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2019 (3) TMI 551 - ITAT DELHIDisallowance u/s. 37(1) - expenses incurred for purchase of gift items - assessee has failed to even disclose the identity of the recipient of gifts either during the assessment proceedings or during the appellate proceedings - HELD THAT:- The assessee has also not furnished any substantial evidence as to the persons to whom such gifts given were actually fruitful towards promoting the business profits of the assessee. CIT(A) in the impugned order has categorically observed that the assessee has failed to even disclose the identity of the recipient of gifts either during the assessment proceedings or during the appellate proceedings. CIT(A) has also examined the records and found that the assessee also failed to establish the business exigencies of the appellant vis-a-vis the aforesaid gifts. AR could not be able to controvert these findings of the CIT(A) by submitting any evidences before us contrary to it. Therefore, in absence of any nexus between the gifts and the business of the appellant company, the findings reached by the CIT(A) cannot be said to be without any basis and as such, involvement of non-business use in the present case cannot be ruled out at all, as is evident from the nature of gifts noted by the AO in the assessment order. Bills and vouchers of the gifts purchased were mostly found in the name of the assessee and some of the bills, some names were written by hand, which nowhere suggest to place credence on the contention of the assessee that these gifts were given to its customers even. Disallowance have a history in assessee’s favour - We have gone through respective orders of the aforesaid years and we find that in A.Y. 2006-07, such expenses were allowed on the premise that those expenses had been subjected to Fringe Benefit Tax. So is the position with respect to A.Y. 2008-09. For A.Y. 2007-08, no scrutiny assessment was made u/s. 143(3) of the Act. In A.Y. 2008-09, the Tribunal while deciding this issue had disallowed substantial part of such expenditure and rest of the expenditure were remanded to AO for verification. In A.Y. 2010-11, the similar disallowances were deleted by Tribunal. Therefore, from the above series of facts, it is evident that the history of the assessee has not been so glorious as claimed by the assessee, but the disallowances have been dealt with by various authorities in view of the attending facts of each year, as noted above. Therefore, in our opinion, the previous history does not render any help to the assessee. The assessee has not been able to establish that the expenditure claimed as above were laid wholly or exclusively for the purpose of business or that the same were open for verification so as to ascertain that the impugned gifts were given for business promotion of assessee. Therefore, we find no infirmity in the order of the CIT(A) while disallowing the claim of the assessee made u/s. 37(1) - Decided against assessee.
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