Zeta Buildtech Pvt. Ltd. Vs DCIT (ITAT Delhi)
ITAT Delhi Deletes Disallowance of MIS Marketing Expenses – Payments to Unrelated Parties Cannot Be Disallowed as Unreasonable
In Zeta Buildtech Pvt. Ltd. vs DCIT (AY 2020-21), the ITAT Delhi allowed the assessee’s appeal and deleted disallowances made towards internal audit/MIS, marketing and consultancy expenses. The AO had disallowed payments made to various service providers alleging lack of evidence and excessiveness of expenditure; however, the Tribunal noted that the services were rendered by independent and unrelated parties engaged for stock verification, MIS reporting and marketing support.
The ITAT held that once nexus with business purpose is established, the Revenue cannot sit in the armchair of a businessman to decide reasonableness of expenditure, particularly where section 40A(2) is not invoked and books were not rejected u/s 145(3). Comparative analysis based on payments to other vendors was also held unsustainable since complexity and scope of assignments differ. Consequently, disallowances of ₹31.8 lakh, ₹3 lakh and ₹18.5 lakh were deleted and the assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. This appeal is filed by the assessee against the order of Ld. Commissioner of Income Tax (Appeals)-24, New Delhi (hereinafter referred to ‘ld. CIT(A)’) dated 30.12.2024 for AY 2020-21.
