ITAT Upholds ₹680.62 Cr Ad, Marketing & Cooler Expense Deductions, Remands Section 80G Claim

DCIT Vs Coca Cola India Pvt. Ltd. (ITAT Pune)

The Revenue filed an appeal before the Income Tax Appellate Tribunal (ITAT), Pune against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] dated 18.03.2025 for Assessment Year 2018-19.

The assessee, engaged in the manufacture and sale of non-alcoholic beverage bases (concentrates), Georgia Coffee/Tea premix and dairy whiteners, had filed its return declaring total income of ₹848.17 crore. During scrutiny assessment, the Assessing Officer (AO) disallowed multiple claims including advertisement and sales promotion expenses, marketing support expenses, service charges and reimbursements, depreciation on coolers, and deduction under Section 80G. The assessment was completed determining total income at ₹1,535.58 crore.

Advertisement and Sales Promotion Expenses

The AO disallowed advertisement and sales promotion expenditure of ₹563.86 crore under Section 37(1), holding that the assessee had failed to establish that the expenditure was incurred wholly and exclusively for its own business. The AO also observed that earlier Tribunal decisions in favour of the assessee had been challenged before the Bombay High Court and, therefore, the issue was kept alive by making the disallowance.

Before the CIT(A), the assessee relied upon consistent Tribunal decisions in its own case from Assessment Years 1997-98 to 2016-17. The CIT(A) held that the Tribunal had consistently found:

• a direct nexus between the expenditure and the assessee’s concentrate business;
• the assessee to be the primary beneficiary of the expenditure;
• the expenditure to have been incurred on grounds of commercial expediency;
• incidental benefit to bottlers or the brand owner not to affect deductibility under Section 37(1).

Following the earlier Tribunal orders, the CIT(A) deleted the entire addition.