News Laundry Media Private Limited Vs DCIT (ITAT Delhi)
The ITAT Delhi held that an ad hoc disallowance of business promotion, petrol, and tour & travel expenses under Section 37(1) cannot be sustained merely on suspicion that personal use may be involved. The assessee, a media company engaged in motion picture, radio, television, and related activities, had furnished ledger accounts, invoices, vouchers, flight tickets, restaurant bills, and other supporting documents to substantiate the expenses. The Assessing Officer disallowed 25% of the expenditure on the ground that the exact details of meetings and purposes could not be verified and personal use could not be ruled out. Although the CIT(A) reduced the disallowance to 10%, the Tribunal observed that neither the books of account were rejected nor any specific defect, bogus claim, inflated expenditure, or non-business use was identified by the Revenue. Since the assessee had discharged its burden of proof and the Revenue failed to bring any incriminating material on record, the entire disallowance was deleted.
Core Issue: Whether an ad hoc disallowance of business promotion, petrol and tour & travel expenses under section 37(1) can be sustained merely on the presumption that personal use cannot be ruled out, despite the assessee producing ledger accounts, invoices, vouchers and supporting evidence, and where no specific defect, bogus claim or incriminating material was brought on record by the Revenue.
