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2021 (3) TMI 319 - AT - Income TaxAccrual of income - assessment year - Addition by treating the advance received from the parent company as the income for the relevant assessment year - HELD THAT:- It does not fit in the order of the things that having accepted the offering of ₹ 2.67 crores received by the assessee in the financial year 2010-11 to tax in the assessment year 2012-13 and also having accepted the offering of ₹ 3.05 crores received by the assessee in the financial year 2011-12 to tax in the Assessment Year 2013-14, the learned Assessing Officer would have held that all the amounts that were received during the financial year 2011-12, irrespective of the fact that corresponding services were rendered during that year are not, should be brought to tax in the assessment year 2012-13 itself. We hold that the reasoning adopted by the Ld. CIT(A) and the conclusions reached by him in deleting this amount of ₹ 3.05 crores which is in fact the advance amount but retreated by Assessing Officer as income for the assessment year 2012-13, are perfectly legal and not warrant any interference. We, accordingly, declined to interfere with the same and dismiss grounds 1 to 3 Revenue's appeal. Disallowance of business promotion expenses - HELD THAT:- There is no dispute that the assessee produced the details and documents like sample invoices, copy of Ledger, summary mentioning the category of gifts and the list of people to whom gifts were given etc were furnished before the authorities and no discrepancies are specifically pointed out with any of these documents. AO himself admitted that it is customary under Indian tradition to offer gifts on the festive occasions like Diwali Festival. Ld. CIT(A) held that maintenance of cordial relations with customers are required for obtaining the market information which is for the furtherance of the assessee's business. By no stretch of imagination could be said that offering of gifts by a businessman to is customers is barred by any law for the time being in force. Now coming to the quantum of disallowance learned AO made it at 60% whereas the Ld. CIT(A) restricted the same to 20%. As observed by is about, no discrepancies found with the books of accounts of the assessee as to the incurring of these expenses or to show that there is any illegality of purpose of this expense. In the absence of any concrete basis to determine the disallowance of the expense and in the absence of a specific finding that the expenses were not exclusively and fully for the purpose of business, we find it difficult to sustain the disallowance year at 60% or 20%. With this view of the matter we delete the addition made by disallowing the business promotion expenses.
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