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2011 (1) TMI 305 - HC - Income TaxAllowing - Deduction of hire-charges u/s 37(1) - it was not disputed that the coolers were in fact hired by Pepsi and as per the agreement with the 20th Century Finance Corporation Ltd., the coolers were installed in the premises of various distributors including in the premises of the assessee - It was also not in dispute that the amount in respect of coolers installed in the territory assigned to the assessee, was, in fact, paid by the assessee to Pepsi - So much so, Pepsi had given a certificate to this effect confirming that the aforesaid charges were recovered by it from the assessee in respect of visi coolers - Hence, the Tribunal rightly allowed this claim as business expenditure which could not be denied merely on the ground that there was no written agreement between Pepsi and the assessee for payment of the aforesaid amount - The amount is represented as hire charges for the coolers which were installed in the premises of the assessee and it would be clearly business expenditure. Advertisement and publicity expenditure - The agreement entered into between the assessee and Pepsi shows that the assessee was given a particular territory in Haryana, boundaries whereof are specifically defined in the agreement for the purposes of bottling, selling and distributing of the beverages - Naturally, therefore, in order to augment its profits in the said territory, it was the business decision of the assessee to advertise and publicize the product for maximizing its sale. The expenditure was, thus, incurred by the assessee for its own benefit. Clause 18 of the agreement authorized the assessee to undertake appropriate advertising and sales promotion activity for the beverage. Membership fee - since the Assessing Officer had allowed the deduction of 50 per cent of Rs. 2 lakhs u/s 37(2) of the Act, it was clear that the Assessing Officer himself accepted the fact that the expenditure incurred was for the business purpose, otherwise, the entire amount would have been disallowed by the Assessing Officer - Held that the assessee was entitled to entire deduction as claimed.
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