TMI Blog2005 (1) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... nference-Rs. 6,26,538.25 (ii) articles presented-Rs. 2,99,445.49 (iii) sales promotion Rs. 11,273.55. The Assessing Officer held that the expenditure was incurred on entertainment like lodging, food and presentation of valuable gifts to distributors and guests. The articles presented were gold necklace, gold rings, gold bangles, silver articles and other articles to various distributors along with the lodging and boarding. It had also found that these expenses although were booked under sales promotion expenses but those were actually in the nature of entertainment. On the other hand the Commissioner of Income-tax (Appeals) held that the expenditure was actually incurred in holding conference with the various distributors and agents, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the expenditures were on the higher side and that the scheme for the sales promotion was submitted to the Assessing Officer. It also recorded that in the subsequent year such expenditure was selected under the said head. After having so found the learned Tribunal recorded that considering the totality of the facts and circumstances of the case and according to the doctrine of justice, equity and good conscience, the orders of the Commissioner of Income-tax (Appeals) and the Assessing Officer were modified restricting the disallowance to Rs. 3,00,000 under the said head and thus the assessee would get a relief of Rs. 6,25,983. Appellant's contention: Mr. S. Bagchi, learned counsel for the appellant, contends that it is the qualitati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 37 and sought to distinguish the decisions cited by Mr. Bagchi. Expenditure on seminar/conference of distributors/agents for sales promotion: Whether entertainment or business expenditure: After having heard learned counsel for the parties it appears that the Commissioner of Income-tax (Appeals) had found that there was no doubt about the genuineness of the expenditure and that these expenditures were not in the nature of entertainment. The learned Tribunal has also recorded that there was no doubt about the genuineness of the expenditure incurred and at the same time it had disallowed the deletion by the Assessing Officer on the ground that he sought to delete entertainment expenditure twice. Once that is deleted by the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess is promoted by increased production or acquisition of stocks, etc. Increase in production or acquisition of stock is aimed at earning income out of its sale or distribution, as the case may be. Promotion of sale is always expedient for promotion of business. How and in what manner, in these days of competitive market, sale can be promoted are matters of business expedience, in the field whereof the assessee is not only the expert but also the sole decider. Holding of conference or seminars of distributors or agents is one of the accepted methods or manners of sales promotions. How and to what extent it would be expedient for the business can be decided by the assessee in its wisdom. Whether by reason thereof he gains or fails is immater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e incurred for the purpose of business of the assessee or not. Unless such expenditure is in the nature of entertainment or in the nature of advertisement, and is aimed at promoting sales, in that event, the qualitative nature of the expenditure is satisfied; and then it becomes an expenditure otherwise eligible for deduction as business expenditure under section 37(1) not being an expenditure in the nature of entertainment. Once it is so found there is no quantitative unit or standard that could be enforced or introduced by the authorities under the Act. The fiscal law does not permit of any abstract ideas of the authority deciding the matter. As soon the expenditure satisfies the eligibility criteria, it becomes eligible for deduction; an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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