The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has held that advertisement expenses incurred for personal purposes are not allowable as a deduction under section 37(1) of the Income Tax Act,1961.
Dr Keyur Parikh, the assessee is a medical professional earning professional income, income from salary, house property and capital gain and other sources. The assessee alleged that the Commissioner (Appeal) erred in confirming the disallowance of Rs. 61,000/- being expenditure incurred for advertisement even though the same is incurred for professional purposes.
The expenditure incurred on advertisement amounting to Rs.61,000/- disallowed, raised vide Ground No3 by the assessee, the facts as emanate from the order of the AO are that the payment of Rs.51,000/- out of the said expenditure was made to Satyagrah Chhavni Co-op Hsg. Society, where the assessee resided, for advertising the assessee’s name in the society members’ directory and Rs.10,000/- was paid to the B.J. Medical College, Ahmedabad for the event “B.J. Beats, 2012.
A Coram comprising Smt Annapurna Gupta, Accountant Member and Shri Siddhartha Nautiyal, Judicial Member observed that these expenses were incurred for advertising in the member’s directory of the society where he resided and for sponsoring a musical event in a medical college.
It was observed that the advertisement expenses incurred by the assessee amounting to Rs.61,000/- are personal in nature and not incurred wholly and exclusively for the profession of the assessee and not allowable as per section 37(1) of the Income Tax Act,1961.
The Tribunal held that advertising is an unethical act as per guidelines of the controlling body of medical professionals and the expenses incurred on carrying out such unethical activities cannot be allowed as a deduction. While dismissing the appeal, the order of the CIT(A)was upheld.
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