Relief to Finesse International: Business Promotion Expenses for Improving Visibility of Brand Should Not Be Treated Personal, rules ITAT [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has granted relief to Finesse global company holding that the business promotion expenses for improving visibility of the brand should not be treated as personal.

The assesse, Finesse International Design Pvt is a global company which was engaged in the business of manufacturing and sale of high end designer garments through company owned /franchise stores under the name and style of “Shantanu& Nikhil”.

The appeal had been filed against the order of Commissioner of Income Tax (CIT(A)) upholding the disallowance of business promotion expenditure to the extent of 50% as against 100% made by the AO .

 The AO had analysed Tally Data seized during the course of search. He observed that the assessee company had booked various expenses under the head business promotion expenses. AO treated such expenses as personal nature and disallowed them under Section 37 of the Income Tax Act.

Ashwani Kumar, on behalf of the assessee submitted that he amount spent were on account of membership fees, hotel/restaurant expenses, PVR payments, invite cards which were incurred for the purposes of business of the assessee company and that these expenses were incurred to promote the visibility of sale of fashion garments sold by the assessee company.

SapnaBhatia,appeared on behalf of the revenue.

The two member Bench of SaktijitDey, (Judicial Member) and M. Balaganesh, (Accountant Member) allowed the appeal filed by the assessee and deleted the disallowance made on account of business promotion holding that the employees and directors of the assessee company would incur the expenditure in their credit cards and later on the same had been reimbursed by the assessee company to the Directors and employees.

The Bench further observed that, “Numerous entries entered by the assessee on account of business promotion and these are to be incurred by the assessee for improving the visibility of its brand and sale of its products, to the various customers / clients and business associates for the business purposes and also for entertaining the customers /clients in various restaurants and clubs and these are routine expenses incurred by the assessee in the normal course of business.”

To Read the full text of the Order CLICK HERE

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