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2012 (12) TMI 89 - AT - Income TaxDisallowance of Sales promotion expenditure - rewards point can be redeemed by the customers by way of rebate from the sale price while making additional purchases at the assessee’s stores – disallowance of claim on the ground that the expenditure is an unascertained expenditure – Held that:- As and when the customer of the assessee makes a particular purchase, the customer is given a monetary right, in the form of rebate in the cost of goods that he may purchase at a future date. Thus, as and when a right is given, the assessee incurs a liability which it has claimed as marketing expenditures. The assessee, based a historical data, in a scientific manner, has estimated that only 50% of the reward points given are likely to be encashed by the customers. Out of this, 50% gross profit margin is reduced and the balance is only claimed as expenditure - assessee has also proved that this is a consistent accounting policy being followed year after year – Disallowance deleted – In favor of assessee
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