Reasonable amount of expense towards gifts for dealers is allowable

ACIT Vs Atlas Cycles (ITAT Delhi)

ITAT Delhi held that a reasonable amount of expenditure towards distribution of gifts amongst the dealers is allowable expenditure.

Facts-

AO disallowed a sum of 2,00,000/- out of Sales Promotions / Business Promotion A/c.

It was submitted that the assessee company has over 4000 dealers nationwide along with various other worldwide buyers and company executives need to visit, entertain these dealers from time to time to keep them happy since companies products can only be sold through network of these dealers. It is essential need for the growth of the company and its survival through competition to be in constant touch with them so as to motivate them to achieve the desired sales.

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