/- considering the same as intangible asset being capital in nature. 3. The CIT(A) has erred both in law and on the facts of the case in confirming the adhoc disallowance on account of table registration fees amounting to RS. 4,77,794/- considering the same as intangible asset being capital in nature. 4. The CIT(A) has erred both in law an on the facts of the case in confirming adhoc disallowance on account of marketing expenses amounting to Rs. 2,72,73,854/- considering the same as intangible asset being capital in nature. 5. The CIT(A) has erred both in law and on the facts of the case in not giving benefit of the losses of preceding year 2013-14 amounting to Rs. 2,43,02,348/- available to the assessee company. 6. The CIT(A) has erred both in law and on the facts of the case in not appreciating the order passed by the AO for the preceding assessment year 2013-14. 2. Brief facts of the case are that the assesse company e-filed its return of income for the AY 2014-15 on 27.11.2014 declaring total loss of Rs. (-) 2,85,48,679/-. During the year under consideration the company is engaged in the business of brewers, distillers, wine manufacturers and to set up plants to distil, manufacture and deal in all kinds of beer, wine, liquors, ethanol, spirits, rum and other alcoholic products for human consumption, industrial and commercial use. The AO have made the additions of Rs. 35,52,173/- relating to disallowance under the head legal and professional charges for brand registration; Rs. 4,77,794/- on account of disallowance under the head label registration fees and Rs. 2,72,73,854/- on account of disallowance under the head marketing expenses. Against the above action of the AO, assesse Printed from counselvise.com 3 filed the appeal before the CIT(A), who vide his impugned order dated 18.09.2018 has partly allowed the appeal of the assesse. 3. Ground no. 1 is general in nature, hence, need not be adjudicated. 4. As regards ground no. 2 & 3 confirming the adhoc disallowance on account of legal and professional expenses amounting to Rs. 35,52,173/- on account of legal expenditure incurred towards registration of trade mark and Rs. 4,77,794/- towards label registration charges, considering the same as intangible asset being capital in nature. The assesse has incurred an expenditure of Rs. 47,36,231/- and Rs. 6,37,058/- towards registration of its trademarks in various countries and towards label designing charges. The assesse has claimed such expenditure to be revenue in nature and hence, has claimed the same in the statement of profit and loss account. AO observed that the registration of trade mark has led to generation of an intangible asset and hence, the same is supposed to be capitalised and thus, eligible for depreciation @25%. Thereafter, the AO disallowed the balance 75% and Ld. CIT(A) confirmed the same. During the hearing, Ld. AR submitted that during the year assesse company has incurred total legal and professional expenses amounting to Rs. 77,42,054/-, out of this a sum of Rs. 47,31,231/- has been incurred in respect of trade mark/brand. Complete bills and detail of the same has already been submitted and the expenditure incurred in respect of trade mark is an admissible deduction u/s. 37 of the Act. Ld. AR draw our attention towards the page no. 10-11 placed at Paper Book containing the copy of detail regarding legal and professional charges pertaining to brand development incurred by the assesse company during the AY 2014-15. He further draw our attention towards page no. 41-113 of the PB containing the copies of various bills of professional fees are the copies of ledger account from Page 213 to 220. He further draw our attention towards page Printed from counselvise.com 4 no. 12-13 of the PB containing the copy of Label Registration Fees Ledger Account for the period 1.4.2013 to 31.3.2014. We note that expenditure of Rs. 35,52,173/- incurred by the assesse are on account of legal expenditure. We note that the assesse company incurred amounting to Rs. 47,36,231/- which the assesse claims to be revenue expenditure, and thus had claimed the deduction of the same in its statement of profit and loss and further the assesse had also incurred Rs. 6,37,058/- towards label registration charges for the same brand. In fact as per Section 32(1)(ii) expenditure for trade-mark /copy right, license, franchise are to be treated as capital in nature. Therefore, we do not find any reason to interfere in the finding given by the CIT(A) on this issue, thus assessee appeal on these issue are dismissed. 5. As regards ground no. 4 relates to confirmation of addition of Rs. 2,72,73,854/- regarding marketing expenses. The assesse had incurred some marketing expenditure, collectively amounting to Rs. 3,56,19,078/- and the assesse claimed that the said expenditure, collectively amounting to Rs. 3,56,19,078/- . However, the AO observed that after incurring this marketing expenditure, would create a brand identity, that would lead to it to have enduring benefits. Thus, the AO considered the expenditure to be deferred revenue expenditure and hence disallowed 80% of the same and Ld. CIT(A) partly confirmed the action of the AO. During the hearing, Ld. AR has submitted that marketing expenses amounting to Rs. 3,56,19,078/- includes expenses amounting to Rs. 66,65,457/- on which TDS has been deducted @ 10%. As the said amount was paid for the professional services obtained by Tigre SAS Liquors India Pvt. Ltd., thus, the same have been covered under section 194J and TDS have been deducted @10%. It was