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2011 (4) TMI 178 - AT - Income TaxDisallowance - Cost of testers and merchant displays - There is a direct nexus between the expenses on "testers" and "merchant display" and in the business of the appellant it has to be necessarily incurred to meet the competition in the market and to sell its product which are high end and advertisement, promotion,. Incentive and freebies driven - That unless the appellant made the efficacy of its products known in the market its business would suffer.The ratio of the decision of the Delhi High Court in the case of CIT v. Salora International Ltd. [2008 -TMI - 32171 - DELHI HIGH COURT] is also applicable to the present case - Decided in favour of assessee. Promotional expenses - the assessee company has given break up of the promotional expenses through the paper book on which remand report was called from the Assessing Officer. It is noted by the Ld. CIT(A) that the assessee company has categorized these expenses under three category. First category of expenses is those expenses on which tax was deducted and paid and the expenses incurred under this category is Rs.15,57,857/- In the light of these facts TDS was deducted and paid by the assessee on these expenses of Rs.15,57,857/-, no disallowance can be made u/s 40(a)(ia) of the Act and hence there is no infirmity in the order of Ld. CIT(A) regarding this part of deletion of disallowance. Legal expenses - The assessee has to explain each item for which bill has been raised by M/s Dua Associates and it has to be explained and satisfied that the same is not in connection with increase in capital or other capital related matters - Thereafter, the Assessing Officer should pass necessary order as per law after providing adequate opportunity of being heard to the assessee - This ground of the revenue is allowed for statistical purposes.
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