ITAT allows Liquor, Buffet Dinner and Govt Taxes to DLF Resort expenses as Business Promotion Expenses u/s 37(1) [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) allowed expenses for liquor, buffet dinner, and government taxes paid to DLF Resort as business promotion expenses under Section 37(1) of the Income Tax Act.

The Appellant Rhine Energy LLP preferred an appeal mentioning that addition of Rs. 20,00,557/- and Rs. 1,04,318/- under section 37 of the business promotion expenses were spent to Taj Mahal Hotel, New Delhi including Buffet dinner Rs. 9,00,000/- liquor Rs. 7,52,901/- and Government taxes to DLF Resort for promotion of business. AO initiated penalty proceedings under section 270A of the Act. CIT (A) through order dated 30.08.2023 partly allowed confirming disallowance of Rs. 18, 73,722/- and Rs. 1, 04,318/-.

Being aggrieved assessee preferred an appeal. In appeal assessee submitted that disallowance of Rs. 18,73,722/- and Rs. 1,04,318/- were in connection with business promotion expenses claimed under section 37(1) of the Income Tax Act, 1961. Learned CIT(A) and AO both erred in confirming disallowance of Rs. 18,73,722/- and Rs. 1,04,318/- on account of business and promotion expenses claimed by assessee under Section 37(1) of the Income Tax Act.

The AO held that Government is discouraging consumption of alcohol. The assessee claimed Rs. 1, 04,318/- on account of payment to DLF Golf Resorts Limited which included expenses for food, liquor for business meeting under Section 37(1) of the Income Tax Act. Assessee claimed that all the expenses were incurred during the previous year relevant to assessment year 2021-22 and accounted for properly and fully audited also. None of the expenses were of personal in nature.

The two member bench of the tribunal comprising S. Rifafur Rahman (Accountant member) and Vimal Kumar (Judicial member) found that assessee had arranged a party at Taj Mahal Hotel and paid hotel bill of Rs. 20, 00,557/- consisting of cot of Buffet dinner, liquor and Government taxes etc. The appellant claimed expenditure as revenue exclusively for purpose of business liable under Section 37(1) of the Income Tax Act.

Accordingly, appeal of the assessee was allowed. Impugned assessment order dated 28.12.2022 was set aside and order of CIT(A) dated 30.08.2023 was modified by holding that the assessee was entitled to get allowable expenses of Rs. 20,00,557/- and Rs. 1,04,318/-.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates