Expenses to Musical Programme and Garba Event are Personal in Nature, No Income Tax deduction: ITAT [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) held that income tax deduction is not allowable, as the expenses to musical programmes and Garbaevents are personal in nature.

Dr Keyur Parikh, the assessee is a medical professional earning professional income, income from salary, house property and capital gain and other sources.  is aggrieved by the disallowance of various expenses claimed by itwhich were disallowed on the ground that they were found by the Revenue authorities to be personal in nature. 

The assessee claimed Rs.13,90,620/- Professional development expenses, out of whichdetails of expenses relating to the musical programme and Garba. The balance expenses amounting to Rs.7,95,120/-,  were stated by the assesseeto have been incurredfor giving gifts to the Doctors on the occasion of marriage or Diwali. The AO  found the expenses to be personal in nature and disallowed expenses aboutthe musical programme and garba event and   50% of the remaining amount to Rs.3,97,560/-.  

It was contended that this expenditure was incurred for promoting and publicizing his professional network, that the gifts had been given to doctors who were in the professional circle associated with the assesseeand the purpose wasmaintaining and strengthening relationship with the concerned persons, thus entirely incurred for purposes of the professioncarried out by the assessee.

It was further contended that the primary purposefor incurring this expenditure was to strengthen his professional network and any incidental personal benefit was of no relevance while determining whether the claim was allowable to the assessee under the Income Tax Act. 

It was alleged that organizing musical parties for colleagues or garba events in the society where the assessee resides or for that matter giving gifts on marriages of colleagues is done primarily out of social obligations or practices and predominantly for personal reasons.

It was viewed that the Garba event was organized for the benefit of persons limited to those residing in his society. It was a religious programme conducted in the assesses society which he had sponsored as a resident of the society. Thesole purpose for incurring the expense was not for his profession but also because being a resident of the society he felt obliged to contribute towards the programme.

A Coram comprising of Smt Annapurna Gupta, Accountant Member and Shri Siddhartha Nautiyal, Judicial Member observed that in the case of Sayaji Industries Ltd., it was held that expenses incurred towards social obligations in respect of staff members during the course of business would be allowed as business expenditure.

The Tribunal held that the expenses are not found to have been incurred wholly and exclusively for the profession of the assessee. While dismissing the appeal, the ITAT upheld the order of CIT(A) disallowing Professional expenditure claimed by the assessee amounting to Rs.7,49,560/-.

To Read the full text of the Order CLICK HERE

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