INCOME TAX ACT, 1961

Section 37(1)

Business expenditure - Allowability - Business promotion expenses - Business expediency

Assessee-company was engaged in business of Builders & Developers. AO made disallowance on account of 'Business Promotion Expenses'. Assessee submitted that the expenses were incurred for advertising its business and the major expenses that consisted of membership to Mumbai Cricket Association (MCA), were incurred on account of corporate membership to have meeting with various clients. All the expenses were incurred for the purpose of business and rest of the expenses were incurred for donations. It further submitted that certain expenses were incurred on account of payments made to various organizations for social education and public welfare and certain expenses were incurred for putting hoarding for advertising of its upcoming projects. Held: Since corporate membership fees of MCA was paid by assessee for improving its business relation and prospects, the said payment would be allowable as business expenditure. Similarly the other expenses, genuineness of which were not disputed by the Revenue, which mainly consisted of either donation to various charitable organizations, distribution of notebooks to poor student and expenses incurred during the festival season for erecting hoarding were also allowable expenses. Therefore, AO was directed to allow all the expenses and delete the disallowance accordingly.

REFERRED : Otis Elevator Company (India) Ltd. v. CIT (1992) 195 ITR 682 (Bom) : 1992 TaxPub(DT) 0486 (Bom-HC)

FAVOUR : In assessee's favour

A.Y. :

INCOME TAX ACT, 1961

Section 40A(2)(a)

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