In a recent ruling, the Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the depreciation claim made by ‘Mail Today’ towards the expenses incurred for the publicity of trade name/brand name is allowable under section 32 of the Income Tax Act, 1961.
The assessee company publishes ‘Mail Today’, an English Daily newspaper, and further displays its publication on ‘mailtoday.in’. It derives revenue from the sale of the said publications and advertisements published. The Assessing Officer rejected the claim of the on account of advertisement and sales promotions observing that the amount of advertisement and sales promotion incurred in the initial stage of business, (this being the fifth year of operations) by the assessee, is considered as capital in nature due to two reasons. He further held that the nature of these expenses is not depreciable and thus, disallowed the depreciation claim on this expense.
On appeal, the Tribunal noted that the High Court, in the case of the assessee, already held that such claim is allowable under section 32 of the Income Tax Act.
“Thus, the issue involved in the present case is also identical. The advertisement and sales promotion expenses incurred by the assessee are merely for the purpose of publicity of trade name/brand name which results in enhancement of sales. Therefore, the CIT(A) was right in allowing the appeal of the assessee as the issue is already covered in earlier years,” the Tribunal said.
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