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2023 (5) TMI 730 - AT - Income TaxDisallowance of expenditure incurred for payment of salaries, incentives etc. to the helpers and guards - Expenses ment for personal purposes - during the course of search operation, the statement Manager of Finance and Accounts of the assessee was recorded u/s 132(4) wherein he admitted that employees work at the residence of the Directors - HELD THAT:- We find that out of the total expense towards salaries, incentive paid to drivers, helpers and guard which are reflected in the Tally Data seized, of Rs.18,46,149/-, a sum of Rs.17,28,439/- had been identified by the assessee and disallowed in the return filed in response to notice u/s 153A of the Act as meant for personal purposes of the assessee. In fact, a surrender had been made in the hands of the company for not including the same as ‘perquisites’ in the hands of the Directors. This goes to prove that the remaining sum of Rs.1,17,710/- is meant wholly and exclusively for the purposes of the business of the assessee company. Hence, it became allowable expenditure u/s 37 of the Act. Accordingly, ground No.1 raised by the assessee is allowed. Disallowance of business promotion expenditure to the extent of 50% - AO had analysed Tally Data seized during the course of search and observed that assessee company had booked various expenses under the head business promotion expenses - HELD THAT:- As there are numerous entries entered by the assessee on account of business promotion and these are to be incurred by the assessee for improving the visibility of its brand and sale of its products, to the various customers / clients and business associates for the business purposes and also for entertaining the customers/clients in various restaurants and clubs and these are routine expenses incurred by the assessee in the normal course of business. The employees and Directors of the assessee company would incur the expenditure in their credit cards and later on the same were reimbursed by the assessee company to the Directors and employees. In any case, there cannot be any element of personal expenditure in the hands of the company. Reliance on the case of Sayaji Iron And Engg. Co. [2001 (7) TMI 70 - GUJARAT HIGH COURT]. Hence, we direct the Ld. AO to delete the disallowance made on account of business promotion expenses. Accordingly, ground No.2 is also allowed.
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