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2020 (7) TMI 101 - AT - Income TaxDisallowance of business promotion expenditure - AO observed that the explanation of the assessee was not found acceptable as the assessee was unable to establish that these business promotion expenses has helped in promoting business - assessee has neither submitted the details of customers to whom these gifts were given and against which what was the quantum of the sales - HELD THAT:- It is the opinion of the lower authorities that the assessee could not establish a link between the gifts given and the sales orders received. It may not be practically possible for all businesses to maintain a complete list of the gifts given to their various customers and demonstrate that a particular sales order was received as a result of a particular gift. Act also does not prescribe demonstrating such live linkage. There is no denial b the department that the assessee has been carrying on business regularly, the department also does not allege that there is any personal element involved in the impugned expenditure. It is also an accepted business practice in India that customary gifts are usually handed out during festive occasions. Although, handing out gold items or semi-precious items may be frowned upon by the revenue authorities, all the same it cannot be a reason for disallowing the expenditure, especially when it is settled law that the revenue cannot step into the shoes of a businessman and direct how the business should be conducted. Reasonableness of quantum of expenditure vis a vis the turnover would have to be justifiable. Accordingly, it is our considered opinion that interest of justice would be served if the disallowance is restricted to 40% of the initial total disallowance. Appeal of the assessee stands partly allowed.
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