further submitted that as far as balance marketing expenses are concerned amount is paid in respect of contracts payments in regard to marketing expenses. Accordingly, TDS @2% is deducted Printed from counselvise.com 5 on the same. He draw our attention towards page no. 122-190 of PB which are mostly the copies of the Bill raised by USP Entertainment Solutions before the assesse and the PB page no. 213 to 220 are the copies of Ledger Account for the period 1.4.2013 to 31.3.2014 for detention charges, advt. and publicity, legal and professional charges etc. In view of the above discussion, it is abundant clear that expenditure incurred by the assesse suits the commercial expediencies of its business, and thus the assesse’s claim that it is eligible to claim the entire expenditure seems to be genuine one. Accordingly, the addition partly sustained by the Ld. CIT(A) is hereby deleted and ground no. 4 is allowed. 6. As regards ground no. 5 relating to not giving benefit of the losses of preceding year 2013-14 amounting to Rs. 2,43,02,348/- available to the assessee company is concerned, we note that Ld. CIT(A) has noted that amount of loss is consequential to the recalculation, that ought to be done as a consequence of the appellate order for AY 2013-14 and such recalculated loss ought to have been allowed to the assessee, on fulfilment of the subjected terms and conditions. Hence, he rightly directed the AO to verify the computation of taxes, in light of the provisions of Section 72 and Section 139(1) and allow the benefit of losses, if allowable to the assessee. Accordingly, we affirm the action of the Ld. CIT(A) and thus reject the ground no. 5 raised by the assessee. 7. In the result, the appeal of the assessee is partly allowed. ITA No. 7968/Del/2018 (AY 2013-14) 8. Following grounds have been raised in ITA No. 7968/Del/2018 (AY 2013-14) :- 1. That on the facts and circumstances of the case, the order passed by the CIT(A) under section 250 of the Income Tax Act is bad in law. Printed from counselvise.com 6 2. That Ld. CIT(A) has erred both in law and on facts of the case in confirming the disallowing of expenditure incurred on registration of trade mark of Rs. 79,55,233/-. 3. The CIT(A) has erred both in law and facts of the case in confirming the claim of expenditure incurred in connection with new line of business activity and thereby making an addition of Rs. 17,97,760/-. 4. The CIT(A) has erred in both in law and facts of the case in confirming the claim of marketing expenditure and thereby making an addition of Rs. 3,23,24,931/-. 5. The CIT(A) has erred in both in law and on facts of the case in confirming the claim of launching expenses and thereby making an addition of Rs. 10,95,212/-. 6. The CIT(A) has erred in both in law and on facts of the case in confirming the claim of launching expenses and thereby making an addition of RS. 42,93,097/-. 7. The CIT(A) has erred in both in law and on facts of the case in confirming the claim of vehicle repair and maintenance expenditure and thereby making an addition of Rs. 1,70,925/-. 8. The CIT(A) has erred in both in law and on facts of the case in confirming expenditure u/s. 40A(3) of the Act and thereby making an addition of Rs. 1,36,767/-. Printed from counselvise.com 7 9. The CIT(A) has erred in both in law and on facts of the case in confirming the interest u/s. 234B of the Act. 9. Ground no. 1 is general in nature, hence, need not be adjudicated. 10. Ground No. 7 & 8 are not pressed, hence, the same are dismissed as such. 11. Ground no. 9 is consequential in nature, thus, need not be adjudicated at this stage. 12. Ground No. 4 is exactly similar and identical which we have already dealt in ITA No. 7969/Del/2018 (AY 2014-15), as aforesaid, wherein we have deleted the addition in dispute in respect of claim of marketing expenditure, hence, respectfully following the aforesaid precedent, we delete the addition in dispute in the instant appeal for AY 2013-14) and accordingly, allow the ground no. 4 raised by the assessee. 13. As regards ground no. 2 relating to confirmation the disallowance of expenditure incurred on registration of trade marks of Rs. 79,55,233/- is concerned, AO noted that the trademarks are intangible assets and hence, the creation of such intangibles are to be capitalized and accordingly, the asset so created is eligible for depreciation, under the provisions of section 32(1)(ii) hence, the AO allowed the depreciation of 25% on such intangible assets, disallowed the balance expenditure, thereby making an addition of Rs. 79,55,233/- and in appeal Ld. CIT(A) affirmed the action of the AO by holding that trademark is an intangible assets. Before us, Ld. AR has submitted that assessee company has entered into an agreement with Tigre France (supplier of the assessee company) regarding purchase of goods. It is noticed that as per clause 1.1, page no. 1 of the agreement, it is clearly mentioned that assessee company would be free to register its Trademark of Tigre Blanc Printed from counselvise.com 8 outside India on its own cost and accordingly would be eligible to enjoy the corresponding revenue on the same. Thus, in support of the agreement assessee company in the year 2013-14 has incurred expenses for registration of trade mark outside India and claimed it as revenue expenditure under section 37 of the Act, but the AO during the course of assessment proceedings has rightly disallowed the said expenditure. We note that in view of Section 32(1)(ii) expenditure for trade-mark /copy right, license, franchise are to be treated as capital in nature. Therefore, we do not find any reason to interfere in the finding given by the CIT(A) on this issue, thus assessee appeal on this issue is dismissed. 