The Income Tax Appellate Tribunal (ITAT), Hyderabad bench ahs held that the distribution of IPL tickets to the long-standing customers to improve business relation and goodwill would amount to business expenditure for the purpose of tax deduction under Section 37 of the Income Tax Act.
During the assessment proceedings, the Assessing Officer noted that the assessee has debited an amount of Rs.5,50,000/- towards purchase of 150 seasonal tickets of IPL cricket matches held at Hyderabad.
The assessee maintained that the said tickets were distributed amongst its long-standing customers and business associates and therefore, the said distribution served the purpose of promotion of business relations and goodwill among the customer base of the company and also in encouragement of sports, which is a part of the company’s corporate social responsibility. Therefore, the assessee submitted that the expenditure satisfies all the conditions stipulated u/s 37(1) of the Income Tax Act and should be allowed.
While granting relief to the assessee, the Tribunal noted that the assessee’s submissions in support of its claim under section 37 of the Act are that it has purchased the IPL cricket match tickets to distribute them amongst its long standing customers to garner their goodwill and improve its business relations and therefore, it is its business expenditure.
“According to us, this is a plausible and acceptable submission. This is akin to distribution of gifts or articles on special occasions to the customers and such expenditure has been held to be business expenditure. Further, in reply to Revenue’s contention that the assessee has failed to produce any evidence in support of its contention, the learned Counsel for the assessee has filed a list of the customers amongst whom the IPL Cricket match tickets have been distributed,” the Tribunal said.
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