GTD Expenses are allowable as Income Tax Deduction: ITAT upholds deletion of Disallowance [Read Order]

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that GTD expenses are allowable as Income Tax deduction and upheld the deletion of disallowance BY Commissioner of Income Tax (A).

National Association of Software and Service Companies Office Cum Shop, the assessee is a premier trade body and the chamber of commerce of the IT-BPO industries in India.  It was set up in 1988 and is registered under the Indian Societies Act 1860.  It aims to drive the overall growth of the technology and service market and maintain India’s leadership position, by taking up the role of a strategic advisor to the industry.  

The AO asked the assessee to show cause why the society should not be considered a general public utility body under section 2(15) of the income tax Act for which the assessee filed a detailed reply claiming that the said section along with the amended provision does not apply to the facts of the case.  The AO denied the claim of exemption u/s. 11 and 12 of the income tax Act and assessed the assessee as a normal AOP.  

Further, the AO noticed that the assessee has claimed expenditure on account of global trade development activities.  The assessee filed a detailed reply in support of its claim which was rejected by the AO. The CIT(A) upheld the partial disallowance reducing the disallowance from 41345917/-to 20808291/- because donations given by the Government of India ought not to be disallowed. 

A Coram of Sh N K Billaiya, accountant member and Sh. Kul Bharat, judicial member observed that the program has been commenced to harness the power of existing partnerships, collaborations and MoUs with Governments, industry associations and customer organizations abroad, the world over to ensure that the country’s leadership position in the outsourcing domain remains intact for the sole benefits of Indian I.T. Industry.

The assessee working closely with the Indian Government to represent the true potential of the Indian IT Industry for increasing the Indian market share in Information and Communication Technology (ICT) and helping to ensure that the Governments of other nations do not create impediments to free trade or barrier-free business exchanges.

It was observed that the coordinate Bench viewed that“the disallowance of GTD expenses are not sustainable because the purpose of such expenditure and the benefits derivable therefrom is aimed at benefitting L.C.T & Business Process Management (BPM) industry as a whole, which not denotes the member fraternity of the assessee, but also the industry at large in India.”

The Tribunal declined to interfere with the findings of the CIT(A) and the appeal filed by the revenue was dismissed.

Ms Rakhi Vimal appeared for the assessee and Sh. Salil Kapoor, Ms Ananya Kapoor and Sh. Amarbir Singh Walia appeared for the respondent.

To Read the full text of the Order CLICK HERE

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