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2013 (9) TMI 75 - AT - Income TaxDisallowance u/s 37(1) - Sales promotion expenses - Genuineness of the claim - Onus to prove - Held that:- Assessing Officer has not appreciated the facts of the case in their proper prospective. The assessee has debited Rs. 2,38,36,827 under the head "sales promotion expenses" whereas the Assessing Officer has disallowed a sum of Rs. 3,75,49,810. A perusal of the copy of the ledger account of sales promotion shows that the assessee is receiving reimbursement from its clients which are credited to the scheme reimbursement account such reimbursements are made by companies like Cadbury (India) Ltd., Wipro, Colgate Palmolive (India) Ltd., Timex Watches and UDV India. These companies are reimbursing the claim made by the assessee which itself proves that the assessee-company is actually incurring certain expenses on account of sales promotion otherwise why would such big companies reimburse the claims made by the assessee. The Assessing Officer grossly failed to appreciate this fact. The Assessing Officer further erred in adding the entire amount received as reimbursement to the amount disallowed which is not understandable. Further, in our humble opinion, if the sellers are not filing their sales tax return, parties dealing with such person cannot be questioned or held responsible for such lapses. The whole payment has to be considered in the light of the provisions of section 37(1) of the Act which provides that any expenditure not being in the nature of capital expenditure or personal expenses of the assessee laid out or expanded wholly and exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession" - Decided against Revenue. Disallowance of foreign travel expenses - Held that:- out of the total disallowance of Rs. 8,10,521, the learned Commissioner of Income-tax (Appeals) has allowed Rs. 1,33,852 as expenses incurred for the purpose of business. Nothing has been brought before us in support of the claim by the authorised representative nor by the Departmental representative to controvert the findings of the learned Commissioner of Income-tax (Appeals). We find that the learned Commissioner of Income-tax (Appeals) has given a reasonable finding on allowing the expenses only to the extent of Rs. 1,33,852 - Decided against Revenue.
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