TMI Blog2020 (7) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... mers 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 businessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on expenses and the assessee was required to furnish detailed ledger account of these expenses. From the perusal of the ledger account it was observed that the major part of the expenditure was towards purchase of precious items, gold items and cash payments for various gift items. The AO required the assessee to further explain as to how these business promotion expenses had helped in promotion of the business as many of the payments were in cash or were for purchase of jewellery and other precious items. In response, the assessee submitted before the AO that due to plenty of competition in his line of business, the assessee has to promote his business to maintain the existing business as well as to get fresh business and new customers and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That the Ld. AO as well as the Ld. CIT(A) has not appreciated that the goods vide bill No. 1210 dated 22.10.2011 were received on approval basis and once goods approved the same were converted in to regular bill which is a customary practice and these are not against cash payments and will not make any difference. 4. That the Ld. CIT(A) has erred in observing that cheque No. 044997 on ICICI Bank has been issued in the name of Sakshi Anand whereas it is issued in the name of M/s. Bansal Sons and the bank statement also reflects the same and thus conclusion so arrived is bad and opposed to the facts of the case. 5. That the above grounds of appeal are without prejudice to one another. 3.0 The Ld. AR submitted that the disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the paper book. The Ld. AR also drew our attention to the list of customers of the assessee during the various assessment years placed at pages 54 to 56 of the paper book and submitted that it is not the department s case that the assessee did not have customers or there was no increase in the number of customers. The Ld. AR also placed reliance on numerous judicial precedents to support the various proposition propounded by him in support of its contentions. 4.0 Per contra, the Ld. Sr. DR placed extensive reliance on the observations and findings of both the lower authorities and submitted that one has to not only consider the increase in turn over but also whether the expenditure was genuine or not. The Ld. Sr. DR submitted that the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e confirming part of the disallowance observed that while small gifts may be necessary to promote the products, gifting costly items to the employees of a public sector company may not be so permissible. The Ld. CIT (A) also observed that the nature and quantum of expenditure would necessarily be a relevant consideration and unusual purchase of jewellery without the reasonableness of expenditure being demonstrated and the genuineness of the expenditure being established, the disallowance made by the AO was not without merit. Thereafter, the Ld. CIT (A) directed that the disallowance of jewellery items and payments made in cash were to be upheld whereas other standard items of gifts which did not look so unreasonable should be allowed. 5. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. However, we also feel that the 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 restric ..... X X X X Extracts X X X X X X X X Extracts X X X X
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