The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the expenses incurred on the demise, birthday greetings and congratulating some politicians are not eligible for a tax deduction as business expenditure under section 37 of the Income Tax Act, 1961.
The assessee, for the relevant year, has made an expenditure of Rs.1,27,500/- towards payment to a daily newspaper for death news of G.P Pardhan, birthday greetings of Mr. Ajit Pawar and Mr. Sharad Pawar and congratulating Mr. Ajit Pawar and claimed deduction of the said amount while filing its income tax return for the year under consideration.
The Assessing Officer disallowed the same under section 37(1) of the Income Tax Act on finding that the said expenditure relates to some advertisements connected to demise/birthday greetings / congratulating some politicians, etc which is not allowable as a deduction under the Act.
The appellant contended that expenditure is every nominal that does not lead to the conclusion that expenditure is allowable.
On the first appeal, the first appellate authority confirmed with the view of the Assessing Officer by observing that the said expenditure was incurred not for the purpose of business. the authority observed that the appellant has not demonstrated that how this advertisement on print media is for attracting more customers, especially when these persons are not related to the banks and they could not prove business expediency of such expenditure.
The assessee, in order to secure relief, approached the Tribunal challenging the orders of the lower authorities.
Concurring with the findings of the lower authorities, the Tribunal held that “the expenditure incurred on the birthday/victory day celebration qua the erection of Flexes of the politicians, is not an allowable expenditure u/s 37 of the Act. In our considered opinion, the orders of the Assessing Officer / CIT(A) are fair and reasonable. They do not call for any interference.”To Read the full text of the Order CLICK HERE