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2009 (2) TMI 420 - HC - Income TaxBusiness Expenditure- The appellant-company is a manufacturer of Indian made foreign liquor. According to them, they are depending to a large extent on orders from the military canteen for the sale of its products. The company a liquor manufacturer, is banned from direct media and television advertising of its products. The military authorities on the other hand are debarred from directly accepting any free samples from a liquor manufacturer. As per the Canteen Stores Department Rules, the liquor required for any function are to be procured from the canteens only against actual payments. The company from the point of commercial expediency offers samples of its products at various military functions so that the personnel develop a taste for it and the company secures bigger orders from the Canteen Stores Department. The assessing officer disallow the sale promotion expenses on account of liquor supplied at the time of the Canteen stores department parties on the ground that it was clear entertainment of the customers. This was upheld by Commissioner (Appeals) and Tribunal. Held that- the amount spent by the unit towards purchase of that liquor was reimbursed by the assessee not to any individual but to the Army Unit itself which went into the coffer of the Government. There was no bar in taking such reimbursement as evidenced by receipt. Thus the amount spent by way of commercial expediency for promoting the assessee’s product. It was deductible. Thus allow the appeal.
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