INCOME TAX ACT, 1961

Section 37(1)

Business expenditure - Allowability - Printing and stationery expenses - Assessee failed to furnish satisfactory explanation before AO with regard to manner of utilization of printing and stationery materials

Assessee-company was a corporate agent of an insurance company. AO disallowed 50% of printing and stationery expenses claimed by assessee. Assessee submitted that the printing and stationery expenses were incurred for printing pamphlets explaining various insurance products for distributing the same to prospective buyers. Therefore, those expenses were incidental to carrying on its business. However, the AO took the view that the assessee had not satisfactorily explained the manner in which the material published had been utilized for the purpose of its business. Accordingly, he disallowed 50% of the printing and stationery expenses. Held: Although assessee submitted that the entire printing and stationary materials were used for the purposes of its business only, however, since the assessee had not furnished satisfactory explanation before AO with regard to manner of utilization of such materials; in view of interest of natural justice, the issue was restored to the AO for fresh consideration and the assessee was directed to furnish details of manner of utilization of the printing and stationery materials for the purposes of its business.

REFERRED :

FAVOUR : Matter remanded

A.Y. : 2008-09 to 2013-14

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