Bengal Peerless Housing Development Company Ltd. Vs DCIT (ITAT Kolkata)
The appeal was filed by the assessee against the order of the Commissioner of Income-tax (Appeals), Panaji, for Assessment Year 2013-14. The dispute primarily related to disallowances made by the Assessing Officer in respect of advertisement and publicity expenses, legal and professional fees, and a deduction claimed in relation to an earlier year’s disallowance.
With regard to advertisement and publicity expenses, the Assessing Officer observed that the assessee had claimed expenditure of ₹42,20,000 and sought details and supporting evidence. After examining the expenditure, the Assessing Officer disallowed ₹21,45,198, holding that the expenses were not incurred wholly and exclusively for the assessee’s business and were therefore not allowable under Section 37(1) of the Income-tax Act. The disallowed items included expenditure on sponsorships, advertisements relating to green movement initiatives, football tournaments, and promotion of a football team. The Commissioner (Appeals) confirmed the disallowance.
The Tribunal examined the nature of the expenditure and found that the expenses had been incurred in connection with sponsorship of a football team, promotion of football-related events, and support for a green movement. The Tribunal held that the Assessing Officer’s conclusion that the expenses were not incurred wholly and exclusively for business purposes was incorrect. According to the Tribunal, these expenses were incurred for promoting the assessee’s business and were therefore allowable as business expenditure. The order of the Commissioner (Appeals) was set aside and the Assessing Officer was directed to delete the addition of ₹21,45,198.
