TMI Blog2021 (8) TMI 562X X X X Extracts X X X X X X X X Extracts X X X X ..... is rejected. Whether sales promotion expenditure was incurred wholly and exclusively for the purpose of business? - The assessee submitted list of 320 persons stating that they are employees of the assessee company and went to Sri Lanka to launch the product of the company. However, there is no documentary evidence to show that 320 persons are employed by the assessee as the assessee has not filed any appointment orders or any correspondence of these persons stated to be employees of assessee company. We failed to find out names of persons in this bill in the list of 320 persons submitted by the assessee. Further it is to be noted that the assessee has not been able to lead any evidence and explain what is the product launched by the assessee with reference to sales bill raised by the assessee in subsequent sales. There is no evidence about the enquiries received for the product during the course of launch or any product sold in that region subsequent to this launch. In such circumstances, it could not be presumed that the assessee has sold any product in this region where the alleged product launch took place. There is nothing on record to show that any sales increased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well as in law, in ignoring the contents of the video coverage and concluded based mainly on the finding of the Assessing Officer. 6) The Learned Commissioner of Income Tax (Appeals) erred both in facts as well as in law, in ignoring the bills presented by the event manager/ travel agent in arranging the video coverage at Srilanka without recording any valid reason. Though the bill was drawn up in the name of M/s. Team Life Care Company (India) Private Limited, the Holding Company, the Appellant Company had an agreement with the holding company to pay for such bill. 7) The Learned Commissioner of Income Tax (Appeals) erred both in facts as well as in law, in not adjudicating on the veracity of the reasoning put forward by the Learned Assessing Officer in the Assessment Order in disallowing the part of expenses of ₹ 1,04,23,246/- under the head `sales promotion' and substituting the reasoning of the Learned Assessing Officer by his own estimate based on surmise and conjecture. 8) The Learned Commissioner of Income Tax (Appeals) erred both in facts as well as in law, in determining the allowance of sales promotion expenditure based on his own estimate without br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the rate of ₹ 350/- per point. As per the details furnished, the appellant had claimed that during the year, the holding company has earned 23280 points. Accordingly, at the rate of ₹ 350/-per point, the appellant has stated that the holding company had raised a bill of ₹ 87,88,429/- for sales made up to February 2012 and a bill for ₹ 1,98,952/- for March 2012. The appellant has also claimed that apart from this, various other sundry expenditures were incurred in connection with the sales promotion. 4. The CIT(Appeals) observed that the amount of ₹ 1,04,23,246/- debited to the P L account includes the bills for ₹ 87.88 lakhs and ₹ 1.98 lakhs, which were paid to the holding company. The balance amount includes various expenditures for amounts below ₹ 20,000/-, which were incurred in cash. No evidence has been furnished to substantiate such cash expenditure. The expenditure debited also includes ₹ 13.10 lakhs for which entries were passed by way of a journal entries and no evidence has been furnished to substantiate these expenditures. In this regard, he noted that the total sates of the company as reported in the financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 246 as expenditure incurred towards sales promotion. It is the contention of assessee that it was incurred on launch of its products in Sri Lanka and it has to be allowed u/s. 37 of the Act. However, the AO observed that the assessee commenced business on 21.12.2011 and as on 29.12.2012 the assessee has claimed it has spent ₹ 87,88,429 and for the next month i.e., March, 2012, it has expended ₹ 1,98,952. The balance amount was spent in cash and the AO doubted the genuineness of the balance payment. However, he considered 75% of expenditure i.e., ₹ 104,23,246 at ₹ 78,17,245 as pre-operative expenses and out of this, he allowed 1/5th as revenue expenditure worked at ₹ 15,36,4878. He disallowed the balance amount of ₹ 62,53,938. 8. The CIT(Appeals) has observed that the total sales of assessee during the year was ₹ 3.53 crores. Total expenditure under the head sales promotion expenses worked out at ₹ 2.58 crores which worked out at 67.30% of total sales turnover. According to the CIT(A), it was very disproportionate as compared to the total sales of assessee in the assessment year under consideration. Even otherwise, an amount of S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de hotel (lodging) and food bills and also car hiring charges. It was explained by the ld. AR that 320 employees of assessee went to Sri Lanka to launch its products and it is reflected in the video recorded by the assessee. The assessee submitted list of 320 persons stating that they are employees of the assessee company and went to Sri Lanka to launch the product of the company. However, there is no documentary evidence to show that 320 persons are employed by the assessee as the assessee has not filed any appointment orders or any correspondence of these persons stated to be employees of assessee company. We have carefully gone through a Bill issued by Global Travels appearing in page 53 of PB. We failed to find out names of persons in this bill in the list of 320 persons submitted by the assessee. At page 47 of PB, the assessee has produced a Bill which says it is relating to expenses of Late Mr. Ramaswamy. It is not explained how this late Mr. Ramaswamy is connected to assessee company and what services were rendered during the period 11th to 13th October, 2011. The assessee has produced bill copy of car hiring charges of ₹ 1,55,300 for pick-up and drop for 35 cars witho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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