14. As regards ground no. 3 relating to confirmation the claim of expenditure incurred in connection with new line of business activity and thereby making an addition of Rs. 17,97,760/- is concerned, AO noted that assessee was not able to justify the nature of expenses, whether any professional opinions or consultancies were taken for abandoning of such project etc. Further, even though the assessee had incurred expenditure, and AO noted that the appellant was unable to match the expenditures with any substantial benefit or business and therefore, the expenditure on new line of business, being abandoned could not be claimed as an expenditure. Ld. CIT(A) affirmed the action of the AO by noting that expenditure is not allowable to the applicant. Ld. AR submitted that during the year assessee company has incurred expenses amounting to Rs. 17,97,760/- for starting a new project of pizza chain. The said expenses were incurred for developing a brand launch strategy for the premium pizza chain in India. But, unfortunately after incurring the said expenses, assessee company has dropped the idea on the basis of some prognosis that the business will not be fruitful and claimed these expenses as revenue expenditure. However, AO disallowed the said expenses on the ground that the expenses are not related to the assessee present business, but for the proposed Printed from counselvise.com 9 line of new business, which was not launched and started and therefore expenses are liable to be disallowed. We note that the said expenses were the legal expenses which were not incurred in the commercial expenses and for all the expenses assessee had already submitted sufficient vouchers invoices to substantiate its claims, copies thereof are placed at paper book pages 55-59 and 141-143. We find plausible contention of the Ld. AR that assessee that the said expenses were also not for any new line of business because the assessee company is in the business of hospitality and not only into sale and purchase of any specific products, and therefore serving liquors along with other product is not a new line of business but a part of hospitality and in the business of hospitality the main object is to identify the needs of their client and fulfilled it i.e. initially assessee company had started supplying liquors and further decided to provide a good quality pizza which could have been served alongwith drinks and therefore incurred certain legal expenses for developing the brand launch strategy for pizza. The expenditure incurred by the assessee company to start new business, which could not be started should not be disallowed. Of late, assessee realised that the said business is not fruitful, hence, he dropped the idea and rightly claimed the expenditure as revenue expenditure under the provisions of section 37 of the Act. In view of the aforesaid factual matrix, we delete the addition in dispute and accordingly, the ground no. 3 is allowed. 15. Ground no. 5 relating to confirmation of claim of launching expenses and thereby making an addition of Rs. 10,95,212/- is concerned, we note that assessee had incurred an expenditure of Rs. 10,95,212/- towards launching of its brand in a fashion festival and the same was disallowed by the AO on the contention that the expenditure is not towards business activities of the assessee, Printed from counselvise.com 10 which was in appeal affirmed by the Ld. CIT(A) by noting that the expenditure is towards building-up of its brand and the brand so built up will obviously tantamount to creation of intangible asset, that would give benefits till the perpetual life of existence of such brand. It was informed by the Ld. AR that these expense have been incurred on launch of the brand ‘Tigre Blanc’ of the assessee company. In view of the aforesaid facts and circumstances, we are of the considered view that Ld. CIT(A) has rightly held that assessee is eligible to claim benefit of 25% of depreciation on such capitalised cost, under the provisions of section 32(1)(ii), which does not need any interference on our part, hence, we affirm the same. Accordingly, the ground raised by the assessee is dismissed. 16. Ground No. 6 relating to confirming the claim of travelling expenditure and thereby making addition of Rs. 42,93,097/- is concerned, we note that AO on non-satisfaction of proper explanation on this account, proceeded to make the addition in the hands of the assessee, which the Ld. CIT(A) in appeal upheld. We note that the assessee had produced the copy of Ledger account for the period 1.4.2012 to 31.3.2013, various invoices of hotel etc. which are placed at page no. 60-138 of the Paper Book issued by the “Boun K Tours & Travels”, which clearly establishes that the expenses are fully justified, thus the addition in dispute needs to be deleted. We hold and direct Printed from counselvise.com 11 accordingly and thus the ground no. 6 is allowed. Resultantly, the appeal of the assessee is partly allowed. 17. In the result, both the appeals filed by the assessee stand Partly Allowed. Order pronounced on 28.08.2025. Sd/- Sd/- (Anubhav Sharma) (Kriwant Sahay) Judicial Member Accountant Member Date: 28-08-2025 SRBhatnaggar Copy forwarded to: - 1. Appellant 2. Respondent 3. DIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order, Assistant Registrar, ITAT, Delhi Benches Printed from counselvise.com "