Case Law Details
Ms. STEAG Energy Services (I) Pvt. Ltd. Vs ACIT (ITAT Delhi)
Conclusion: Assessee was not entitled to claim gifts and presents given to the customers by way of cash as business expenditure as the same was against the provisions contained u/s 40A(3).
Held: AO made addition by disallowing the misc. expenses like Diwali gifts and presents given by the assessee on the ground that from the ledger account of gifts and presents for the respective period, it was found that gifts and presents for the respective period had been done in cash which was against the provisions of section 40A(3). However, it was the case of assessee that these expenses were incurred exclusively for business purposes which was to maintain high morale of the employees which resulted into cost reduction and more profit of the company in the overall operation. It was held undisputedly assessee had incurred these expenses allegedly on gifts and presents by way of cash, the same could not be attributed to Diwali gifts and presents etc. which was also against the provisions contained u/s 40A(3). So, the addition made by AO was confirmed.
FULL TEXT OF THE ITAT JUDGEMENT
The Appellant, M/s. STEAG Energy Services (I) Pvt. Ltd. (hereinafter referred to as ‘the taxpayer’) by filing the present appeal sought to set aside the impugned order dated 31.12.2015 passed by the AO in consonance with the orders passed by the ld. DRP/TPO under section 143 (3) read with section 144C of the Income-tax Act, 1961 (for short ‘the Act’) qua the assessment year 2011-12 on the grounds inter alia that :-
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