The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that gifts to dealers and “Shagun” during the marriage of dealers and staff are effective tools for business promotion and social welfare and are a deductible expense.
The Revenue challenged the orders of the CIT(A), dated 24.07.2018 which were in favour of the assessee, Atlas Cycles (Haryana) Ltd.
It was alleged that the CIT(A) has erred in deleting the addition of Rs. 55,700/- which was aptly made by the A.O. under the sub-head marriage gift expenses on account of the being personal in nature. The return of income declaring a total loss at Rs.1,08,55,973/- was filed on 10.10.2016 electronically. The assessee company filed a revised return on 24.10.2017 declaring a total loss of Rs.89,30,973/-.
The Assessing Officer made disallowance of Rs. 55,700/- incurred as Marriage Gift Expenses under the head Misc. Expenses. He viewed these gifts are of personal in nature as they were being used to be given as “Shagun” during the marriage of dealers and Staff.
A Coram comprising of Dr B. R. R. Kumar, Accountant Member and Sh. Yogesh Kumar US, Judicial Member observed that “the issue has been decided in favour of the assessee for the AY 2006-07, 2007-08, 2008-09, 2009- 10, 2010-11, 201112, 2012-13, 2013-14, 2014-15 and 2015-16 by the CIT (Appeal), Rohtak which was upheld by the Co-ordinate Bench of ITAT.
Dealers and Staff are an important part of the business and gifts are given to the marriage of dealers and staff are effective tools for business promotion and social welfare, hence they are deductible as business expenses. They do not amount to personal expenses.
While dismissing the appeal, the ITAT upheld the order of the CIT(A). Sh. Madhur Aggarwal, Advocate appeared on behalf of the assessee and Sh. Kanav Bali appeared on behalf of the revenue.
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