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2016 (11) TMI 363 - AT - Income TaxDisallowance on account of ‘sales promotion expenses’ - Held that:- Expenditure so incurred was wholly and exclusively for the purpose of assessee’s business. The relevant assessment years under consideration are A.Ys.2010-2011 & 2011-2012 during which there was no CBDT Circular as referred by AO for making disallowance by branding the expenditure as covered by Explanation to Section 37(1) of the Act. We found that the expenditures were incurred wholly and exclusively for the purpose of business, therefore, same cannot be disallowed by applying CBDT Circular dated 1-8-2012 in respect of years under consideration. In the instant case before us the relevant assessment years are A.Y.2010-2011 & 2011-2012 during which this CBDT Circular was not applicable. As per the details of expenses placed on record, we found that same was in the nature of sales promotion. Neither the AO nor the CIT(A) had doubted genuineness of the expenses nor there is any allegation to the effect that expenses were not incurred for the purpose of business. Even the G.P. and N.P. rate shown by assessee nowhere indicates that assessee had claimed any excessive expenditure under the head sales promotion. No justification in the orders of lower authorities for disallowing sales promotion expenses under Explanation to Section 37(1) during the assessment year 2010-11 and 2011-12 under consideration. - Decided in favour of assessee.
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